Economics

NONBANK CREDITING HAS GREAT UNEXPLOITED POTENTIAL – NCFM CHAIRMAN

15 july, 2019

The sector of nonbank crediting in Moldova has a great, though unused potential, said Chairman of the National Commission for Financial Market (NCFM) Valeriu Chitan, presenting the 2018 report to the parliamentary Standing Committee on Economy, Budget and Finance.

In 2018, the cost of assets in the nonbank crediting sector [savings and credit associations (SCA), microfinancial organizations (MFO)] grew almost 9 billion lei. The share of credits in the GDP reached 3.94%, which is 0.43% more than in 2017 (MFO – 3.52%, SCA – 0.43%).

In 2018, 176 MFOs presented financial reports to the regulator, which is by 9 more than in 2017.

“Last year, the total cost of the MFO assets grew 43.85%, accounting for 7.8 billion lei. The net profit grew 29.23% – 689.3 million lei. The amount of own profit grew 544.6 million lei – to 2.51 billion lei. The return on assets (ROA) accounted for 8.82%, while the return on equity (ROE) – 27.36%”, the NCFM report says.

The results of the sector activity demonstrate growth of credit portfolio and leasing. In 2018, the volume of loans grew 2.08 billion lei and accounted for 6.68 billion lei. Loans and credits, received by the MFO from banks, accounted for 4.57 billion lei.

The credit structure is dominated by physical persons – 5.39 billion lei or 80.68%, 52.91% of which are guaranteed credits and 47.29% – nonguaranteed. Credits, issued to legal persons accounted for 1.29 billion lei, from which 72.57% guaranteed and 27.43% - nonguaranteed. The MFO sector has high concentration on the market, respectively, 10 companies are holding 67.89% aggregate assets.

The maximum share of credits, issued in 2018, accounted for consumer credits – 44.77%, as well as buying or building real estate – 12.93%.

The NCFM Chairman pointed at the fact that despite impressive results of sector development, there are risks, which accompany this development. Among the most notable risks there is excessive debt of population.

“Changes must be made to the Law on nonbank credit organizations. In particular, the MFO must be obliged to report about newly issued credits to the credit information bureaus, reducing the unjustified costs on loans”, Valeriu Chitan said.

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