Moldovan experts affirm liquidity of banks remains well above regulated limits, so as continuing to profit

Chisinau, 06 October /MOLDPRES/ – The bank liquidity remains well above the regulated limits, reaching a level of 56 per cent, which means that more than half of the banks' exposures are liquid assets (state securities, BNM certificates or mandatory reserves). The banks continue to generate profits under these terms, reaching $1.2 billion at the end of August, notes the Independent Analytical Centre Expert – Grup in the analysis of ranking of banking performance.

According to experts, bank lending has a slight dynamism mainly supported by loans to individuals. However, despite the fall in interest rates, economic agents appear to be attracted by non – bank financing. The tightened loan requirements of banks narrow the eligible customer group, even opting for more expensive funding to detriment of complying with requirements of transparency and quality of financial info.

Thus, in August 2018, the total stock of loans registered a volume of MDL 33.9 billion, increasing by about MDL 500 million compared to July. The largest contribution was provided by loans to food industry, plus MDL 153 million and consumer loans, rising by MDL 144 million. Also, the volume of loans granted for purchase/construction of real estate increased by about MDL 134 million as compared to previous month, bringing the interest in programme: The first home.

On the other hand, the largest reduction is registered by loans to energy sector. At the same time, the specific indicators for the quality of the loan portfolio continue to improve, and the coverage of provisions remains adequate. Thus, at the end of August, the rate of non – performing loans recorded a level of about 14.2 per cent, oscillating within 05 – 33 per cent depending on the bank.

The experts' appraisals are confirmed by the National Bank of Moldova (BNM), which reveals that with the cheaper loan, the amount of contracted bank loans has increased. Thus, if in January and February the contracted loans exceeded by MDL 1 billion, within recent six months economic agents and population took loans from banks in excess of MDL 1.4 – 1.7 billion. The loans granted over 12 – month terms were the most requested in August and accounted for 93 per cent of the total volume of loans in national currency, being granted at an average rate of 8.43 per cent.

The weighted average interest rate on new loans in national currency, granted by Moldovan banks, dropped in August 2018 to a new historical minimum of 8.45 per cent a year, against 9.76 per cent in the same period of 2017. It is the fourth consecutive month when the interest rate on national currency financing remains below 9 per cent.

Expert – Grup also notes that in late August, the main financial and prudential indicators of commercial banks were steady for the recent months. Even though new methodologies for capital and loan risk exposures have entered into force, the total own funds ratio remains at an appropriate level of 28.5 per cent for the entire banking sector, with individualised fluctuations within range of 19.8 – 63 per cent. The limit set by BNM for this indicator is 10 per cent, plus additional capital requirements throughout capital buffers.

The top ranking of bank performance at the end of August 2018 was led by three banks with systemic importance for national banking and financial systems – Moldova – Agroindbank, followed by MobiasBanca and Moldindconbank. Mostly, they excel in profitability and market indicators, accounting for 85 per cent of sector – wide profit and 60 per cent of total bank assets.

(Reporter V. Bercu, editor L. Alcaza)