🔥 Khan Bank's Q3 report | Belt & Road | Commodity Price Projection

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🔥 Khan Bank Q3 Net Income Up 20.6% YoY

Khan Bank (KHAN) reported net income rose 20.6% YoY reaching ₮424 billion as of Q3 2023. How?

• Big numbers: net loans increased by 15.8%, amounting to ₮8.7 trillion, while total assets rose by 22%, reaching ₮16.1 trillion. Current accounts also increased by 20%, totaling ₮4.3 trillion, and deposits expanded by 16.8% to ₮7 trillion.

The bank's interest income rose by 48.5% to reach ₮1.5 trillion. This growth is affected by interest income from securities, which increased 1.9 fold, totaling ₮0.3 trillion. However, interest expenses climbed by 90.1% to ₮0.7 trillion, primarily due to macro influences.

• Policy interest rate: The Bank of Mongolia raised its policy interest rate from 6% at the start of 2022 to the current 13% through 6 successive increments. Consequently, the interest rate on new deposits across the banking sector increased by an average of 3.3 percent points, significantly affecting interest expenses.

• A surprise: The no-interest clause on demand deposits and current accounts due to the ongoing COVID-19 pandemic has expired this year. As a result, the bank incurred interest expenses of ₮7 billion on current accounts this year.

From the stock market perspective,

• Dividend distribution: The bank has announced in a dividend distribution policy that the bank will distribute more than 40% of the company's net profit after tax in the form of dividends. Assuming a distribution range of 40% to 100% of the profit as of Q3, investors can expect a dividend yield ranging from 8% to 20% at the current price.

• Ratios: The P/E ratio stands at 5, the P/B ratio is 1.1 while ROE stands at 21.8% as of Q3 of 2023.

In conclusion, Khan Bank, a prominent player in the banking industry and the stock market, closed Q3 with an excellent performance.

DATA STORY: 🤔 Commodity Price Projection In Next Year’s Budget

Next year's budget spending is projected to increase by ₮5 trillion from 2023, to reach ₮27.4 trillion. To justify this increase, the government has leveled up revenue projections.

• The coal export forecast for next year is 60 million tons, 10 million tons more than the 2023 plan. Copper exports are also estimated to reach 1.5 million tons. As a result, the projected revenue from mining is ₮8 trillion, an increase of 63% from the first approved budget of 2023. Sounds crazy?

☝🏻 BRI Commitment Stronger Than Ever with $100 Billion Boost

On the occasion of the 10th anniversary of the Belt and Road Initiative (BRI), China and Mongolia signed a special loan agreement for the Erdeneburen hydropower plant construction project.

Xi Jinping: BRI to Become More Inclusive and Beneficial to All Participants

Chinese President Xi Jinping announced that he would increase the funding of the Silk Road Fund by $100 billion. This is a significant increase in investment in the BRI, which China is trying to signal that they are committed to the initiative's success.

Xi Jinping also called for greater cooperation between BRI countries on sustainable development, green cooperation, and digital cooperation. He emphasized the importance of making the BRI more inclusive and beneficial to all participants.

What is the benefit for Mongolia?

Mongolia signed a number of important agreements with China at the BRI summit, including:

• A special loan agreement for the construction of the Erdeneburen hydropower plant project.

• Memorandums of understanding to advance the Shiveehuren-Sekhee cross-border railway construction, develop tourism near the border, exchange development experiences between the two countries, and improve policy planning and strategic coordination.

These agreements are likely to have a significant impact on Mongolia's economy and development. The Erdeneburen hydropower plant project, in particular, will improve Mongolia's energy security and reduce its reliance on imported energy.

What next?

It remains to be seen how the BRI will develop in the second decade. China is facing a number of economic challenges, such as the COVID-19 pandemic and the growing debt of its real estate sector. However, China has shown a strong commitment to the BRI, and it is likely to continue to play a major role in the initiative.

For Mongolia, BRI is an opportunity to attract investment and develop its infrastructure. However, there is no guarantee that Mongolia's infrastructure development with China's loans and investments will not cause problems, starting with falling into a debt trap.

🏃 QUICK STORIES

🔵EBRD funded a senior secured loan of up to $10 million to Tavan Bogd International LLC. The funding will support a stable supply of daily goods by reducing logistics challenges, and increasing sales turnover. The working capital loan tenure is longer than usually available in the local market.

🔵Mongolian Mining Corporation (0975.HK) sold a total of 1.7 million tonnes of washed coking coal in the Q3 of 2023. This represents a 17% year-on-year increase compared to the corresponding period of 2022 and 11% quarter-on-quarter. Accordingly, the company’s year-to-date sales volume of washed coking coal that was delivered to the customers reached 4.9 million tonnes as of Q3 2023.

🔵XacBank (XAC) profit reached ₮101.6 billion in the third quarter. The bank's interest income increased by 41.5% from a year ago and reached ₮270.6 billion, which is why the profit increased by 29.4%. Furthermore, the bank's total assets increased by 24% to ₮4.39 billion.

🔵Rio Tinto’s (RIO.AX) Q3 mined copper rose 5% to 169,000 tonnes. The Oyu Tolgoi mined copper production on a 100% basis increased by 16% from the third quarter of 2022 as the ramp-up in underground production continued to plan. During Q3 the company delivered 0.9 million tonnes of ore milled from the underground mine and 8.8 million tonnes from the open pit of Oyu Tolgoi.

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Editor: E.Zolbayar
Writer: M.Khulan & G.Aminaa

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.