54th meeting of the Financial Stability Board



54th meeting of the Financial Stability Board

07/06/2021

The Financial Stability Board (FSC) held its 53rd meeting today, attended by Milojko Spajić, Minister of Finance and Social Protection, Uroš Andrijašević, Chairman of the Board of the Insurance Supervisory Agency, and Zoran Đikanović , Chairman of the Capital Market Authority. By invitation, Predrag Marković, Director of the Deposit Protection Fund, attends Council sessions.

At today’s meeting, the Board discussed the AnnualReport of the Financial Stability Board for 2020 and the Financial stability information for the first quarter of 2021.

the AnnualReport of the Financial Stability Board for 2020 stressed that the preservation of financial stability the previous year was marked by the control of risks with an upward trend due to the coronavirus pandemic. The pandemic economic conditions threaten almost all aspects of financial stability.

Despite many challenges, the banking sector has remained stable thanks to the good inherited risk profile, prudential activity of the CBCG and moderate credit policies. One year after the pandemic impact of the pandemic, the banking sector has solid liquidity and solvency, and credit risk is under control. However, although this risk has so far been assessed as moderate, the lifting of CBCG measures and the potentially prolonged impact of the crisis and pandemic development uncertainty could increase this vulnerability.

The capital market and insurance market trends have evolved steadily, despite the impact of the crisis. The effect is evident in the shrinking capital market, while the insurance market has shown adequate resilience. The stability of the insurance sector has strengthened slightly and indicators point to positive growth rates in this activity, despite an apparent dominance of compulsory insurance.

The FSC estimated that, despite many challenges, financial stability was preserved during all quarters of the previous year. The risk was assessed as moderately stable with an increased presence of certain risks. Therefore, it is necessary to continuously monitor risks and orient monetary and fiscal policy measures towards their reduction.

Discuss the Financial stability information for the first quarter of 2021, the FSC said economic activity in the euro area registered a quarterly decline of 0.6% in the first quarter of 2021, while the economies of the United States and China grew by 6.4% and 0 , 6%, respectively.

Regarding the domestic macroeconomic environment, industrial production increased by 11.8% in the first three months of 2021, compared to one year, while the number of tourist arrivals and overnight stays respectively decreased by 57.1 % and 49.7%, as well as retail trade. 7% turnover.

According to preliminary data from the Ministry of Finance, the initial budget revenue for the first quarter of 2021 was 4.8% higher than expected, while budget expenditure was 14.6% lower than forecast. The budget deficit for the first quarter of 2021 was 2.2% of the projected annual GDP.

The Information further indicated that the banking sector was characterized by an adequate capitalization, expressed by the solvency ratio, which stood at 19.3% at the end of March 2021. The share of overdue loans in total loans was by 5.45% at the end of the first quarter of the current year, 0.36 percentage point more than in the previous year. In the first quarter of this year, bank deposits and lending activity continued to grow, while interest rates declined slightly. In the first quarter of 2021, 119.5 million euros of new loans were granted to the economy, or 11.1% more than year on year.

Based on the analysis of the different impact factors, the FSC concluded that the stability of the financial system at the end of the first quarter of 2021 was preserved, while the risks were rated as moderate.

Warning

Central Bank of Montenegro published this content on June 07, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on 08 Jun 2021 06:52:05 AM UTC.



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