H.Amartuvshin: We are working to improve loan portfolio quality at firstEconomy
Ulaanbaatar /MONTSAME/ On July 4, Chief Executive Officer a.i. of the Development Bank of Mongolia (DBM) H.Amartuvshin and First Deputy Chief Executive Officer Ch.Enkhbat held a briefing about the bank’s operation.
Mr.Amartuvshin said, “Today, there are three major issues in our bank. Those are the issues of solving the repayment of non-performing loans detected during the government’s inspection; making changes to the bank’s requirements for investments, projects; and programs; and improving loan portfolio quality.”
At the beginning of the briefing, he gave information on DBM’s financial performance. As of the first half of 2019, the bank’s overall assets amounted to about MNT 4 trillion and 244 billion, loan portfolio to MNT 2 trillion and 577 billion, risk funds to MNT 336 billion, and non-performing loans to MNT 292 billion.
Mentioning that an increase of non-performing loans of entities which were found by the inspection is causing the bank’s operation to stall, he said, “One of the nonperforming borrowers, Erel Group got a loan worth MNT 132 billion, but has not paid back since 2015. A joint working group of the government and DBM is working to resolve the repayment issues. A discussion is underway to establish a joint state owned company in charge of this task. However, a final decision has not been made and a study is also being carried out to find out whether it is necessary or not. In case a company is not established, the issue will be brought to court.”
Personnel in charge of non-performing and problem loans to be increased
With Mon Laa company, another nonperforming borrower which has an unpaid loan of 8 billion, a settlement contract has been made to pay off the debt within this year and the repayments are being made. As for Khutul company, its plant has been officially transferred to the State Commission and actions are underway to seize it as a collateral of the DBM. The issue will also go through court if the task stalls.
He then introduced the bank’s internal policy such as the changes in loan management regulations. Special structure and personnel of the asset unit responsible for nonperforming loans are to be settled in the near future. Personnel in charge of problem loans will also be increased. Lastly, he informed that the bank’s legal and policy requirements for investments, projects, and programs are also undergoing a change.
Loan amount will not exceed 85 percent of the project value
Mr.Amartuvshin said, “There appears to be a misunderstanding that DBM’s loan cannot be paid. We will clear this up.” “As the tax payers’ money finances the bank’s loans, we will compel them to repay at all costs”
As for our requirements, firstly, we will support projects and programs that promote export and boost export revenues. We will assist those compliant with the government’s mid- and long-term development policies. Of course, the projects shall be beneficial to the economy. The borrower shall have many years of experience in that particular sector.
As for the policy requirements, loans of above MNT 20 billion will be given directly by DBM and the ones below the amount will be granted through commercial banks.
The maximum amount of loan shall be within 85 percent of the project cost for legal entities other than state owned enterprises. Those who filed false documents or have problem loans in other banks are being blacklisted.
In conclusion, Mr.Amartuvshin said, “We will provide support for projects and programs on energy, agriculture, and non-mining exports. It goes without saying that those against air and soil pollution will receive support too.”