Moody’s Investors Service says the negative outlook for Mongolia’s banking system, unchanged since 2013, reflects the challenging operating environment, leading to continued deterioration in asset quality and capital, while funding and liquidity will also remain tight. However, the pace of deterioration will moderate compared to 2015, AKIPress reported. “Although we have seen a moderate pick-up in economic growth in Mongolia, the operating environment remains challenging for banks, with risks skewed to the downside,” Hyun Hee Park, a Moody’s assistant vice president and analyst, said. “Specifically, we expect domestic demand will remain subdued against a backdrop of tight macroeconomic policies and high real interest rates,” Park added. “The greatest downside risk for the banks is a faster drop in commodity prices and a sharper slowdown in GDP growth in China, which we currently forecast at 6.3% in 2016.” Asset quality will remain under pressure, says Moody’s, although the pace of deterioration will be significantly slower than in 2015.
