The audit report on TDB’s 2017 year-end figures has been completed, with an unqualified opinion of KPMG Samjong, and the report is now available on the bank's website. The overall performance of the bank and its subsidiaries was positive despite the difficult conditions in some sectors of the improving Mongolian economy. Net income increased 31 percent from 2016 to MNT 73.6 billion. Loan growth was modest, although an increase in loan demand was experienced in the last months of the year.
During the year, the bank focused on improving asset quality, obtaining repayment of NPLs, and increasing the level of loan loss reserves. As a result, at year end, the bank’s loan loss provisions reached MNT 267.9 billion, representing an NPL coverage ratio of 119.1 percent.
There was also a focus on improving the bank’s capital ratios. As a result of 2017 retained earnings, balance sheet management, and other actions, the bank’s Tier 1 capital ratio improved to 13.42 percent from 10.64 percent at the previous year end, and its capital adequacy ratio improved to 16.44 percent from 14.10 percent at the previous year end. Both ratios are well above the current requirements set by the Bank of Mongolia.
During the year, the bank participated in the Asset Quality Review of Mongolian commercial banks under the IMF’s Extended Fund Facility with the Mongolian Government. The objective was to assess the soundness of the banks’ loan portfolios and the adequacy of capital levels to provide resilience and capacity for Mongolian banks to support expected growth in an improving economy. The review was based on year end 2016 financial data, and updated with September 30, 2017 information. The review has not yet been completed as there remain the stress testing and final Bank of Mongolia portfolio review. In our opinion, as a result of the actions taken by the bank during the past year to improve asset quality, increase provisions and improve capital ratios, any additional actions requiring the need for additional capital would be manageable through our own capabilities. During the past year, the bank has repaid the last of its subordinated notes, which qualify as Tier 2 capital. One of the possible actions planned this year is to raise new subordinated debt to meet any required capital needs as well as to have a sufficiently robust capital position to support expected increased loan demand from our clients.
March 23, 2018