Fitch Ratings agency has estimated that Mongolia’s banking sector will be “Neutral”, which means it will neither deteriorate nor improve from the current level in 2024, reports Bloombergtv.mn.

However, Fitch concluded that Mongolia’s business environment will be “Stable”. It reported that the main impetus will be the continued economic growth of Mongolia and the decrease of the consumer price index to a certain level. In addition, it was estimated that Mongolia’s real gross domestic product (GDP) in 2023 and 2024 will increase by five percent. This will be influenced by the activity of the mining sector and the stability of domestic demand. Inflation is also forecasted to decrease from the beginning of 2024. As for the Mongol Bank, they are aiming to lower inflation to a target level of four to eight percent in 2024 and 2025.

Regarding the banking sector, it is believed that the non-performing loan ratio of Mongolian banks will gradually decrease, and the cost of loans will continue to decrease. In 2023, despite the upward pressure on prices, the quality of banks’ assets remained good. It is predicted that it will remain the same even in 2024. However, due to the competition and the growing cost of deposit accounts, there will be pressure on the interest rate. It is also believed that the policy interest rate will remain high in the near term. However, credit growth in 2024 will be slower than this year, but it is estimated that it will remain in double digits.

Currently, five systemically influential banks in Mongolia make up 80 percent of the capital of the banking sector, while 522 non-banking financial institutions are operating. Co-Founder of Mongolian Investment Rating Agency Mohammed Tajul Islam said, “Compared to the size of the economy and the structure of the financial sector of other developing countries, the number of non-banking financial institutions operating in Mongolia is very large.”