Mongolia: $14.4 billion banking sector

Dear reader, good morning and welcome to the third edition! We’re happy to announce that we’ve just reached 1,300 subscribers and hope that you will continue supporting us. If you have any friends interested in Mongolia, you can always use the referral program shown at the end of this email.

To give feedback or make a suggestion, don’t hesitate to reply to us! 😊

  📌 DID YOU KNOW?

A little about the foreign workforce in Mongolia:

• In 2021, there were a total of 5,616 foreign citizens with a labor contract working in the country.

• 90% of them are men.

• About 63% come from China.

• Most men were employed in the mining industry, women - in education.

🥚 ALL ABOUT EGGS

For thousands of years, eggs have been the staple breakfast food in many countries across the world. It hasn’t been the case for Mongolia, but it’s definitely changing now. Here’s what you have to know:

Egg market overview

• More demand: 20 years ago, Mongolians ate an average of 12 eggs a year, but in recent years this number has risen to over 100. Compared to the consumption in developed countries, that's almost 4 times less, which indicates that the demand for eggs in Mongolia has a lot of room for further growth.

• Eggs and numbers: Indeed, as the demand increases, so does the total number of eggs circulating in the market. While in 2018 we consumed 301 million eggs, last year the amount rose to about 366 million.

• Replacing import: Considering the growing demand and the fact that imports cover about 50% of the egg consumption, Mongolian egg companies are putting effort to substitute foreign eggs with domestic ones by increasing their output.

The leading player in the industry is ‘Tumen Shuvuut’ (TUM), the largest egg producer in the country that went public in 2019. Within the last year, its shares rose over 300%, making investors richer and happier. And if we ask why, the numbers from the company’s 2021 financial report say it all.

MVP of 2021: Tumen Shuvuut (TUM)

• More profits: Net profits reached MNT 6.9 billion (USD 2.4 mln), surpassing the previous year’s figure by 2.9 billion (USD 1 mln).

• Increased dividend payout: 30% of net profits will be paid in dividends to shareholders. The total payout amount is MNT 2.8 billion (USD 1 mln) or a 2.2% return per share.

• Production boost: The number of eggs produced in 2021 is 83 million. That’s almost 10 million more than last year and 21 million more than in 2019.

• Additional eggs:  Acknowledging its business possibilities, the company has already started the ‘Tumen Shuvuut-2’ project expected to substantially improve next year’s production, raising the output to 110 million eggs. 

In any case, Tumen Shuvuut is a good example of sector diversification among the public companies listed on the Mongolian Stock Exchange. We didn’t have many domestic investment options before, and it’s good that now we even have eggs to invest in. 

📢 MONGOLIA FIELD SCHOOL 2022

Planning is hard, and even harder when you don’t know where to start. To those of you who have been facing this issue and putting off the long-wished-for trip to Mongolia, we have a solution. Well, to be accurate, the American Center for Mongolian Studies (ACMS) has a solution.

Pack your bags and get brainy!

The ACMS will hold an onsite Field School in June-August, 2022. The program consists of 5 courses, which will include travel experiences mixed with academic activites. You’ll learn about many things, starting from Buddhism and ending with the connection between herding and climate change. See the details on their website.

And before you apply know that:

• The program is open to everybody.

• The application closes on April 30th.

• Students may receive academic credit.

• Financial aid is available.

Good luck!

🏛 MONGOLIAN $14.4 BILLION BANKING SECTOR

The Mongolian banking sector has grown incredibly last 30 years. Of course, there have been ups and downs but now a new era in the banking sector is upon us. 

By the numbers:

• $14.4 billion in total assets in 2021. Compared to this, GDP is $13.1 billion (2020) and the Mongolian stock exchange market capitalization is $2.1 billion (Jan 2022).

• 94% of total assets were from the Big 5, which include Khan Bank, TDB, XacBank, Golomt bank, and the State Bank.

• 15,958 people employed in the banking sector in 2021.

• 47.99 ATMs per 100,000 adults in 2020, a significant drop from 106.88 ATMs in 2018. The rest of the world had 51.66 ATMs in 2020 and 39.9 ATMs in 2018. The sharp decrease can be attributed to decreasing reliance on cash payments and the increase in mobile banking.

• 4.3 million cards were issued by banks as of the third quarter of 2021, an increase of 10.1% compared to the previous year. 48.3 percent or 2.1 million cards are actively used. Remember, we have only a population of 3.3 million.

A new era in banking

In the 30 years since the banking sector was established, most banks have had highly concentrated ownership, with up to three shareholders holding more than 90 percent. To mitigate the adverse effects on the development, stability, and risk of the financial sector, the Banking Law of Mongolia was amended in January 2021. Some key requirements of the new amendments are:

• The 5 largest commercial banks must become publicly traded companies by July 2022. Small banks are optional. 

• One shareholder or its related party must own not more than 20% of the total shares before 2023. 

The impending wave of IPOs: The first to take lead was Bogd Bank, Mongolia’s youngest bank, which raised MNT 31.75 billion in its IPO last year. The others are following, and a huge wave of IPOs is building for the coming months, with MNT 500-600 billion ($175-210 million) expected to be raised before July 2022. With this drastic increase in the need for capital, banks are seeking foreign investment more than ever. 

🏃 QUICK STORIES

📌 Mongolian PM, UN Secretary-General meets in Beijing. Antonio Guterres praised Mongolia’s contribution to UN peacekeeping operations and its efforts to combat climate change. The meeting took place within the framework of the 2022 Olympics, where many international public officials gathered to become one of the few spectators of the winter games.

📌 Mongolia’s ‘CallPro’ LLC to enter the Kyrgyz market. CallPro develops a cloud-based call center software currently used by more than 1,500 companies. They’ve recently signed a partnership agreement with Kyrgyzstan's national operator ‘KyrgyzTelecom’, seizing an opportunity to advance its operations in the country.

📌 Currency Swap Agreement extended to 2026. After meeting on February 5, Mongolia and China extended their ‘National Currency Swap Agreement’ by three years until the social and economic impact of the pandemic returns to normal. To recall, the Bank of Mongolia and the People's Bank of China first signed the swap agreement in 2011 to promote trade and economic cooperation between the two countries.

📌 Men are earning more than women. According to a recent report by the National Statistics Office, men earned an average monthly salary of MNT 1.5 million ($526), while women earned MNT 1.2 million ($421). In recent years, the gap between the average salaries of male and female employees has been widening.

📷 A GLIMPSE OF MONGOLIA

About: Narantuul is the largest market in the country that offers almost anything anybody could possibly look for. The main challenge is to find the desired item. It wouldn’t be a complete lie to say that Narantuul is like a complicated maze with countless twists and turns, but it definitely has a unique charm one must experience at least once in life.

Tip: Remember that it is not like your usual possible-to-visit-in-pajamas supermarket. Dare to go? Be prepared!

More: Here’s a good article showing Narantuul in its true colors. 

ESSENTIAL LINKS

• Not sure where to eat in Ulaanbaatar? Food and drink reviews in English. (Dodddo0)

• 5 tips to survive Mongolia’s brutal winter. (Breathe Mongolia)

• Must know geography facts! (Geography Now)

• Are the Mongolian stereotypes true? (Real Mongolia)