💸 MSE MILESTONE | M BANK IN 2022 | NBFIs

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International Women's Day is just two days away! A public holiday in the middle of the week can be tricky, but try to enjoy it, nevertheless.

🤔 DID YOU KNOW?

In 2022 Q4, the average real monthly income of households in Mongolia decreased by 0.7%, amounting to ₮1.2 million.
This was primarily attributed to a 15.7% drop in pension and benefit income.

💸 REVENUE OF NBFIs NEARS ₮1 TRILLION

The net profit of the non-banking financial institution (NBFI) sector increased by 49% last year, reaching ₮312.9 billion.

Interest income up 66.5%

513 NBFIs operating in the sector issued loans totaling ₮2.7 trillion, which represents a substantial 35.3% increase compared to 2021. However, the increase in lending also led to a 0.6 percentage point rise in non-performing loans, reaching 7.6%. Despite this, the sector experienced a robust growth of 66.5% in interest income, reaching ₮702 billion. If this trend continues, the interest income of NBFIs is projected to reach ₮1 trillion in the coming year.

Digitalization

In 2021, there were 28 NBFIs that provided digital loans in Mongolia - their number rose to 37 last year.

These institutions granted loans totaling ₮461 billion to 78.8% of all borrowers, with an average loan size of ₮492.6 thousand per borrower. While digital loans experienced a significant growth rate of 49.7% last year, the recent law that mandates a debt-to-income ratio of 70% is expected to slow down this trend in the future.

Public NBFIs

In 2022, the total net profit of NBFIs in Mongolia surged by 49% to reach ₮312.9 billion, with an average net profit of ₮609.9 million per company. Out of the total amount, 14.6% was accounted for by five public NBFIs, led by InvesCore NBFI (INV) with a net profit of ₮32.9 billion, followed by the newly listed Sendly NBFI (SEND) with a net profit of ₮3.1 billion. Although the valuation of the five NBFIs listed on the MSE decreased by an average of 10.8% last year, there was a slight growth of 2.4% on average since the beginning of 2023.

📈 DATA STORY

Last Friday marked a significant milestone for the Mongolian Stock Exchange, which surpassed the ₮7 trillion valuation mark. This remarkable achievement was made possible by the trading of shares from 39 companies, resulting in a substantial daily trading volume of ₮1.2 billion. As of now, there are 183 stocks, 16 bonds, 7 asset-backed-securities, and 2 investment funds registered on the MSE.

💸 M BANK IN 2022

M Bank, Mongolia's first neobank, reported a loss of ₮3.1 billion in its first year of operation.

Net loans up 3.1 times

The bank's total assets increased by 9.3% from ₮219.1 billion in the first half of 2022 to ₮239.4 billion at the end of the year. The increase was driven by a 3.1-fold growth in net loans from ₮29.6 billion to ₮92.7 billion. Current accounts increased by 446% to ₮67.7 billion, resulting in a 19.7% uptick in liabilities. However, savings accounts are currently only at ₮3.4 billion.

Expenditure > income

In the first half of 2022, M Bank provided net loans of ₮29.6 billion and earned ₮342.1 million in interest, which accounted for 13% of total income. By the end of the year, their interest income reached ₮7.4 billion, making up 60.2% of total income. Despite this, the bank's non-operational expenses of ₮14.2 billion led to a loss of ₮3.1 billion. As a new bank finding its position in the market, this expenditure is understandable.

Looking forward

Bank M is achieving a remarkable increase in its interest income, with an average quarterly growth rate of 131.3%. As a result, once it establishes its position, the bank may not need to incur significant non-operating expenses. This is due to its unique business model, which does not require the same infrastructure as traditional banks, such as physical branches or clearinghouses, resulting in lower operating costs. Moreover, the bank's profitability is likely to increase as it establishes itself more firmly in the market.

🏃 QUICK STORIES

📌 33 companies on MSE to distribute dividends worth ₮303 billion. This is already twice the amount of dividends distributed in 2021. Among these companies, State Bank has announced the highest dividend payout of ₮48 billion.

📌 Tavan Bogd Trade offers to buy Mon Beef (MBF) for ₮47 per share. In response to Mon Beef's profitability not meeting the expected level, the board of directors at Tavan Bogd Trade plans to acquire 44.2 million shares for a total of ₮2 billion.

📌 Gashuunsukhait to become international port. Mongolia's proposal to turn Gashuunsukhait into a 24/7 international coal port was well-received by China, and both parties agreed to upgrade it to meet global standards.

📌 Jade Gas begins Mongolia natural gas drilling program. During the 2023 exploration program, the company will drill four wells targeting three coal seams in the northern extension of the Red Lake area within its TTCBM Project. The drilling program is expected to begin in March.

⭐ TOP NEWS

• Joint Statement on Advancing the U.S.-Mongolia Economic Partnership (U.S. Department of State)

• Putting Mongolia on the digital map: Bolor-Erdene Battsengel (AP)

• Qatari-Mongolian parliamentary friendship groups hold meeting (The Peninsula Qatar)

• Elixir’s CBM Pilot in Mongolia Passes Milestone (Natural Gas World)

• Savior of Przewalski’s Horses – The Prague Zoo (MONTSAME)

💭 WATCH & LEARN

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Editor: E.Zolbayar
Writer: Ch.Anuun

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