Governor Žugić: Montenegro Successfully Strengthened Banking System

By , 13 Oct 2019, 14:40 PM Business
Governor Žugić: Montenegro Successfully Strengthened Banking System Copyrights: Pixabay

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13 October 2019 - The situation in the banking sector in Montenegro has strengthened after addressing issues related to vulnerable banks, as evidenced by excellent indicators of key balance sheet positions with 13 banks operating in Montenegro, Central Bank (CBM) Governor Radoje Žugic said at a high-level dialogue meeting with the European Central Bank (ECB), held in Frankfurt.

Žugić explained that banks' assets of 4,6 billion EUR are at a historical maximum, while the stability of the system is confirmed by an extremely high coefficient solvency ratio of 19,5 per cent, reports Vijesti daily.

"Non-performing loans are steadily declining and currently amount to 4.75 percent of purchases, which is a significant drop from 2011, when their level was 25.9 percent," said Žugic.

Interest rates, he said, continue the decreasing tendency. "Despite low-interest rates, deposits are growing, which is a testament to the confidence in the banking system," Žugic said.

The CBM said that ECB representatives were presented with new data reflecting the situation in the Montenegrin economy, with particular emphasis on the situation in the banking sector. “The Montenegrin economy has been continuously growing for the last six years. According to official data from Monstat, last year saw a 5,1 per cent growth rate, thanks primarily to strong investment activity in the public and private sectors, as well as an increase in domestic demand and private consumption, "said Žugic.

He highlighted that there were positive trends in the fiscal sphere owing to the fiscal consolidation measures implemented by the Government of Montenegro and added that, according to the Ministry of Finance projections, public debt would have a downward trend this year.

The meeting also discussed activities undertaken by the CBM to implement the planned asset quality audit of the banking system (AQR), further strengthen supervision, especially in the segment of money laundering prevention, and modernization of the payment system.

The CBM Vice Governors, Nikola Fabris and Miodrag Radonjić, presented macroeconomic trends in Montenegro, the status of negotiations with the EU, as well as the management of international reserves and the effects of the CBM's monetary policy.

The meeting also discussed the economic situation and development of the euro area banking sector, as well as the ECB's monetary policy. The ECB, they said, offered all forms of support to the CBM in the monetary policy area, especially in the area of ​​supervision.

Read more about the business environment in Montenegro at TMN's dedicated page.

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