Moldovan banking system to pass stress test in 2017

Chisinau, 1 February /MOLDPRES/- Moldovan banks will pass stress test this year to see if they are sufficiently well capitalized and could cope with shocks without major problems. “The good news is that according to our figures, the local banks pass this test, but prudence in capital management is quite important”, National Bank of Moldova governor Sergiu Cioclea said today.

Banks’ financial solidity, ability to cope with situation leading to increase in volume of bad loans and worsening profitability will be tested during the stress exercise.

“BNM conducts tests to see if the banks are prepared to move to a European system for calculating norm of capital BASEL-3, as there may be additional risks that must be covered with additional capital”, the governor said.

According to BNM, capital sufficiency in the banking system increased to 30 per cent in late 2016, which means that the banks have enough capital to absorb potential losses from bad loans. “We are not in a case of alert, but banks need to work better with borrowers who are not able to repay loans. The three largest banks have submitted work programmes with these borrowers”, Cioclea also said.

Cioclea added that 30-per cent-capital sufficiency was high, and it was convenient for financial institutions as long as state credits, but will credit the economic agents the risks will increase. Bank credits decreased by 9 per cent in 2016, “which means more in real terms”. Gross loan portfolio represented 47.7 per cent of total assets, however, assets of state securities doubled. “Commercial banks have a tendency to lend the state, instead of crediting the economic agents. 15.3 per cent, almost one sixth of assets are securities. We believe that today over 6 billion lei is money available immediately”, he noted.

He pointed out that the lending capacity of the Moldovan system is high and means that there is no bid problem, but of demand. “It is very important that this economic stabilization, we have recently seen, and macro-monetary one I mean exchange rate and base rate, should be transformed into a microeconomic stabilization with investment plans, business plans meant to support a healthy lending by banks”, Cioclea said.

BNM data show that in 2016, the share of bad loans to total loans increased by 6.4 percentage points compared to the end of previous year, reaching 16.3 per cent. The indicator varies from one bank to another, the highest value accounting for 33.8 per cent.  

(Reporter V. Bercu, editor L. Alcază)