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 Monitoring→Economy→The Socioeconomic Environment

Economic Policies on February 1–14, 2010

Banking sector

Banks “have shown signs of fatigue” in 2009…

According to an informative note of the National Bank of Moldova (NBM) as of February 12, 2010, during 2009 the Moldovan banking system registered a downward trend, generated largely by global economic crisis. Thus, Tier I capital decreased by 2.4% at end of 2009, constituting slightly more than 6.45 billion MDL. According to the NBM requirement, Tier I capital of commercial banks in Moldova should be at least 100 million.

In all banks, the indicator in question exceeds the minimum regulated and further reflects their resilience against risks taken (risk of bad loans, other assets etc.). The decrease in Tier 1 capital per system was determined by withdrawal of Investprivatbank’s license and by some banks’ losses related primarily to expansion of their reserves to cover credit risks. Under crisis conditions, some shareholders have given financial support to banks, the additional issue of shares amounting to over 290 million.

The share of foreign investment in banks was over 77% or about 4 percentage points more compared to early 2009 and reflects the increase in the social capital for account of current non-resident shareholders. The average risk weighted capital adequacy ratio of Moldovan banking system was over 32% at the end of the year, while the minimum required is 12%. Maintaining this indicator at a high level provides banks stability and safety under the conditions when there is an increased lending potential. Another important financial indicator, total assets, rose last year by 2.2% to about 39.92 billion MDL (about 3.63 billion USD). This increase was in particular due to an increase of bonds by over 3%.

The ratio of non-performing loans to total loans increased by 10.4 percentage points from the beginning of 2009, accounting 16.3% at the end of 2009. The need to cover potential credit losses led to an increase of credit loss ratio by 4.7 percentage points up to 9.7% at the end of 2009. At the same time, the largest part of the loan portfolio on December 31, 2009 was held by industry and trade — 51.6% of the total, followed by agriculture and food industry — 15.9%, loans for real estate, construction and development — 12.5% and consumer loans — 8.7%.

NBM states that in 2009 the banking system losses mounted to 145.5 million MDL. As a result, return on assets and equity had negative values at the end of 2009: ROA (-0.4)% and ROE (-2.1)%. However, the liquidity indicators of the Moldovan banking sector showed during 2009 a positive trend, thus reflecting the satisfactory capacity of banks to honor current and long-term liabilities. The principle I on the banks’ liquidity (assets with repayment period of more than two years must not exceed the financial resources with potential withdrawal term over two years) was 0.6. The principle II (liquid assets / total assets must not be less than 20%) was 38.3%.

With regard to bank deposits, they decreased in 2009 by about 3% to approximately 26,417 billion MDL, including deposits of individuals — by 3.7% to about 16,466 billion MDL. Deposits of legal persons dropped down by about 5% to 8,012 billion MDL.

January 18–31, 2010 October 1–31, 2010