THE BANK OF MONGOLIA FINANCIAL SYSTEM MONGOLIA 2017

THE BANK OF MONGOLIA FINANCIAL SYSTEM MONGOLIA 2017. 02

Contents I. Overview II. Banking sector III. Non-bank financial institutions IV. Insurance companies V. Savings and credit unions VI. Stock market Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд 2

I. Mongolian Financial System Overview

Mongolian financial system at glance Market participants Financial Stability Council Regulators: Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд Number of Entities Commercial banks: 14 Development bank: 1 Non-Bank Financial Institutions (NBFI): 529 Savings and Credit unions: 282 Insurance companies: 17 Securities market: Listed companies: 302 Trading companies: 2 Securities clearing and settlement: 1 Central securities depository: 1 Custodian banking service: 3 Investment management: 14 5

Financial system structure: Dominated by Banking sector Table 1. Financial sector structure, MNT Billion Assets Amount % of Banks 25, 338 NBFIs 787 Insurance 208 Savings & Credit union 113 Securities participant 91 95. 5% 3. 0% 0. 8% 0. 4% 0. 3% Banks 21, 521 NBFIs 623 Insurance 173 Savings & Credit union 98 Securities participant 68 95. 7% 2. 8% 0. 4% 0. 3% Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд Profits Amount % of 2016 176 70. 1% 59 23. 5% 11. 4 4. 5% 3. 8 1. 5% 1. 0 0. 4% 2015 218 79. 9% 46 17. 0% 7. 1 2. 6% 2. 2 0. 8% -0. 7 -0. 3% Equity Amount % of 2, 936 578 105. 8 24. 3 66. 8 79. 1% 19. 1% 3. 5% 0. 8% 2. 2% 2, 427 424 94 21 62 80. 1% 14. 0% 3. 1% 0. 7% 2. 0% 6

Financial and insurance services growth Figure 1. Financial and insurance services growth, in GDP 6 60 5 50 4 40 3 30 2 20 1 10 0 0 -1 -2 -10 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Weight to RGDP growth (%) Weight to NGDP growth (%) Financial and insurance services growth RGDP growth Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд 2016 -20 7

II. Banking Sector

Banking sector At the end of 2016: 14 banks, 1494 branches, 866, 800 bank borrowers, 8. 8 million customers, Profit MNT 176. 5 billion Figure 3. Banking sector liabilities, 2016 Figure 2. Banking sector assets, 2016 24 000 6 004 16 000 4 188 853 2 088 3 012 20 000 4 255 1 025 3 495 2 543 2 925 2 065 12 000 8 000 Bkllions of MNT Billions of MNT 20 000 16 000 12 000 4 798 7 988 1 465 2 491 1 375 5 652 5 387 1 454 3 595 8 000 12 441 11 634 12 338 4 000 8 015 5 812 6 337 2 692 2 056 2 828 2014 2015 2016 4 000 0 0 2014 2015 2016 Loan Bank reserve Gov't treasury bills CBB Other Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд Current account Deposit Foreign Liabilities Government deposits 9

Capital ratio and Profitability Figure 5. Banking sector profitability ratio Figure 4. Banking sector capital ratio 25% Total 18% 20. 4% 20% 18. 6% 15% Tier 1 15. 2% 15% 11. 3% 12% 10% 8. 9% 8. 6% 6. 9% 9% 5% 2. 9% 2. 3% 2. 7% 1. 5% 1. 2% 0. 8% 0. 9% 0% 6% 1 4 7 10 1 4 7 10 1 2012 2013 2014 2015 2016 2017. 04 2016 2017 Return on asset Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд Return on capital 10

Mongolian Banking system Vs. Other countries Figure 7. ATM’s per 100, 000 adult Figure 6. Domestic credit to GDP 100 80 80 60 60 40 40 20 20 0 0 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 Figure 9. Bank NPL to gross loans (%) Figure 8. Bank lending-deposit spread 15 16 14 12 10 8 6 4 2 0 10 5 0 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 Source: World bank, Global Financial Development Database (GFDD, Bank of Mongolia Explanation: Some of financial sector development indicators of Mongolia as of 2016 is compared to that of OECD countries as of 2014 due to certain limitations to data availability. Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд 11

III. Non-bank Financial Institutions

Non-bank financial institutions By the 1 st quarter of 2017 • NBFIs 529 • Total assets 798 billion togrog • Outstanding loans 502 billion togrog Figure 10. NBFIs’s total assets • • Branches 122 Profits 59 billion togrog in 2016. Figure 11. NBFIs’s Loan quality 560 900 800 13. 4% 480 12. 4% 700 400 600 500 320 400 240 9. 8% 8% 160 200 6. 3% 6. 0% 5. 1% 6% 4% 4. 1% 3. 8% 80 100 0 12% 10% 8. 8% 5. 6% 300 14% 2% 0 08 09 Total asset 2010 11 12 13 Current asset 14 15 16 2017 Q 1 Non current asset Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд 0% 08 09 2010 11 12 NPL to Total loan NPL 13 14 15 16 2017 Total loan Q 1 Principal in arrears 13

IV. Insurance

Insurance By the first quarter of 2017 • 17 insurance companies with 252 branches | Premium income 37. 5 billion togrog | Total assets 224. 8 billion togrog | Compensation 8. 8 billion togrog Figure 12. Insurance companies’ asset, profits and equity Figure 13. Insurance companies’ liabilities 250 Billions of MNT 200 150 100 50 0 Assets 2014 Profits 2015 2016 Equity Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд 15

V. Savings and credit cooperatives

Savings and credit unions By the first quarter of 2017 • 282 Savings and credit cooperatives • Deposits 74. 7 billion togrog • Profit 0. 5 billion togrog • • Figure 14. Number of SCUs Figure 15. SCUs’ outstanding loan 280 105 14% 90 12% 54 48 240 10. 0% 42 200 75 30 120 24 18 80 thousand 36 160 10% 60 45 6 07 08 09 10 11 Number of members 12 13 14 15 In Rural area 16 2017 0 In UB Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд 8% 6. 3% 6. 5% 5. 5% 6. 8% 30 3. 0% 15 2008 09 10 2011 12 NPL % Total loan Principal in arrear Standard 13 6% 4% 2. 5% 2. 3% 0 4. 6% 12 40 0 Total assets 121. 7 billion togrog Total outstanding loans 96. 7 billion togrog 2% 2014 15 16 0% 2017 Q 1 NPL 17

VI. Stock market

Stock market By the first quarter 2017 • 302 share-holding companies registered in Mongolian Stock exchange, 62 broker-dealer, 25 underwriters • Market capitalization of Stock market 1. 4 trillion togrog • ТOP-20 index 12451. 0 unit Figure 16. TOP-20 index Figure 17. Trading volume and market liquidity /1 st quarters of years/ 20 000 2 000 15 000 1 500 10 000 1 000 500 0 2008 10 TOP-20 index 2012 14 16 30 1. 2% 25 0. 9% 0 Q 1 Market capitilization Монгол Улсын гадаад секторын тойм, тулгамдсан асуудлууд billions of MNT 2 500 billions of MNT 25 000 20 15 0. 6% 10 0. 3% 5 0 2010 11 12 13 Trading volume 14 15 0. 0% 16 2017 Q 1 Liquidity 19

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