🏛️ IPO: GOLOMT BANK | RETAIL VS CORPORATE BANKING | MOST ACTIVE SECURITIES COMPANIES

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🤔 DID YOU KNOW?

🏛️ IPO: TWO DAYS TO CLOSE

The Golomt Bank IPO started last week and is already oversubscribed by 122.93% with 13.6 thousand orders worth ₮127 billion.

• A small reminder: KPMG values Golomt Bank at ₮1 trillion - 1.15 times more than the bank’s book value of equity.

The company intends to dedicate the funds raised from the IPO to expanding its credit services. The majority 37% will be used for business loans, 26% will go to small and medium enterprises, 21% to consumer loans, and the remaining 16% will be committed to housing loans.

The valuation

With the IPO, Golomt Bank, which alone accounts for 20% of the whole banking sector’s total assets, aims to raise its total owners' equity to ₮887 billion - which will result in a P/B ratio of 1.15. This is comparably lower than the average 1.6 P/B ratio of financial companies publicly traded on the MSE.

• The other two banks that have recently completed their initial offerings, Bogd Bank and State Bank, had P/B ratios of 1.8 and 0.98, respectively.

The risks

Macroeconomic factors and industry competition can’t be overlooked, but they are not the most urgent issues Golomt Bank is currently facing. Although the bank is offering 10.09% of its total shares to the public, its largest shareholder will still be owning the majority 78.36% stake. This is the first thing the company will have to address after the IPO - by the end of next year, each shareholder is required to own no more than 20% of the company’s shares.

📈 DATA STORY

Although corporate loans make up the majority of the banking sector’s total loans, they also account for the most non-performing loans. As of the third quarter of this year, 16.4% of corporate loans were non-performing, while the same could be said for only 4.3% of consumer loans.

🏛️ SECURITIES COMPANIES IN Q3 2022

55 securities companies operating on the stock market traded shares worth ₮264.1 billion on the secondary market in the first 3 quarters of this year. The majority of those ₮264.1 billion was accounted for by five companies.

Top 5

• 1/3 of trading: Golomt Capital traded securities in the amount of ₮84.3 billion, 31.9% of the total trading volume.

• Runner-ups: Ard Securities and Apex Capital ranked 2nd and 3rd with ₮46.8 billion and ₮45.6 billion, respectively.

• The fourth and the fifth: Mandal Capital, followed by the only public securities company, BDSec, with ₮17.2 billion, brokered trades worth ₮29 billion.

Fun fact: In the third quarter alone, 10.4 thousand new securities accounts were opened, resulting in a total number of 2.4 million - equivalent to Mongolia’s population aged above 15.

The profits

The total revenue of securities companies amounted to ₮24.7 billion, 2.1 times more than in Q3 2021. 39.2% of the revenue was generated from underwriting services and 24.2% from brokering. As a result, the sector’s net profit increased to ₮2.5 billion. This is a significantly improved performance compared to the same period last year when securities companies were operating at a loss of ₮0.9 billion.

🏃‍♀️ QUICK STORIES

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📌 Ashid Arvijikh, Mongolia's third open-ended mutual fund launched. The initial offering started last week and will last until December 20, 2022. The fund is looking to raise ₮1 billion with investment units priced at ₮100 each.

📌 Mongolia to introduce VAT refund for tourists. Visitors from developed countries will also be visa-exempt and required to apply only for electronic visas in certain cases. The decision is one of the various steps the government has taken to promote tourism.

📌 Chinggis Khaan Era scientific conference held at Japan-Mongolia Center. The event was organized on November 23 to commemorate the 860th anniversary of the birth of Chinggis Khaan and the National Pride Day.

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