Mongolian banks set to benefit from strong growth backed by rising mining output, says Fitch

Mongolian banks set to benefit from strong growth backed by rising mining output, says Fitch
On the up. (A branch of Golomt Bank in Ulaanbaatar). / Juris Paiders, cc-by-sa 2.0.
By bne IntelIiNews October 5, 2023

The operating environment for banks in Mongolia is set to benefit from strong medium-term economic growth, backed by rising production in mining, Fitch Rating said on October 5 in a non-rating action commentary.

“Loan growth picked up in 1H23 on improving business conditions and as major banks have complied with IPO requirements that have provided them with higher capital bases to support growth,” the rating firm said.

It added: “We believe appropriate risk controls during periods of rapid growth will be a key differentiating factor for banks’ risk profiles and asset quality. We expect banks to be more disciplined in balancing growth and capitalisation, given the improved regulatory framework in recent years.”

Fitch anticipated that Mongolian lenders’ earnings would continue to be supported by healthy economic growth in the medium term, despite strong competition.

Banks’ non-performing loan (NPL) ratios have been gradually improving, it assessed, due to conducive business conditions and higher loan growth.

“The 2023 interim results of major banks in Mongolia were steady, with higher net income and lower credit costs offsetting the impact on operating expenses from high inflation and foreign-exchange volatility,” Fitch concluded.

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