Novaka Miloseva bb,Podgorica,
Tel: +381 (0) 81 232 028 or 232 029
Montenegro’s GDP 2020: €4.2 billion, -15.3% compared to 2019. The real growth rate of gross domestic product in 2020 was -15.3%. In 2020, Montenegro’s gross domestic product in 2020 amounted to €4,186 million, while in 2019 it amounted to €4,951 million. In 2020, gross domestic product per capita amounted to €6,737, while in 2019 it amounted to €7,959.
The outbreak of Covid-19 pandemic interrupted the strong growth from the previous period. The average economic growth rate over the last five years was 3.9%. The real decline in GDP for the first half of 2020 was 10.3.
In the period before the crisis caused by the Covid-19 pandemic, and after the financial crisis, Montenegrin banking sector strengthened its capital position, liquidity and asset quality, which enable it to more easily play its significant role in mitigating the consequences of the crisis and recovering the Montenegrin economy. During 2020, and in the period after the declaration of the pandemic, a satisfactory level of bank liquidity was maintained. At the end of October, liquid assets were above the level recorded at the end of the previous year by 1.57%, while at the annual level a decline of 7.25% was recorded. At the same time, the loan-to-deposit ratio improved by 0.97 in October, while the maximum value in the observed one-year period was reached in August (0.98).
Recording smaller oscillations, loans grew in a one-year period, and at the end of October 2020, they amounted to €3.21 billion, an increased by 7.3% compared to end-October 2019, and 4.7% compared to end-December 2019 (€3.06 billion). The structure of total loans by purpose slightly changed in favour of loans for refinancing liabilities to other banks, whose share increased by 2.94 percentage points, from 5.91% (October 2019) to 8.85% (October 2020). These loans amounted to €283.9 million at the end of October 2020, which was 60.8% more than at the end of October 2019, and 57.6% more than at the end of the previous year. Such a trend in loans was to be expected, given the liquidity of the real sector and the population and the difficult possibility of servicing the assumed obligations. While loans for construction and adaptation of buildings decreased (9.53% annually and 11.9% compared to the end of the previous year), housing loans increased so that the amount reached at the end of October was higher by 7.6% compared to October of the previous year and 5.6% compared to the end of the previous year.
In the observed one-year period, deposits had a slightly declining trend. Deposits fell by an average of 0.5% per month during the ten months of 2020. At the end of October, they amounted to €3.3 billion, which was lower both compared to October (by 5.3%) and compared to the end of the previous year (by 5%). Higher positive deposit growth rates were missing during the three months of the main tourist season in 2020. In this period, only in 2009, deposits recorded a monthly decline, under the influence of the global financial crisis. After the proclamation Montenegro as the free-corona destination, there was a slight increase in deposits. Namely, the monthly growth of deposits ranged from 0.01% to 0.37% during the first ten months of 2020.
At the end of October 2020, household deposits amounted to €1.2 billion. They decreased by 6.1% compared to October 2019, while the decrease compared to the end of the previous year amounted to 6.9%. Deposits of the non-financial sector at the end of October 2020 amounted to €1 billion, which was lower by 7.8% than at the end of October of the previous year, i.e., by 2.7% compared to the end of the previous year.
Banks’ capital recorded a growing trend during 2020 and at the end of October 2020, it amounted to €620.4 million i.e., it increased by 3.4% compared to October 2019 and by 3.7% compared to December 2019.
Interest rates continued the downward trend during 2020. In October 2020, the weighted average effective lending interest rate was 5.87%.
When it comes to banking services, the Covid-19 pandemic has led to the change in client habits. Immediately after the declaration of the pandemic, the banks took measures to protect the health of their employees and clients and ensure the continuation of business. Banks have increased the limit for contactless payments without entering a PIN for payment cards, increased the limit for withdrawing cash from ATMs. Furthermore, they temporarily abolished fees for performing transactions through electronic and mobile banking services, and some banks also temporarily abolished fees for withdrawing cash with debit cards at ATMs of other banks.
Observed in terms of the number of transactions, more transactions were initiated in paper than electronic form. However, observed in terms of the value of transactions, the value of transactions initiated electronically (€7.9 million) was higher than in paper form (€5.9 million) in the first three quarters of 2020. At the end of the third quarter of 2020, the number of ATMs increased by one compared to the same period last year, while compared to the end of the previous year, there were 27 more ATMs. The number of POS terminals also increased by 1,774 compared to the end of the third quarter of the previous year and by 2,684 compared to the end of the previous year. In October 2020, the number of terminals for accepting cards with the electronic money function increased by 38 year-on-year, or by 114 compared to the end of the previous year.
Negative trends in the real sector have already affected the quality of assets of the banking sector. In the first ten months of 2020, non-performing loans increased by about 30% year-on-year and they amounted to about 6%. Similarly, past due loans also increased during the pandemic year, and their share in total loans increased (by 1.3 percentage points).
The pandemic also pointed to the importance of the digital infrastructure of the banking sector. Thus, in 2020, there was a significant increase in payment service users who had an electronic money account. The number of users who use mobile payments as well as internet cards also had an extremely significant growth in 2020.
Contributor: Nebojsa Djokovic firstname.lastname@example.org