Mongolia

What challenges does Mongolia’s economic slowdown pose for the banking sector? Where are there opportunities for growth?

Banks in Mongolia saw weaker profits in 2015 as one of Asia’s fastest growing economies cools, triggering higher borrowing costs and an increase in non-performing loans (NPLs), while credit rating agencies are also watching the banks’ vulnerability to China's continued economic slowdown. Recent downgrades in Mongolia's sovereign credit rating following falls in commodity...

While early 2014 was a time of considerable uncertainty for the banking sector in Mongolia, the year turned out to be much better than expected. No banks failed or faced runs, and the institution that generated the greatest concern – Golomt Bank – fared well in the end. As the sector’s third-largest player by assets, a collapse at Golomt Bank would have caused serious...

While public spending has been key to maintaining growth in 2012 and 2013, its funding has relied on a ramp-up in foreign-currency (FC) debt. Constrained by the Fiscal Stability Law (FSL), which caps public debt at 40% of GDP, the government subsequently channelled expansionary quasi-fiscal spending through the Development Bank of Mongolia (DBM).