Mongolia Banking Sector Overview December 11 th, Masaru Honma, Director, Central Asia, EBRD

Transcription

1 Mongolia Banking Sector Overview December 11 th, 2014 Tokyo Masaru Honma, Director, Central Asia, EBRD

2 1. Banking sector structure 2. Key banks 3. Foreign participation 4. NBFI sector 5. EBRD activity in the financial sector 6. Contacts 2

3 Market breakdown Concentrated market 13 commercial banks Major bank dominance Top 5 Banks hold: - 83% of assets - 89% of deposits High private ownership State Bank, nationalized in 2009, is the only 100% state owned financial institution All other financial institutions are privately-owned XacBank, 10.4 Capital, 2.5 UB City Bank, 5.2 State Bank, 9.1 Golomt Bank, 20.7 Market share by bank (%) Chinggis Khan, 1.2 Capitron, 1.1 Others, 0.7 Khan Bank, 25.9 Trade and Development Bank,

4 MNT blns Funding, liquidity, and guarantee Customer have grown strongly over past 5 years USD 5.1B as Oct Liquidity ratio of 38% (FY 2013) FX 24% of loans 35% of deposits (Oct. 2014) Deposit Insurance Corporation Established after 2008 financial crisis, a blanket guarantee of deposits up to MNT 20M by the Government of Mongolia 30,000 25,000 20,000 15,000 10,000 5,000 0 Total Loans (MNT blns) Total Deposits (MNT bln) Loan to Deposit Ratio 97.0% 85.2% 74.3% 75.7% 60.9% % 120% 100% 80% /31/ /31/ /31/ /31/ /31/ /30/ % 40% % 0% 4

5 Trade and Development Bank Mongolia s largest commercial bank by total assets and loan portfolio. Holds 23% market share. Net loans USD 1.6B, Net profit USD 37M (3Q 2014). Fully locally owned, majority equity held by the bank s chairman Erdenbileg Doljin President Randolph Koppa brings international experience to management and corporate governance Khan Bank Mongolia s second-largest bank by assets and net loans, largest bank by equity Net loans of USD 1.6B, Net profit of USD 38M (3Q 2014) 70% of Mongolian households have deposits with Khan Bank International management, including CEO and senior advisors 54.4% owned by Sawada Holdings, listed on Osaka stock exchange 5

6 Golomt Bank Mongolia s third largest bank, with 20.7% market share Net loans of USD 1.3B (3Q 2014) Net profit USD 21M (3Q 2014) Foreign investors including Trafigura and Swiss Mo Xac Bank Mongolia s fourth largest bank, with 10.4% market share Originally a microfinance institution, now majority commercial lender. USD 655M net loans in 3Q 2014 USD 6M net profit in 3Q 2014 Strong ethics and corporate governance. Works closely with International Financial Institutions 6

7 Foreign Participation in Local Banks Sawada Holdings and the IFC hold majority stake in Khan Bank Orix, EBRD and IFC hold stakes in Xac Bank Small equity stake held by Swiss companies in Golomt Bank Foreign Bank Offices Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation. Foreign banks including Bank of China, ING have representative offices and look to grow operations in Mongolia. International banks including Goldman Sachs, Deutsche Bank, BNP Paribas, Standard Bank have lent directly to Mongolian companies 7

8 Microfinance Institutions 263 licensed NBFIs with a Total assets: USD 230M (Estimate from 2013 numbers) 18 Tier 1 institutions, i.e. total assets greater than local currency MNT 5B, i.e. USD 2.5M Top 5 NBFIs: 1. Business Invest Development 2. Net capital 3. Transcapital 4. Mongolian Financial Group 5. Gazar Capital Concentration is high Top 10 players hold 27% market share Opportunity for diversification and growth of smaller lenders Strong room for growth: Strong demand at times of liquidity stress in financial system and continued growth in the corporate sector 8

9 Insurance sector Concentrated market: 16 General (non-life) and 1 life Insurance companies with 213 branches, 3187 insurance agencies 20 insurance intermediaries (brokers or agents) 14 insurance loss appraisers 15 actuary companies Top 5 companies hold 51% market share High private ownership State has small holdings in Gan Zam Insurance and Ulaanbaatar City Insurance companies All other insurance companies are privately-owned Khaan 2% Practical 5% Nomin 4% Soyombo 5% Mandal General Insurance 8% MIG 9% Market Share Monre 2% Monnis 2% Tenger 9% Others 3% Ard 11% Mongol Daatgal 27% Bodi 13% 9

10 Leasing market Total leasing market is USD 103M or 1.2% of GDP Market share by players: Captive leasing companies: Wagner, Caterpillar etc 64% Commercial banks (5 banks out of 13) 22% Xac Leasing 14.2% With the adoption of the new Law on Financing Leasing in 2006, leasing became much more attractive to foreign and domestic investors. Favorable Tax treatment for leasing VAT exemption on interest of the lease payment for equipment suppliers Further improvement in the law and new operating lease structures will lead to increased activity 10

11 The macroeconomic situation has deteriorated: Depreciation of the MNT reached 35% as of Oct 2014, since 2012 YE Foreign investments were down by 59% as of Oct 2014, compared to Oct 2014 Rising private sector debt against a backdrop of volatile property prices and a weakened external position. Concentrations in mining, mortgage and construction sectors accounted for 41% of GLP as of 3Q 2014, up from 39.8% in 3Q Leading to new challenges: Increasing Non-Performing Loan ratios from 3.7% at 2Q 2013 to 4.6% at 2Q Need to diversify the portfolio (agribusiness ) FX lending exacerbated overall credit risk due to sharp MNT depreciation. (Oct 2014: 24%, 2013: 27% of systems loans were in foreign currency)

12 Total exposure : USD 107.2M Strong working relationship with Central Bank EBRD holds 11,6 % equity in Xac Bank SME Credit Lines Total USD 52M loans and trade finance program (TFP) with Khan Bank Total USD 25M loans, TFP, and medium co-financing facility (MCFF) with Xac Bank In 2014, the EBRD approved a USD 10 mln Energy Efficiency Credit Line to Xac Bank Local Currency Credit Lines Since Sep 2013, >USD 20M in local currency (MNT) signed USD 5M Energy Efficiency credit line in local currency (MNT) with with Xac Bank USD 8M Micro and SME credit line to Khan Bank Equity Fund EBRD has invested USD 10M equity in Mongolian Opportunities Fund, a nonmining focused private equity firm based in Ulaanbaatar. 12

13 Micro, Leasing, and NBFI USD 1M loan to Transcapital, NBFI institution USD 1.5M facility with Xac leasing Technical Cooperation 31 TCs since 2006 inception of activity in Mongolia Total value of USD 8.4M Technical support to banks as well as NBFI, leasing companies 13

14 Flour Mills of Nigeria Plc Rights Issue Contact Mr Masaru Honma - Director, Central Asia European Bank for Reconstruction and Development One Exchange Square Mr Matthieu le Blan Head of Ulaanbaatar Office European Bank for Reconstruction and Development MCS Plaza, 3 rd Floor, Seoul Street, 4A London EC2A 2JN Ulaanbaatar 14251, Mongolia Tel.: Fax: honmam@ebrd.com Tel.: Fax: leblanm@ebrd.com THANK YOU