Banking

Competition Review

Quarter Ⅱ,

2019

◊ Banking sector news

◊ Key indicators

◊ Featured: Mining sector loans

◊ Total assets, loans, deposit and profit

of 13 commercial banks

Economic Policy and Competitiveness Research Center

BANKING COMPETITION REVIEW 2019 – Ⅱ Quarter

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Banking system news in Mongolia

04.08 – The Bank of Mongolia introduced a decision

to shut down Capital bank. mongolbank.mn

04.09 – TDB introduced high-level “Lounge Key”

service in order to satisfy demand of its Visa Platinum

and Golden credit card users. tdbm.mn

04.19 – The Bank of Mongolia organized the

"Economic Policy Forum 2019" in conjunction with

the 95th anniversary of the Mongolian banking sector

establishment, under the theme of "Financial Sector

Development: Past, Present and Future".

mongolbank.mn

04.25 – The establishment of Green Investment

Principles (GIP) and its signatories were announced

during the Belt and Road Forum for International

Cooperation. TDB announced that it has become a

signatory of the GIP among 26 other global

institutions from 12 countries. tdbm.mn

05.08 – XacBank and its holding company TenGer

Financial Group announced today that the Board of

Directors had unanimously appointed Tsevegjav

Gumenjav as the next Chief Executive Officer of the

organizations. xacbank.mn

05.09 – UB City Bank introduced an improved and

modernized series of International Visa Card to the

customers. ubcbank.mn

05.23 – The Board of Directors of Golomt Bank

appointed Mr. Norihiko Kato as the Bank’s new Chief

Executive Officer. mongolbank.mn

06.05 – Khan Bank launched the I Am a Child of the

Green Earth project with International Children's

Complex Nairamdal. The camp receives almost

40,000 children annually and this project will help all

of those children to learn about Mongolian culture

and history, to know about the many species of plants

and animals in Mongolia and to promote sustainable

development. khanbank.com

06.10 – TDB signed a memorandum of

understanding with "My Club" NGO. During the last

four years, the staff of TDB participated in planting

and irrigation of over 45,000 trees. tdbm.mn

06.11 – If you buy a gasoline from the “Shunkhlai”

LLC by TDB card, you can get 3% discount.

tdbm.mn

06.12 – The Bank of Mongolia granted a permission

to payment card processor for “360 finance” Non-

banking financial institution. mongolbank.mn

06.16 – Golomt bank introduced “The Color” card

(newly designed and advanced NFC technology) for

youth (14-22 years old). golomtbank.com

06.18 – People with Candy payment card can

withdraw its candy as a cash from ATM (Xacbank).

xacbank.mn

06.19 – The Monetary Policy Committee meeting

was held and it was decided to keep the Policy rate

unchanged at 11 percent. mongolbank.mn

06.24 – In the 8th annual “Global Financial Inclusion

2019” awards ceremony, the Bank of Mongolia

received the "CYFI Best Collaborator 2019” award for

the successful implementation of its “National

Program for Financial Literacy”. mongolbank.mn

Economic Policy and Competitiveness Research Center

BANKING COMPETITION REVIEW 2019 – Ⅱ Quarter

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Key indicators of banking sector1

1 Source: Central Bank of Mongolia

Total assets = MNT 34.7 trillion

Total assets of banking sector increased to MNT

34.7 trillion as of Q2, 2019, MNT 1.2 trillion (+3.5%)

higher than the previous quarter, and MNT 4.5 trillion

(+15%) higher than Q2, 2018.

Loss = MNT -98.8 billion

Bank capital has reached MNT 3.1 trillion as of Q2,

2019 which is MNT 0.08 trillion lower than Q2,

2018. Banking sector’s loss reached MNT -98.8

billion as of Q2, 2019.

Bank reserve = MNT 4.4 trillion

Bank reserve reached MNT 4.4 trillion as of Q2,

2019 which is MNT 1.5 trillion (+75%) higher than

the Q2, 2018.

Non-Performing Loans = 11.3%

Total loans (net) reached MNT 16.8 trillion as of Q2,

2019. However, NPL is still high. Total NPL reached

MNT 1.9 trillion which account for 11.3% of the total

domestic loans (net).

3,18 3,103,26 3,35

3,10

32,4 42,2

-96,8

80,8

-98,8

-200

-100

0

100

200

300

400

0

1

2

3

4

2Q'18 3Q'18 4Q'18 1Q'19 2Q'19

BIL

LIO

N M

NT

TR

ILL

ION

MN

T

Bank capital Profit, loss (right)

30,2 3133,1 33,5 34,7

+4,5%

+2,6%

+6,6%

+1,4%

+3,5%

0%

2%

4%

6%

8%

0

10

20

30

40

2Q'18 3Q'18 4Q'18 1Q'19 2Q'19

TR

ILL

ION

MN

T

Assets Growth % (right)

2,9 3,1

4,5 4,4 4,4

0

1

2

3

4

5

2Q'18 3Q'18 4Q'18 1Q'19 2Q'19

TR

ILL

ION

MN

T

Bank reserve

14

,5

15

,3

16

16

,3

16

,8

9,0% 8,8%

11,1% 11,4% 11,3%

0%

4%

8%

12%

0

5

10

15

20

2Q'18 3Q'18 4Q'18 1Q'19 2Q'19

Total domestic loans NPL as of %

Economic Policy and Competitiveness Research Center

BANKING COMPETITION REVIEW 2019 – Ⅱ Quarter

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Mortgage = MNT 4.49 trillion

Total mortgage loan reached MNT 4.49 trillion as

of Q2, 2019. Total mortgages have increased

constantly since the ‘Program on the

Development of Sustainable System of Mortgage

Financing’ was implemented.

Current + Deposit = MNT 18.0 trillion

Total deposit reached MNT 12.5 trillion (16.8%

growth since Q2, 2018) and total current account

reached MNT 5.5 trillion (17.0% growth since Q2,

2018) as of Q2, 2019.

1 USD = 2654 MNT | 1 CNY = 385 MNT

Monthly average of official Foreign Exchange

Rates: USD reached 2654 MNT whereas CNY

reached 385 MNT as of the June 2019. USD to

MNT rose by 222 MNT (+9.1%) and YUAN to MNT

rose by 9 MNT (+2.4%) compared to the same

quarter of the previous year.

Total liabilities = MNT 31.6 trillion

As of Q2, 2019, total liabilities reached MNT 31.6

trillion which is MNT 4.5 trillion (+16.6%) higher

than the same quarter of the previous year.

15,4 15,917,5 17,1

18,0

0

4

8

12

16

20

2Q'18 3Q'18 4Q'18 1Q'19 2Q'19

TR

ILL

ION

MN

T

Current Deposit Total

4,33 4,35 4,43 4,41 4,49

0

1

2

3

4

5

2Q'18 3Q'18 4Q'18 1Q'19 2Q'19

TR

ILL

ION

MN

T

Mortgage

24

63

24

64

25

03

25

64

25

82

26

37

26

50

26

33

26

32

26

35

26

45

26

54

36

6

36

0 36

5 37

1

37

2 38

3

39

0

39

1

39

2

39

2

38

6

38

5300

320

340

360

380

400

2000

2200

2400

2600

2800

3000

USD CNY (right)

27,1 27,929,8 30,2

31,6

+5,0%

+3,0%

+6,8%

+1,2%

+4,7%

0%

2%

4%

6%

8%

0

10

20

30

2Q'18 3Q'18 4Q'18 1Q'19 2Q'19

TR

ILL

ION

MN

T

Total liabilities Growth % (right)

Economic Policy and Competitiveness Research Center

BANKING COMPETITION REVIEW 2019 – Ⅱ Quarter

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Featured: Mining sector loans

Non-performing loans (NPL) in mining sector has been high despite mining sector’s recovery

over last few years. As of 2nd quarter of 2014, total outstanding bank loan in mining sector

reached its historical peak (MNT 1.4 trillion) and NPL and overdue loans were 20% of total

outstanding loan. Unfortunately, 2.5 years later (Q4, 2016) mining sector total outstanding loan

shrank dramatically (decreased to MNT 0.7 trillion) and 78% of total outstanding loan classified

as NPL or overdue loans

Since 2017 (late 2016), commercial banks have begun to grant more loans to mining companies

as the sector overcome crisis. As of 2Q 2019, total outstanding loan of the sector (MNT 1.44)

just surpassed the peak in 2014 and 36.2% of total outstanding loans are NPL and overdue

loans. It is a huge success compared to 2016 but 36.2% is still a very high number.

As of 2Q 2019, loans in MNT are 71% of total outstanding loans with an average interest rate of

16.1% (13.2% for currency loans). Mining loans are issued to 462 individuals and companies.

Weighted average term of loans is 13 months which indicates mining sector loans are mostly

short term loans.

MNT 1,4 trillionMNT 1,44 trillion78,1%

0%

20%

40%

60%

80%

-

400

800

1 200

1 600

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

bill

ion M

NT

Total outstanding loans in mining sector, 2Q 2010 - 2Q 2019

Уул уурхай, олборлолтын салбарын нийт зээлийн үлдэгдэл Чанаргүй болон хугацаа хэтэрсэн зээл % (баруун)Total outstanding loan NPL and overdue loans % (right)

Economic Policy and Competitiveness Research Center

BANKING COMPETITION REVIEW 2019 – Ⅱ Quarter

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Banking system competition

Currently 13 commercial banks are operating in Mongolia.

Khan, TDB, Golomt, Xacbank, State Bank, Ulaanbaatar

City Bank are systematically important banks according to

Bank of Mongolia. These banks account for more than 90

percent of the banking system in terms of assets.

Quarterly financial reports of banks were used in this

report and compared by the following indicators:

Assets

Loan

Current account, Deposit

Profit

The banks were classified as Top 3, Medium 3 and small

banks, depending on their total amount of assets. Capital

bank is not included in this report.

TOTAL ASSETS

BANKS

TOP-3 BANK

>5 trillion MNT Trade and Development Bank

Khan Bank Golomt Bank

MEDIUM-3 BANK

1-5 trillion MNT XacBank

State Bank Ulaanbaatar City Bank

SMALL BANKS

<1 trillion MNT

Chinggis Khan Bank Capitron Bank National Investment Bank Arig Bank Bogd Bank Credit Bank Trans Bank

The figure below ranks the 14 banks, according to total assets under control. The banks were

classified as Top 3, Medium 3 and Small banks. Only Capital bank is not included in this review.

Economic Policy and Competitiveness Research Center

BANKING COMPETITION REVIEW 2019 – Ⅱ Quarter

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Assets

Assets, billion MNT and growth %

Total assets of the 13 commercial banks included in this

review have reached MNT 34.7 trillion. Top-3 banks,

medium-3 banks and small banks account for 69.3%,

22.7% and 8.0% of the sector respectively.

Total assets of top-3, medium 3 and small banks have

risen 16.3%, 13.2% and 44.9% respectively.

Market share, by assets, 2Q'19

Khan bank28.4%

TDB22.2%

Golomt18.7%

Хасbank 9.1%

State bank8.5%

UBCbank5.0%

NIBM - 0.8%Chinggis Khan- 1.6%Capitron - 2.6%Bogd - 0.5%Credit - 0.6%Arig - 0.4%Transbank - 1.5%

7 1

90

8 1

04

5 3

93

20

68

7

7 7

00

9 8

55

6 5

10

24

06

5

7%

22%21%

16%

0%

5%

10%

15%

20%

25%

-

5 000

10 000

15 000

20 000

25 000

30 000

TDB Khanbank Golomt Top-3

Top 3

2Q'18 2Q'19 Growth(right)

1 4

78

2 4

89

2 9

93

6 9

60

1 7

55

2 9

68

3 1

56

7 8

78

19% 19%

5%

13%

0%

10%

20%

30%

-

3 000

6 000

9 000

UBCBank State Bank Xacbank Medium-3

Medium 3

2Q'18 2Q'19 Growth(right)

28

6 4

34

65

2

10

0

17

12

7

30

9

29

3

57

3

89

7

18

5

19

6

13

5

51

4

-

300

600

900

NIBank ChinggisKhan Bank

CapitronBank

Bogd Bank Credit Bank Arig Bank Transbank

Small banks

2Q'18 2Q'19

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Loan

Loan, billion MNT and growth %

Total loans of the 13 commercial banks reached 17.3

trillion MNT as of Q2, 2019. Top-3, medium-3 and

small banks account for 65%, 26.5%, 8.5% of total

loans respectively.

Top-3, medium-3 and small banks increased their

total loans by 16%, 23.9% and 61.1% respectively

compared to Q2, 2018. Overall total loans of these 13

commercial banks increased by 20.9%.

Market share, 2Q'19

Khan bank26.6%

Golomt19.1%

Xacbank11.6%

State bank9.8%

UBCBank5.0%

NIBM - 0.7%Chinggis Khan - 1.8%Capitron - 3.0%Bogd - 0.4%Credit - 0.5%Arig - 0.5%Transbank - 1.7%

TDB19.2%

3 0

83

3 8

02

2 8

00

9 6

85

3 3

21

4 6

04

3 3

07

11

23

2

8%

21%18%

16%

0%

10%

20%

30%

-

4 000

8 000

12 000

TDB Khanbank Golomt Top-3

Top 3

2Q'18 2Q'19 Growth(right)

70

5

1 3

93

1 5

95

3 6

94

87

1

1 6

94

2 0

10

4 5

75

24% 22%

26%

24%

0%

10%

20%

30%

-

1 000

2 000

3 000

4 000

5 000

UBCBank State Bank Xacbank Medium-3

Medium 3

2Q'18 2Q'19 Growth(right)

15

9 23

1 3

23

20

1

61

12

0

12

2

30

4

51

1

72

89

86

29

0

-

100

200

300

400

500

600

NIBank ChinggisKhan Bank

CapitronBank

Bogd Bank CreditBank

Arig Bank Transbank

Small banks

2Q'18 2Q'19

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Current and deposit account

Current and deposit account, billion MNT and growth %

Total current and deposit accounts of the 13 commercial

banks reached 21.1 trillion MNT. Top-3, medium-3 and

small banks account for 69.3%, 23.6%, 7% of total

current and deposit account respectively.

Top-3, medium 3 and small banks increased their

current and deposit accounts by 20%, 18% and 38%

respectively since 2Q, 2018. Total current and deposit

accounts of these 13 commercial banks increased by

21%.

Market share, 2Q'19

TDB 15.5%

Golomt21.8%

UB city bank 4.9%

State bank 10.4%

Xacbank 8.3%

Khan32.1%

NIBM - 0.9%Chinggis Khan- 1.6%Capitron - 3.0%Bogd - 0.2%Credit - 0.3%Arig - 0.4%Transbank - 0.7%

97

9 1 8

07

1 4

47

4 2

32

1 0

47

2 2

07

1 7

51

5 0

04

7%

22% 21%18%

0%

20%

40%

60%

80%

-

1 000

2 000

3 000

4 000

5 000

6 000

UBCBank State Bank Xacbank Medium-3

Medium 3

2Q'18 2Q'19 Growth(right)

3 2

97

5 2

16

3 6

63

12

17

6

3 2

70

6 7

82

4 6

08

14

66

0

-1%

30%26%

20%

-10%

0%

10%

20%

30%

40%

-

4 000

8 000

12 000

16 000

TDB Khanbank Golomt Top-3

Top 3

2Q'18 2Q'19 Growth(right)

19

5

27

4

45

2

38

0

81

38

,1

19

9 3

31

62

5

32

75

81

14

7,4

-

200

400

600

800

NIBank ChinggisKhan Bank

CapitronBank

Bogd Bank CreditBank

Arig Bank Transbank

Small banks

2Q'18 2Q'19

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Profitability

Total net profit of the 13 commercial banks included in this review reached MNT 215 billion (after tax). Big-3 banks’

profit (MNT 200 billion) have increased by 34% or MNT 50 billion compared to Q2, 2018 whereas profit of medium

banks were increased by MNT 17.9 billion compared to Q2, 2018 and reached MNT 15.5 billion. Small banks are

operating with a loss worth MNT 334 million.

Profit and loss by billion MNT and growth %

Sources:

1. Mortgage loan report, June 2019, Bank of Mongolia

2. Key indicators of banking system consolidated balance sheet, June 2019, Bank of Mongolia

3. Monthly foreign exchange rate, June 2019, Bank of Mongolia

4. Quarterly financial report of commercial banks, 2nd quarter of 2019

5. Loan report of banks, June 2019, Bank of Mongolia

( 2

7,6

)

( 1

2,4

)

4,2

0,6

( 0

,8)

( 1

,2)

2,1

( 7

,0)

0,1

5,4

1,5

2,0

( 0

,3)

5,5

( 30,0)

( 20,0)

( 10,0)

-

10,0

NIBank ChinggisKhan Bank

CapitronBank

Bogd Bank CreditBank

Arig Bank Transbank

Small banks

2Q'18 2Q'19

( 5

)

1 2

( 2

)

1

4 1

1

16

( 8)

( 4)

-

4

8

12

16

UBCBank State Bank Xacbank Medium-3

Medium 3

2Q'18 2Q'19

17

25

41

44

6%

-50%

-30%

-10%

10%

-

20

40

60

80

100

TDB Khanbank Golomt Top-3

Top 3

2Q'18 2Q'19 Growth(right)