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Nov 18, 2009 14:24 EEST
SKOPJE (Macedonia), November 18 (SeeNews) – Macedonian banks reported a combined net profit of 646 million denars ($15.6 million/10.5 million euro) in the first half of 2009, around a quarter of the year-ago figure, as the global financial crisis slashed earnings, the central bank said.
A slump in the revenue of big banks and losses suffered by medium-sized banks were the main reason for the fall in combined profit through June, the National Bank of Macedonia (NBRM) said in its half-year report on the state of the country's banking system.
NBRM ranks as big the commercial banks that have total assets of over 15 billion denars each. A medium-sized bank has total assets of 4.5 billion to 15 billion denars. Small banks are those having total assets of less than 4.5 billion denars each.
The big banks' combined profit fell by an annual 45.2% in the first half-year to 1.2 billion denars. The medium-sized banks turned to a 509 million denar loss over the same period from a 280 million denar profit a year earlier.
Macedonia's largest lender, Komercijalna Banka AD Skopje, said earlier its half-year preliminary operating profit fell to 336.3 million denars from 1.054 billion denars a year ago. For the third quarter, Komercijalna Banka reported a preliminary operating profit of 711.1 million denars , 49.6% down from a year ago.
The combined half-year loss of the small-sized banks totaled 74 million denars - seven times bigger than a year ago, NBRM said.
Eighteen Macedonian banks reported a combined income of 6.863 billion denars in the first half, 9.1% down from a year earlier. The drop was caused by falling income in all segments, except for net interest income that grew by an annual 1.0% to 5.02 billion denars at the end of June. Revenue from net fees and provisions fell 20.3% on the year to 1.5 billion denars at the end of June.
Bernard Koenig, general manager of Ohridska Banka majority owned by French banking group Societe Generale, said recently that Macedonia's banking system is healthy but less profitable.
Compared to the year-ago figure, the operating costs of Macedonian banks increased by 13.6% to 4.1 billion denars at the end of June, NBRM said.
RANKING OF MACEDONIAN BANKS IN TERMS OF TOTAL ASSETS:
Koenig said that Ohridska Banka’s total assets rose to 16 billion denars at the end of September, or by 16% from the previous quarter, thus taking the bank to fourth position among the big banks.
Eleven savings houses also operate in Macedonia, but they contributed insignificantly to the results of the banking system with just 1.3% in combined assets, 1.8% in lending and 0.5% in household deposits.
LOANS AND DEPOSITS GROW MUCH MORE SLOWLY
The lending activities of Macedonian banks slowed down significantly in the first half of 2009. Banks' credit portfolio rose by an annual 14.4% to 170.6 billion denars at the end of June, compared to 42.1% growth a year earlier.
The slowdown of the Macedonian economy and tightened lending conditions set by the central bank resulted in gross lending to non-financial borrowers rising by just 1.7% from the end of 2008, to 170.7 billion denars at the end of June, the central bank said.
The stagnation of credit activities that began in the second half of 2008 went hand in hand with the adverse impact of the global turmoil on Macedonia's economy.
NBRM said its monetary policy has been focused on keeping the stability of the denar currency, which was the reason why the central bank in April raised its repo rates to 9% from 7%. In May, it raised its mandatory reserve requirements to 13% from 10% for foreign currency liabilities and to 20% from 10% for denar-denominated liablilities with foreign clause.
"Three-fourths of the banks tightened their lending conditions in the first half", NBRM said.
A mild recovery of the credit market is expected in the following quarters.
"This will happen gradually, considering that over 2009 and next year, the quality of the credit portfolio will worsen as a side effect of the global crisis," the central bank said.
"The gross credits in the second quarters fell by 0.4% from the first quarter, due to the banks watchfulness in approving of credits and maintaining the stringent monetary policy."
Loans to households rose 16.3% on the year to 68.3 billion denars at the end of June, compared to 54.5% annual growth a year earlier.
Credits to companies rose by an annual 13.1% to 102.3 billion denars through June. They grew 34.7% on the year in the first half of 2008.
Increased borrowing costs at home resulting from rising deposit interest rates, and restricted access to external financing made Macedonian banks slow down their lending activity in the first half of 2009, said Koenig, adding that Ohridska Banka currently is in good shape and ready to offer credits to Macedonian businesses.
The loan portfolio is expected to rise by only 2.6% this year, according to the NBRM estimates.
NLB Tutunska Banka AD Skopje said recently it borrowed eight million euro from the European Fund for Southeast Europe (EFSE) for on-lending to micro and small enterprises. The maximum volume of a credit will be 100,000 euro with a five-year repayment period, NLB Tutunska said on its website.
The loan will enable continued flow of finance to some 500 micro and small enterprises (MSEs) at times when most banks are curtailing their lending activities due to liquidity constraints, EFSE said in a separate statement.
Macedonian banks’ deposits portfolio which includes time and savings deposits in foreign and domestic currency, continue to fall in the first half of 2009. It totalled 176.6 billion denars at the end of June, 2.4% down from the end of 2008 and slightly lower than in June 2008, NBRM said.
Deposits of households totaled 112.9 billion denars in the first six months of 2009, 11.1% up on the year, compared to an annual growth of 23% a year earlier. Deposits of companies totaled 53 billion denars, down 13.3 % year-on-year, compared to a 23.7% growth a year ago.
Interest rates were influenced by the global economic crisis and NBRM's lending restrictions. The biggest yearly rise was registered in interest rates on loans and deposits in denars, which increased by 1.2% and 1.7%, respectively, compared to June 2008. Interest rates of foreign currency deposits rose by 1.0%, the central bank said.
MARKET SHARE, OWNERSHIP STRUCTURE
The three big Macedonian banks held 66.3% of the assets of the banking system at the end of June, medium-sized banks accounted for 28.5% and the small banks had a 5.1% share, the central bank said.
In lending, the big banks accounted for 69.8% of all loans extended in the first half of 2009, the medium-sized banks had a 28.4% share and the small banks had a 1.8% share. The three big banks also dominated the deposit portfolio with a share of 72.3%, the medium-sized banks participated with 24.9% and the small banks had a share of 2.8%.
Foreign owners held 73.5% of the combined shareholders’ capital of the Macedonian banking system at the end of June, 0.8% down from the end of 2008.
“There were no significant changes in the participation of foreign shareholders in the Macedonian banking system in the first half of 2009, due to the lack of ownership restructuring,” NBRM said.
Most of the assets of the Macedonian banking system are held by banks that are majority-owned by their peers from European Union member states. Greek-based banks control 27.7% of the assets of Macedonia's banking system, followed by Slovenian-based lenders with 19.9%. France comes third with 5.8%, Bulgaria - 4.4%, Austria - 3.6%, the Netherlands - 2.4%, foreign portfolio investors - 22.2%, other countries - 7.1%.
Macedonia's banking system had total assets of 248.3 billion denars at the end of June, 3.0% up on the year, compared to an annual growth of 21.1% in the year to June 30, 2008.
(1 euro = 61.7629 Macedonian denars)
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