Business loan growth has been increasing in the last two months according to BoM. Year to year business loan increased by 15.7% and reached MNT 7.8 trillion. However, retail loans increased by 24.8% higher than that of business loans.

BoM noted that banks can increase source of credit because the central bank can issue notes up to MNT 2 trillion in value. Furthermore, policies to transfer retail consumption loans into business loans will increase business loans to sufficient levels in 2019 stated BoM.

Although business loan growth is increasing the non-performing loan (NPL) levels are still at a high rate. In the first 7 months of 2018, NPL levels reached 8.6%. This is a 0.4 percentage point decrease compared to the previous year. Business loans make up 82% of this number. Processing, mining, and construction sector NPL make up over 50% of NPLs. Processing and construction NPLs increased rapidly starting from the middle of 2016. It’s important to note that these sectors’ NPLs increased by over 50% compared to the previous year.

Source: BloombergTv.mn