The end-2024 review of the banking sector was presented by the Mongolian Bankers Association and the Banking and Finance Academy on March 17, highlighting stable growth and improved financial indicators. The total assets of the banking sector increased by 23 percent compared to the same period last year, while non-performing loans declined. The upward trend in tugrug deposit yields, which began in early 2024, has also continued.
In particular, the quality of bank credit has significantly improved, with non-performing loans reaching their lowest level in the past 15 years. According to the latest financial review, the overall stability of the banking sector and the improving economic situation have contributed to this positive trend. Non-performing loans, which are classified as such when payments are overdue by more than 90 days, have declined across various economic sectors. The mining sector, in particular, has seen a sharp reduction in non-performing loans, with delinquent loans in this sector decreasing by half. The improved financial health of businesses and individuals has also helped maintain consumer loan quality at a stable level.
At the end of each year, the ratio of non-performing loans to citizens has shown a steady decline, reflecting stronger economic conditions and responsible lending practices. As Mongolia continues to experience growth in key industries, the downward trend in non-performing loans is expected to support overall financial stability.
Bank lending to key economic sectors has grown steadily, supporting business activity. Inflation remained relatively stable due to policy measures aimed at controlling price increases. However, demand-driven inflation began to rise in the second half of the year.
The balance of payments, including the financial account, was in surplus, leading to a significant increase in foreign exchange reserves. This helped stabilize the purchasing power of the tugrug. Despite rising budget revenues from increased mining exports, the state budget remained in deficit, impacted by the costs of two local elections and budget amendments. As a result, Mongolia now faces a dual deficit in both the state budget and the current account, posing a challenge to maintaining economic stability.
Economic growth reached 4.9 percent, driven mainly by the continued expansion of the mining, transport, logistics, services and trade sectors. However, unfavorable weather conditions led to a decline in the agricultural sector, negatively affecting overall economic growth.
Looking ahead, the country plans to maintain high economic growth by capitalizing on rising prices and increased output of mineral exports. The government has set ambitious targets for budget revenues and expenditures, with plans to boost spending on major development projects. Consumer lending also continued to rise, with banks primarily offering loans secured by salaries, pensions, and deposits. The recent increase in wages and pensions has contributed to the growing demand for personal loans.
