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Business Environment Macroeconomic Outlook Capital Market Banking Sector Privatization and Investments Economic Freedom Business News In the Spotlight Coming up... Graphic 6. The structure of total banks’ assets 80 60 40 20

67.8

66.1

24.0

22.2 11.7

8.2

0

November 2011

December 2011

Loans Monetary assets and deposits with depository institutions Other asset items

Graphic 7. Structure of deposits 22.0 20.7

Up to 3 months From 3 months up to 1 year

53.4 54.9 19.0 19.0

From 1 to 3 year 5.6 5.4

Over 3 years 0

20

November 2011

40

60

December 2011

Banking Sector Total Bank Assets and Liabilities

Household Deposits

Total bank assets amounted to €2,809.7 million at end-December 2011, thus recording a decline both at a monthly level (1.7%) and at an annual level (4.5%).

Total household deposits amounted to €1,033.4 million at end-December 2011, and recorded an increase at a monthly level (0.7%). Comparing to December 2010, they increased by 8.6%.

At end-November and end-December 2011, within the structure of the total bank assets, loans accounted for the main share (about 67%), followed by monetary assets and deposits. Depository institutions represented about 23%, Graph 6. Within the structure of the total bank assets, at end-December the greatest monthly decrease was recorded in the area of factoring and forfeiting operations (19.5%), and at end-November 2011 the greatest decline was seen in monetary assets and deposits with depository institutions (4.5%). In December 2011, within the area of bank liabilities, deposits accounted for the main share (64.7%), followed by loans (18.8%) and total bank capital (10.9%). The remaining (5.6%) represented a variety of other liabilities. In relation to the previous month, financial derivatives recorded an increase (11.8%). Total bank capital amounted to €305.2 million at end-December 2011, and recorded an increase at a monthly level (6.4%) and decline at the annual level (1.8%).

Deposits Graphic 8. Structure of deposits by sectors 4.5 4.7

Financial institutions Non-financial institutions

29.8 29.3 5.0 4.5

General Government

56.1 56.9

Households Non-profitable organisations

1.3 1.3 3.4 3.3

Other 0

10 November 2011

20

30

40

50

December 2011

Graphic 9. The maturity structure of household deposits 80.0

67.8 32.2

67.4 32.6

0.0 November 2011 Time deposits

6

Total deposits amounted to €1,817.1 million at end-December 2011. When observing data from November and comparing it with December figures, it is evident that deposits declined by 0.8%, while comparing to December 2010, increased to 1.5%.

December 2011 Demand deposits

60

In November and December 2011, within the deposit maturity structure, time deposits were dominant (61%), while time deposits accounted for 39%. Within the structure of time deposits, the largest area that recorded deposits was the sector offering a maturity period of 3 months to 1 year (about 54%). This was followed by the sector offering a maturity period of up to 3 months (about 21%, Graph 7. Observed on a sector by sector basis, within the deposit structure, deposits made by individual persons were still dominant and represented a percentage share of about 56.0% , Graph 8.

At end-November and end-December 2011, within the maturity structure of household deposits, time deposits were dominant, while demand deposits accounted for 32.0%, Graph 9.

Loans At end-December 2011, total loans granted by banks amounted to €1,955.8 million, thus recording an increase of 0.9% in comparison with the previous month and 11.1% less than in the previous year. This figure should not be interpreted as a 11.1% decrease in granted loans, because a portion of loans was displaced into balance sheets of parent banks, factoring companies, and the like. The loan-to-deposit ratio amounted to 1.08 at end-December 2011. This was less than it had been the previous month (1.06) but had improved in comparison with December 2010 (1.23). Within the structure of total loans disbursed, corporate and household loans were 92.0% less dominant in November and December 2011; the remaining 8% refers to banks, other financial institutions, public owned organizations, non-profitable organizations and various others.

Interest rates In December 2011, the weighted average lending effective interest rate (lending interest rate) was 9.73% and remained almost at the same as level as it had been the previous month. The weighted average deposit effective interest rate (deposit interest rate) was 3.03% in December 2011, and recorded a slight increase on a month to month basis. Graphic 10. Interest rates, period-end, in % 10

9.78

9.73 3.03

3.08 0 November 2011

December 2011

The weighted average lending effective interest rate The weighted average deposit effective interest rate

Source: Bulletin of the Central Bank of Montenegro (December 2011, January 2012).

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