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Happy November! Allow us to introduce Mongolia's first commercial wind farm, Salkhit. This groundbreaking 49.6 MW project, with its 31 turbines, is revolutionizing the country's energy landscape by harnessing the power of the wind. Click here to learn more about Salkhit Wind Farm.

Today’s newsletter in 3 sentences…

• 💌 President Invitation

• 🔥 Top 5 Banks’ Q3 Earnings: Who Came Out on Top?

• 🎫 How Powerful is the Mongolian Passport?

Let’s Dive. 🌊👇🏻

MARKET

• MNG: The President of Mongolia invites the President of Turkmenistan to pay a state visit to Mongolia.

• TDB: Trade Development Bank signs a long-term financing agreement with the U.S. DFC. 

• STPGF: Steve Haggarty, a member of the board of directors of Steppe Gold (STPGF), decides to step down from his position.

🧩 All green: TOP-5 Banks

The long-awaited Q3 earnings report from the Trade Development Bank (TDB) wraps up the TOP-5 banks’ earnings picture. Let’s play Sherlock Holmes on it.

👏 Thank you for the color, TOP-5!

All 5 systemically important banks deliver a green-hued Q3, with total net profits reaching ₮1.2 trillion. Together, they boost net profits by ₮391 billion year-on-year, and total assets, net loans, current accounts, and deposits all saw gains. In short, it’s a feast, but not everyone is eating the same slice.

🔍 Small But Mighty

The 5 public banks manage a combined ₮56 trillion in assets in Q3. The State Bank of Mongolia (SBM), with the smallest asset base, leads in asset growth with an impressive 34.5% increase, followed by XacBank (XAC) at 28%. TDB, despite its larger asset base, sees a more modest increase of 22.7%.

• Highest 🆚 Lowest: Golomt Bank (GLMT) has the highest net profit growth, though Khan Bank (KHAN) maintains its lead in absolute net profit, albeit with the lowest growth rate. Khan Bank’s ROE stands at 28.3%, 2 percentage points above the TOP-20 index average.

📈 ₮113.5 Billion Growth

Turning to the market stage, the combined market cap of the 6 public banks, adding Bogd Bank (BOGD), rises by ₮113.5 billion over the past year, now totaling ₮5.4 trillion and representing 43.7% of the total market cap.

• 🔻 Not All Sunshine: Golomt Bank and XacBank adds ₮393.2 billion to their market cap, while the other 4 banks collectively lost ₮279.7 billion. Khan Bank leads the losses, down ₮147.2 billion, with TDB following close behind at ₮122.5 billion.

🔍 Behind TDB’s Historic Profits

TDB finally drops its Q3 report, and it’s juicy. Net profit skyrockets 83.4% year-on-year to over ₮200 billion, thanks to a 50.9% jump in interest income, while expenses climb only 28%. That leaves TDB with a hefty ₮166.6 billion margin on interest income. Net loans rise 33% to ₮5.8 billion, and deposits grow 20.7% to ₮8.7 billion. But let’s not get carried away, while TDB is putting up solid numbers, it’s still playing a little below the league average, with asset growth 5 percentage points short of the TOP-5 average.

• 🔻 From 1 to 0.4: Non-performing loans fall from over ₮1 billion to ₮432 billion, though they still account for 7.5% of TDB’s total net loans, a higher-than-average figure in the sector.

😴 Slow Recovery on the Stock Front

On the stock side, TDB’s shares have been a bit sluggish. The stock hit a high of ₮35,500 last June, only to drift back to its IPO price of ₮33,000 by year-end. As of last Friday, it’s sitting at ₮24,500, a 34.7% drop from its peak, dragging TDB’s market cap down by ₮445 billion since January. TDB’s numbers are fine, but to investors, it’s a tough sell right now.

Ok, this is the end of the overview of how Mongolian banks are doing in Q3. What do you think?

🙃 Mongolian passport lost power over 118 countries!

Mongolian passport holders now have access to 67 destinations either visa-free or with visa-on-arrival. While this marks significant progress, there remains room for improvement, particularly in expanding visa-free access to major Western nations.

• 🤓 Visa-on-Arrival: This policy allows travelers to obtain a visa upon arrival, typically at the airport or border checkpoint. Although not entirely “visa-free,” it simplifies travel compared to securing a visa in advance.

🔇 Power of the Mongolian Passport

The Mongolian passport ranks 76th on the Guide Passport Index, with access to 67 destinations. Additionally, Mongolian citizens can use an eTA (Electronic Travel Authorization) to enter Kenya. An eTA is required for visa-exempt travelers transiting through certain countries.

💭 Expanding Horizons in Aviation

Mongolia’s aviation sector is rapidly growing, offering direct flights to 18 countries. However, only 2 of these routes, Istanbul and Frankfurt, connect Mongolia to Europe. As part of a new aviation agreement, this is set to change with planned direct flights from Mongolia to Italian cities like Milan, Rome, and Venice. Additionally, discussions are ongoing to establish a route to Rwanda, which, if finalized, would provide Mongolia with its first direct flight access to an African country.

📍Long-Haul Flights

The longest current direct route from Mongolia reaches Frankfurt, spanning 6,000 kilometers. However, with direct flights to the U.S. scheduled to begin in the second quarter of 2024, this distance will increase to over 10,000 kilometers. These long-haul flights were agreed upon during the Prime Minister’s visit to the U.S. last year.

• 🙂 In Any Case, the Plane is Ready: Though direct flights to the U.S. have yet to launch, MIAT acquires 2 “Boeing 787-9 Dreamliner” aircraft to service this route.

• 🌛New Routes: Recently, United Airlines (UAL) announces its plans to fly to 8 new destinations, including Mongolia. As a result, the company becomes the first American airline to operate flights to Mongolia, starting the Tokyo-Ulaanbaatar route in May next year.

Looking Ahead

Over the next 4 years, the Government of Mongolia is actively pursuing its vision to position the country as a transit hub connecting Asia and Europe. This vision foresees a significant expansion in travel routes, enhancing Mongolia’s connectivity by both land and air.

⭐ Selected for you

ECONOMY & BUSINESS

• TMK Energy Hits Another 60m Mongolian Coal Seam in the Second Hole. (TheWestAustralian)

• Trafigura Warns of Up to $1.1bn Loss Over Mongolian Oil Scandal. (Reuters)

• 'Funding For Mortgage Loans Could Expand By 35%. (PressReader)

POLITICS

• Kazakhstan Becomes Mongolia's First Strategic Partner in Central Asia. (InsideMongolia)

• The Mongolia-US Strategic Partnership Under the Biden Administration. (TheDiplomat)

• Kazakhstan to Export First Satellite to Mongolia. (TheAstanaTimes)  

• Kazatomprom is weighing uranium production in Mongolia. (Kursiv)

• Government of Mongolia Introduces AI-Based Chatbot. (Montsame)

• Solar and Wind Power in Mongolia: 2024 Policy Overview. (SEI)

CULTURE & LIFESTYLE

• The Changing Face of Mongolia. (BBC)

• Feminist Thriller ‘Where the Mountain Women Sing’ Teams Patrick Mao Huang, Juefang Zhang at Tokyo Market. (Variety)

• From the Steppes With Shamanism: The Hu Makes Hits With Praises to the Sky Deity. (Independent)

• How a Festival in Mongolia is Keeping Eagle Hunting Traditions Alive. (STv)

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Publisher: Ts.Ankhbayar
Writer: M.Khulan
Graphics by: Ch.Battseren

Disclaimer: The information Inside Mongolia provides is for educational and informational purposes only. It is not intended to be or constitute financial advice, trading advice, or any other advice. The decision whether to consider the information we provide is solely our readers' independent decision.