A meeting of the CBCG and the Association of Montenegrin Banks


29/07/2020

A meeting with representatives of commercial banks was held today at Central Bank of Montenegro (CBCG) premises to discuss the continuation of activities of the CBCG and the banking sector aimed at mitigating the adverse effects of the Coronavirus pandemic on the financial system and the real economy.


In his introductory speech, Governor Žugić said that commercial banks approved almost 300 million euros of new loans to citizens and the economy since the crisis outbreak. Moreover, the banking sector itself suffered the adverse impact of the pandemic through profit reduction during the first half of this year of almost 47% compared y-o-y, while maintaining liquidity at the system level.


The Governor pointed to the fact that during the crisis, some banks approved new loans in the same or higher amount compared y-o-y, while some recorded a lending decline. “In the coming period, banks have to focus on strengthening the lending volume, especially those with a declined lending activity,” said Governor Žugić, adding that due attention has to be paid to priority sectors.

The banking sector’s representatives pointed out that some banks recorded decreased lending activity resulting from reduced demand for loans and the postponement of some investments due to the uncertainty caused by the virus pandemic, and that there was no lending policy tightening. Recognising the problems faced by specific activities (such as tourism), some banks reacted proactively offering significant relief to these entrepreneurs in the form of a more extended grace period and attractive interest rates (average weighted nominal interest rate was 4.24%).

The banks’ representatives showed their readiness to support sustainable economic projects fully and to meet the needs of citizens facing significant financial challenges through adequate restructuring models.


The Governor also pointed out that banks had to continue their focus on maintaining confidence in the banking system, with long-term interest to retain their clients. In this regard, the CBCG recommended the banks not to change the fees and tariffs policy until the crisis ends.


At today’s meeting, it was agreed to take actions on delaying the implementation of the Law on Credit Institutions and the Law on Resolution of Credit Institutions, which was supposed to begin on 1 January 2021, and that they require the prior passing of bylaws beforehand. The delayed implementation of these laws will relieve the banks’ capacity and enable them to commit fully to implementing measures to mitigate the Coronavirus effects and the activities on implementing AQR.