Debt Market Dynamics and Credit Ratings l Mongolia Investment Forum: New York 2026
https://www.youtube.com/watch?v=E9wA92tTXzI
[00:04] So we now continue to our second panel.
[00:08] So we now continue to our second panel discussion depth market dynamics and credit ratings.
[00:10] The session will be chaired by Mr. Juan Garandia, senior.
[00:13] Chaired by Mr. Juan Garandia, senior emerging market analyst at StoneX Group, Inc. who specializes in sovereign and corporate debt across frontier and high yield markets.
[00:17] Inc. who specializes in sovereign and corporate debt across frontier and high yield markets.
[00:22] Joining him on the panel are Miss Hlam Batton, Deputy Minister of Finance of Mongolia with over 14 years of experience spanning government advisory, global asset management and sustainable finance.
[00:27] Finance of Mongolia with over 14 years of experience spanning government advisory, global asset management and sustainable finance.
[00:31] Mr. Atum Batar Amaraya, CEO of Kaz Bank bringing over 16 years of experience at the bank with deep expertise in internal audit, strategic operations and capital markets.
[00:36] Amaraya, CEO of Kaz Bank bringing over 16 years of experience at the bank with deep expertise in internal audit, strategic operations and capital markets.
[00:40] Mr. Nikolai Dimmitri, executive director at Morgan Stanley Investment Management with over two decades of experience and deep expertise in emerging market securities.
[00:45] Markets. Mr. Nikolai Dimmitri, executive director at Morgan Stanley Investment Management with over two decades of experience and deep expertise in emerging market securities.
[00:50] Please welcome our panelists to the stage.
[00:59] Thank you very much for everybody to be here.
[01:03] I think uh we're going to keep it short and sweet and then maybe we can go.
[01:05] short and sweet and then maybe we can go for uh some Q&A to make it a little bit more interactive.
[01:11] Um well panelist thank you very much for for for coming and if you don't mind let me start with the representative of the minister of finance maybe we can talk a little bit about what is happening at the moment.
[01:25] When I start looking at Mongolia four or five years ago it was more like a rollover uh story I think was all over the place.
[01:34] We were discussing that in the IMF and then a lot of investor were looking at it now seems like we have a more great spread story.
[01:42] Uh some people might say that it trades quite tight.
[01:47] Do you think that that's that's the reality?
[01:50] You think that it actually uh is a result of of what is happening right now in Mongolia?
[01:55] And also do people should be looking at what is happening on a policym uh situation right that matters or not and is that price in in the current levels.
[02:10] Good afternoon everyone.
[02:15] Um close to lunch just bear with us for another uh few minutes.
[02:18] Um directly to your question um indeed uh some years ago 10 years ago.
[02:24] Our um external debt to GDP was uh 93% and four years ago it was 75%.
[02:31] And today as of 2025 it's 39% of the GDP.
[02:36] So I'm not trying to demonize external debt or you know it depends whether it's too much or too less and what we are financing it for.
[02:46] So in that respect um uh between 20 2017 to 20 um 25 we've um uh that indeed it was a rollover story.
[02:55] It was about 5 billion USD to roll over and uh uh that was uh unsustainable.
[03:04] So uh since then um as uh Amar Saklang has mentioned in uh in his presentation there was a three times uh credit upgrade and the spreads are tightening.
[03:11] upgrade and the spreads are tightening which is not necessarily a really nice thing for our investors but for government it's the taxpayers money that we pay back right so it's a it's a good thing for us so um back to your question um we are cautiously optimistic about it and uh although uh the our last sovereign issue was the beginning of March which was right after the Middle East conflict and you know these days um uncertainty seems to be the new certainty and we just have to be um proactive rather than reactive and at the same time being really adaptive and pragmat pragmatic in our policym.
[03:49] So our uh government debt strategy is defined every three year and it's been like this for the past 10 years.
[03:57] Uh so um thanks to the sustainable uh debt management uh we brought the debt level into a really um prudent level which is in line with the OECD uh emerging market um uh percentage that's about 50 to 60%.
[04:08] So as
[04:12] percentage that's about 50 to 60%.
[04:15] So as of today we uh it's about 40% of the GDP of today we uh it's about 40% of the GDP and we still have some f buffer there.
[04:18] and we still have some f buffer there just in case you know things go wrong.
[04:21] just in case you know things go wrong.
[04:23] Yeah, thank you very much.
[04:23] And I think for as you mentioned right in the last years the main focus of the government was to bring down that uh debt to GDP.
[04:32] was to bring down that uh debt to GDP.
[04:34] What would you say is the focus right now the ministry of finance like for the next two three years where are you guys focusing?
[04:40] focusing?
[04:40] So as per our la uh latest uh approved uh debt management strategy so which is uh between 2026 to 2020 8 um we won't be necessarily issuing uh new debt but we will work on our existing debt and um probably refinance if there is if there there is a need be and if we see uh more tightening spread but that doesn't necessarily mean that you know uh we will be just sitting there and waiting uh you need different kind of uh funding resources.
[05:09] uh you need different kind of uh funding resources.
[05:11] A server bond is uh uh one
[05:15] resources.
[05:16] A server bond is uh uh one really good existing channel that we really good existing channel that we have built our time and we have a really good breath of investors.
[05:21] Some of uh them are already in this room.
[05:24] But uh our need in terms of financing is um not necessarily a bond but sometimes it's a project sometimes it's an industrial park and sometimes it's you know as uh Franklin Templeton mentioned in in their presentation it's the S so SOE um uh you know uh reducing the government uh share of the S so SOE and bringing more uh private players into the game.
[05:44] So our policy is to um uh the new government's policy is really to um deregulate to the minimum uh possible and rate tape reduction and use non-fiscal measures uh to enable private sectors because they're the players and they should be the uh economic engine of growth and hence it's sustainable and it's more inclusive and it creates more job and it it brings more innovation into the market and at the same time
[06:16] the same time um uh we are open to like different kind of resources that is suited to what's the invest need be so uh dialogues like this is really important uh platform I would say it's the third time it's happening in New York and um it's my third time also participating in this forum in different capacity but probably this one is the first time that Ministry of Finance is present with um all our um policies and it I'm here we are here not only to say what we think also it's vice versa right so we want to hear your constructive feedbacks and what works what seem to be the next thing we should collectively do and hopefully um after this event um we will have continue to have an engaging dialogue
[07:01] thank you very much and that's a nice way to finish the the the answer to for to go for my following question which is for Nick uh as being on the other side right on the client side or investor side.
[07:13] Maybe if I can put some questions together will be what do you think
[07:18] together will be what do you think clients or investors focus when they clients or investors focus when they look at the soaring uh itself?
[07:24] Secondly will be where do you think is the focus right now in Mongolia?
[07:29] Like do you think that they're focusing on the credit or on on the policy making or on the fundamentals the mining?
[07:35] What do you think they are focusing on?
[07:38] And then just to finish is do you think that there are going to be a shift in that view for the next 12 months?
[07:43] You think that people is becoming more cautious or taking a look into certain things that might change their view in Mongolia itself?
[07:52] Um sure.
[07:55] So anything that I'm going to say I'm going to say it from the point of view as as someone that actually owns Mongolia risk.
[08:02] Um generally we have a positive view on Mongolia which is why we are involved in the country and we've been supportive over the last several years.
[08:11] Um in order to form the investment thesis to get engaged in a certain geography we would normally first look at the fundamentals
[08:19] normally first look at the fundamentals right this is kind of the the the basic building block.
[08:26] Um once we figured out the fundamentals and we feel comfortable there then we look at commodities and in the case of Mongolia whether you agree or disagree the reality is that the market looks at Mongolia very much as a play on commodities specifically to commodities right we're talking about co cocing coal and then copper right so um we you have to kind of be on top of where these commodities are trading um on the policy side.
[08:56] Um, sometimes it tends to get noisy and there was noise last year.
[09:03] Um, I have to say a lot of times we kind of try to look through that noise.
[09:08] Um, but that would require that the institutional strength is not compromised and that the financial stability is still there.
[09:16] So as far as these requirements are available, um you
[09:19] these requirements are available, um you know, often we would kind of try to to ignore some of that noise and and and and you know, have kind of a longer term view uh on the on the credit.
[09:31] Um now when it comes down to what can happen over the coming months that can potentially you know make us reassess our view um I I think the most important thing that we pay attention to is the financial stability sorry that the fiscal stability um we believe that as far as Mongolia maintains a tight fiscal even if there is volatility that comes through the commodity exposure As we know, commodity cycles tend to be fairly cyclical, which kind of import that cyclicality into the performance of the Mongolian economy.
[10:10] Um, we're going to be fine.
[10:12] We believe that tight fiscal allows Mongolia to withstand to some volatility.
[10:14] So, this is probably the the first thing that we monitor very closely.
[10:17] And I already mentioned kind of
[10:20] closely.
[10:22] And I already mentioned kind of I'm repeating myself here a little bit, I'm repeating myself here a little bit, but we obviously keep a very close uh eye on on prices.
[10:29] Like personally I there there's actually an index on on Bloomberg those of you that have access to Bloomberg you can see the um prices of uh Mongolia's cocal that is being exported to uh to China so you can kind of stay on top of these developments almost kind of uh real time.
[10:46] Um, and then the last thing that we care about is reform momentum.
[10:50] And we fully understand that when it comes down to reforms, there's always kind of um es and flows, right?
[10:59] There's it's never exactly consistent, but what matters for us is that in the long run um Mongolia remains on that reform trajectory and there is improvement um over time.
[11:13] So that's kind of the the gist of it when it comes down to to the sovereign.
[11:17] But again, I'm I'm underlying that that fiscal is probably the thing that we we
[11:21] fiscal is probably the thing that we we care the most.
[11:23] care the most.
[11:26] Thank you very much. And now going from the sovereign into the macro players,
[11:30] right, the banks, um maybe if you can tell us a bit, Mr. and on in terms of Gollum, right?
[11:35] When you look at it, do you think that banks still should be seen as a spillover story from the sovereign and I think we have talked about this many times, but you think that Gollum and the issuers should be look at it look at themselves like a standalone uh credit.
[11:54] Yes. So international market access still closely linked to sovereign of course investors of usually they first look the mark outlook so risks etc but we do see clear progress so year by year investors becoming more issue specific so more about that company's fundamentals governance transparency
[12:22] fundamentals governance transparency reporting as well as most one of the
[12:25] reporting as well as most one of the most important thing is investor
[12:27] most important thing is investor relations.
[12:29] relations. So I can say that especially Holland
[12:33] So I can say that especially Holland Bank since our international bond issue
[12:36] Bank since our international bond issue we do a lot of investor relations thing.
[12:39] we do a lot of investor relations thing. So of course our financials are
[12:41] So of course our financials are improving but meantime we never forget
[12:43] improving but meantime we never forget to improve our investor relation that
[12:45] to improve our investor relation that gives us huge advantage.
[12:48] gives us huge advantage. So I remember first time I met with Nick
[12:51] So I remember first time I met with Nick in 2024,
[12:53] in 2024, he asked a lot of questions. So and that
[12:57] he asked a lot of questions. So and that time my I was surprised that wow he
[13:01] time my I was surprised that wow he knows our bank better than us. So then
[13:06] knows our bank better than us. So then since then you know we never forget the
[13:08] since then you know we never forget the institutional investors. We monthly,
[13:11] institutional investors. We monthly, weekly we send some information how is
[13:14] weekly we send some information how is going on not only in Mongolia, not only
[13:16] going on not only in Mongolia, not only in Coland Bank, Mongolian political
[13:19] in Coland Bank, Mongolian political situation, micro outlook, banking
[13:21] situation, micro outlook, banking sector. So the short uh question answer
[13:26] So the short uh question answer is yes, still linked to international as.
[13:30] is yes, still linked to international as but day by day uh investors becoming more issue specific.
[13:37] more issue specific.
[13:39] And you think that the banks find themselves in a better situation than other corporates in Mongolia?
[13:44] Maybe because one bank started and then they all follow or or is because people is just more comfortable in the banks.
[13:52] I don't know any any view on on that because it's clearly uh a more banking uh issuer.
[13:59] uh issuer.
[14:01] Yeah. So the Mongolia has always been the bank dominated country especially financial market is always so last few years.
[14:09] capital market is increasing a lot uh developing a lot and also many of our um tech customers big institutions they exploring idea of going for international market.
[14:24] international market.
[14:24] So we give a lot of advice for them for
[14:29] So we give a lot of advice for them for implementing more international standard.
[14:31] Implementing more international standard reporting.
[14:33] Reporting etc.
[14:35] So soon there will be lot of companies issuing the bond equities and international market.
[14:39] And maybe when we talk about the banks in a specific you think that when you compare about the amounts of of issuers right now with the market overall you think that is getting um overcrowded a little bit.
[14:53] What do you think about the banking system overall in Mongolia?
[14:55] You think there's enough space for everybody to go issue and and lend the money internally or you think that is getting more tight every day?
[15:05] You have any any any view on that?
[15:08] As I said before, Mongolian banking sector is always leading sector in Mongolia.
[15:12] So that means and also I think 17% of total bank liabilities related to international funding and also Mongolian banking sector is almost uh Mongolian macroeconomy proxy.
[15:28] So that
[15:31] uh Mongolian macroeconomy proxy.
[15:34] So that means as of today we expecting around five to six% GD GDP growth this year.
[15:37] That means Mongolian banking sector will grow at least more than 15 16%.
[15:43] That means there is a lot of opportunity to Mongolian bank to enter the capital market.
[15:48] So I it's I don't I won't I can't say it's overcrowded.
[15:53] There's a lot of opportunity for Mongolian banks as well.
[15:58] And Nick, from a an investor side and a and a banking uh enthusiast or expert, what do you think uh about the the the banking system overall in in Mongolia and all these new players that we're seeing?
[16:11] Is that raising some uh noise or or is there bringing new questions to to investors when they look at small banks coming?
[16:22] Is there a focus to into top tier against the small scale?
[16:26] I I don't know what's what what do you think?
[16:28] So um in terms of who's prepared and who
[16:32] So um in terms of who's prepared and who has the ability to come to market has the ability to come to market um I have to say
[16:38] um I have to say um in Mongolia it's the five systemically important banks and I would
[16:43] systemically important banks and I would say on the non-bank side like the the the local mining champions right they're
[16:49] the local mining champions right they're of scale and size where they can tap international markets.
[16:53] So if you look at the banking system in Mongolia, you have 14 banks.
[16:59] Five have been designated systemically important.
[17:02] Um the largest bank is called Khan Bank.
[17:06] Um it hasn't come to market which is personally I've been surprised.
[17:10] Um, that being said, it's a bank that historically has been managed incredibly well and I think that
[17:17] Khan Bank is definitely an issuer that if they want to come to capital markets, they will get pretty good reception.
[17:23] So they will get pretty good reception.
[17:25] So that's going to be a very easy call.
[17:28] Um, we already have Golant, we already have TDBM, trade development bank of Mongolia
[17:33] TDBM, trade development bank of Mongolia with outstanding bonds.
[17:35] So by now with outstanding bonds.
[17:38] So by now they're kind of recognized by the market they're kind of recognized by the market and I can't tell how important it is.
[17:40] And I can't tell how important it is that you know they're amping up their game when it comes down to maintaining.
[17:43] That you know they're amping up their game when it comes down to maintaining um active intercore discussions with.
[17:45] Um active intercore discussions with with with investors and um you know posting the earnings on the website.
[17:49] With with investors and um you know posting the earnings on the website.
[17:53] I mean some of these basic things that you take for granted in in in other countries were more were non-existent in in Mongolia.
[17:54] I mean some of these basic things that you take for granted in in in other countries were more were non-existent in.
[17:56] So I think Gollum's done an incredible job in terms of kind of setting the benchmark in that regard.
[17:59] So I think Gollum's done an incredible job in terms of kind of setting the benchmark in that regard.
[18:01] But when you look at the other two remaining banks in from those like five systemically important banks, State Bank, uh they raised $200 million in a private placement last year.
[18:03] But when you look at the other two remaining banks in from those like five systemically important banks, State Bank, uh they raised $200 million in a private placement last year.
[18:05] Uh and they've got Husbank, which is kind of a more of an player.
[18:07] I've never done the deep dive on it, but just kind of the looking at their numbers, it it's actually a pretty decently managed bank.
[18:09] I've never done the deep dive on it, but just kind of the looking at their numbers, it it's actually a pretty decently managed bank.
[18:12] The issue with H very similar to uh to
[18:35] The issue with H very similar to uh to State Bank is that they're much smaller,
[18:37] State Bank is that they're much smaller, right?
[18:39] So although they're semically important, they're kind of distant
[18:41] important, they're kind of distant fourth and fifth compared to the big
[18:43] three and and uh printing $300 million might be too big of a of a you know bit
[18:49] to bite for them. Um,
[18:53] I just want to say a couple of things about the the Mongolian banking system
[18:55] because there's been a lot going on in the last 10 years and I don't know
[18:59] whether people realize that. Um, so
[19:01] going back to like 2016, Mongolia went through a major
[19:05] restructuring where they had to sign an agreement with the IMF and as part of
[19:10] that agreement the government of central bank had to restructure the banking
[19:14] system. Um and and the restructuring that they needed to do was to achieve
[19:20] better disclosure standards and uh better corporate governance, address
[19:24] some of the very large single obligor exposures, the sector exposures. Uh
[19:30] there was a lot of related party lending that was taking place. So all of these
[19:33] things needed to be recognized and what
[19:35] things needed to be recognized and what the central bank did was in 2017.
[19:39] the central bank did was in 2017 they did the first asset quality review.
[19:41] they did the first asset quality review which basically forced the banks to recognize the problematic exposures.
[19:44] which basically forced the banks to recognize the problematic exposures provision accordingly.
[19:47] recognize the problematic exposures provision accordingly.
[19:49] Needless to say that needless to say that kind of um drove some losses losses in the banking system.
[19:51] that needless to say that kind of um drove some losses losses in the banking system.
[19:53] drove some losses losses in the banking system.
[19:56] system. So it was a relatively difficult uh period.
[19:58] uh period. The government a couple of years later took more initiatives to support the banking se sector primarily.
[20:01] years later took more initiatives to support the banking se sector primarily by mandating that the five stateowned banks should get public listed on the local stock exchange.
[20:04] support the banking se sector primarily by mandating that the five stateowned banks should get public listed on the local stock exchange.
[20:07] by mandating that the five stateowned banks should get public listed on the local stock exchange.
[20:09] local stock exchange.
[20:11] Um and it also came with a regulation to reduce the concentration on the shareholder base side.
[20:16] Um and it also came with a regulation to reduce the concentration on the shareholder base side.
[20:18] reduce the concentration on the shareholder base side.
[20:22] So in Mongolia um you know I come from Eastern Europe all of our banks are owned or most of our banks are owned by western banks.
[20:23] you know I come from Eastern Europe all of our banks are owned or most of our banks are owned by western banks.
[20:27] banks are owned by western banks.
[20:29] So it's very unusual to see a bank that is owned by one or two individuals in Mongolia with the exception of Khan Bank.
[20:31] it's very unusual to see a bank that is owned by one or two individuals in Mongolia with the exception of Khan Bank.
[20:33] owned by one or two individuals in Mongolia with the exception of Khan Bank.
[20:36] Mongolia with the exception of Khan Bank and uh state bank which as the name
[20:38] and uh state bank which as the name suggests state owned bank um most of the
[20:40] suggests state owned bank um most of the banks are owned by one or two
[20:42] banks are owned by one or two individuals and and that is a bit of a
[20:44] individuals and and that is a bit of a structural problem in the long run which
[20:46] structural problem in the long run which I I think prompted u the government to
[20:49] I I think prompted u the government to kind of come up with this legislative
[20:51] kind of come up with this legislative initiative to uh to reduce the um
[20:54] initiative to uh to reduce the um concentration of the shareholder base to
[20:56] concentration of the shareholder base to below 20% or the maximum imum exposure
[20:59] below 20% or the maximum imum exposure for a single shareholder can be 20%. Now
[21:02] for a single shareholder can be 20%. Now that comes with other different
[21:03] that comes with other different challenges um and it's it's something
[21:06] challenges um and it's it's something that we can discuss separately.
[21:08] that we can discuss separately. Um I I haven't seen progress on on that.
[21:11] Um I I haven't seen progress on on that. I think it all went quiet. So I'd be
[21:13] I think it all went quiet. So I'd be very happy to to to to get an an update
[21:15] very happy to to to to get an an update on that front. But again the idea here
[21:18] on that front. But again the idea here is to remove that incentive to do
[21:20] is to remove that incentive to do related party landed and improve the
[21:22] related party landed and improve the corporate governance. So clearly there's
[21:25] corporate governance. So clearly there's been progress. Another major thing that
[21:26] been progress. Another major thing that was done over the years was that they
[21:29] was done over the years was that they reduced significantly the amount of
[21:31] reduced significantly the amount of dollar exposure. It is the central bank
[21:34] dollar exposure. It is the central bank made it very costly almost prohibitive
[21:37] made it very costly almost prohibitive to issue dollar dollar loans. So as per
[21:41] to issue dollar dollar loans. So as per the most recent numbers that I've seen
[21:42] the most recent numbers that I've seen about the dollarization of the banking
[21:44] about the dollarization of the banking system it's down to below 10%. It
[21:46] system it's down to below 10%. It obviously varies depending on which bank
[21:48] obviously varies depending on which bank you're looking at, but that is an
[21:49] you're looking at, but that is an incredibly low number which basically
[21:51] incredibly low number which basically suggests that there's not a lot of
[21:54] suggests that there's not a lot of ethics mismatches on on the balance
[21:56] ethics mismatches on on the balance sheet. So certainly a good thing. And
[21:58] sheet. So certainly a good thing. And and the last thing that I think is
[21:59] and the last thing that I think is particularly helpful is that there's
[22:02] particularly helpful is that there's been a push to adopt FRS9. From what I
[22:06] been a push to adopt FRS9. From what I understand, not just FRS9, I mean FRS on
[22:10] understand, not just FRS9, I mean FRS on a fully loaded basis. And from what I
[22:12] a fully loaded basis. And from what I understand, it's supposed to kick in in
[22:14] understand, it's supposed to kick in in the summer of this year. first on a
[22:16] the summer of this year. first on a voluntary basis, but um as someone that
[22:19] voluntary basis, but um as someone that looks at banks across many geographies,
[22:24] looks at banks across many geographies, um I obviously rely very heavily on if
[22:26] um I obviously rely very heavily on if it just makes the life of investors um a
[22:29] it just makes the life of investors um a lot easier. So I kind of digress a
[22:32] lot easier. So I kind of digress a little bit, but I thought that um a lot
[22:34] little bit, but I thought that um a lot of investors are probably not aware
[22:35] of investors are probably not aware about all these good developments.
[22:37] about all these good developments. Again, not everything is perfect.
[22:38] Again, not everything is perfect. There's more work to be done, but I
[22:40] There's more work to be done, but I think a lot of the hang low hanging
[22:41] think a lot of the hang low hanging fruits already been addressed. And you
[22:44] fruits already been addressed. And you think that there's so there is still
[22:46] think that there's so there is still space for more players in in in the in
[22:49] space for more players in in in the in the system like what I'm trying to say
[22:51] the system like what I'm trying to say is small banks should be uh having that
[22:56] is small banks should be uh having that market access or should be looking for
[22:58] market access or should be looking for something more less risky maybe local I
[23:01] something more less risky maybe local I don't know a little bit of of that.
[23:04] don't know a little bit of of that. >> Yeah. So this is a it's a good question.
[23:07] >> Yeah. So this is a it's a good question. So one of the challenges about Mongolia
[23:09] So one of the challenges about Mongolia is that it's a smaller economy and
[23:13] is that it's a smaller economy and respectively the corporates that come
[23:14] respectively the corporates that come out of Mongolia are even smaller. So
[23:19] out of Mongolia are even smaller. So a lot of people tend to kind of overlook
[23:20] a lot of people tend to kind of overlook Mongolia just because it's it's it's
[23:22] Mongolia just because it's it's it's relatively small. Um and even internally
[23:25] relatively small. Um and even internally I was surprised that I got pushed back
[23:27] I was surprised that I got pushed back initially when I was kind of pounding
[23:28] initially when I was kind of pounding the table that we should get involved
[23:30] the table that we should get involved just because that people are like wow
[23:32] just because that people are like wow but it's only three and a half million
[23:33] but it's only three and a half million it's 25 billion economy blah blah blah
[23:36] it's 25 billion economy blah blah blah you know. So, so you you already have
[23:37] you know. So, so you you already have that that preconceived notion, right?
[23:40] that that preconceived notion, right? Um,
[23:41] Um, if you're a smaller issuer,
[23:44] if you're a smaller issuer, um, and you're outside of those five
[23:46] um, and you're outside of those five systemically important banks that I
[23:48] systemically important banks that I mentioned, it's going to be more
[23:51] mentioned, it's going to be more challenging, but it's not impossible.
[23:52] challenging, but it's not impossible. And I'll give you an example. Uh, MB
[23:54] And I'll give you an example. Uh, MB Bank, which is a Mongolian bank that is
[23:57] Bank, which is a Mongolian bank that is kind of a digital player. They do a lot
[23:59] kind of a digital player. They do a lot of consumer lending, a lot of buy now,
[24:01] of consumer lending, a lot of buy now, pay pay later. They tap capital markets
[24:04] pay pay later. They tap capital markets twice but but again it's all going to be
[24:06] twice but but again it's all going to be private placement right very few banks
[24:08] private placement right very few banks have the scale to come up and print 300
[24:10] have the scale to come up and print 300 million400 million dollars right so
[24:13] million400 million dollars right so these smaller banks that need funding
[24:15] these smaller banks that need funding can do private placements and in the
[24:17] can do private placements and in the case of MB bank they did two of those
[24:19] case of MB bank they did two of those one was 50 the other one was 75 million
[24:22] one was 50 the other one was 75 million the issue that as you kind of go down in
[24:25] the issue that as you kind of go down in in in size is a lot of times the credit
[24:27] in in size is a lot of times the credit quality gets a little bit kind of
[24:30] quality gets a little bit kind of murkier the the disclosure standards are
[24:32] murkier the the disclosure standards are not is good. So, the structure needs to
[24:35] not is good. So, the structure needs to be better, right? And and what we've
[24:36] be better, right? And and what we've seen is that um you know, some of these
[24:39] seen is that um you know, some of these um structures
[24:41] um structures uh or private placements come up with
[24:43] uh or private placements come up with either a guarantee or some kind of a
[24:45] either a guarantee or some kind of a back stop or or a collateral and that
[24:47] back stop or or a collateral and that kind of compensates you for so so bottom
[24:50] kind of compensates you for so so bottom line is it is possible. It just is going
[24:52] line is it is possible. It just is going to be both probably private placement
[24:53] to be both probably private placement format and it's going to be a structure
[24:57] format and it's going to be a structure that is that gives more security to to
[25:00] that is that gives more security to to the investor.
[25:01] the investor. >> Yeah. Thank you very much for that. And
[25:03] >> Yeah. Thank you very much for that. And just because we need to to tackle a
[25:06] just because we need to to tackle a little bit more on the credit rating uh
[25:09] little bit more on the credit rating uh what is the the MR finance work at the
[25:11] what is the the MR finance work at the moment on the credit rating like where
[25:13] moment on the credit rating like where is the focus there uh trying to get that
[25:16] is the focus there uh trying to get that upgrade like I don't know what's what's
[25:18] upgrade like I don't know what's what's what's happening at the moment.
[25:23] So as you all know the credit rating um
[25:26] So as you all know the credit rating um the seven credit rating has been uh
[25:28] the seven credit rating has been uh lifted last October and also a year ago
[25:32] lifted last October and also a year ago so 2024 as well. So our job as
[25:35] so 2024 as well. So our job as government is really to keep the
[25:38] government is really to keep the fundamentals intact and uh the fiscal
[25:40] fundamentals intact and uh the fiscal policy discipline right so it's not our
[25:43] policy discipline right so it's not our job to you know uh to do what private
[25:45] job to you know uh to do what private sectors can do. So on the credit rating
[25:48] sectors can do. So on the credit rating um back in 2024 when it was lifted it
[25:52] um back in 2024 when it was lifted it reduces the risk premium by by 70 basis
[25:56] reduces the risk premium by by 70 basis point and then the subsequent credit
[25:58] point and then the subsequent credit rating upgrade um happened last year and
[26:02] rating upgrade um happened last year and it reduces the risk premium by another
[26:04] it reduces the risk premium by another 20 pips. So as we all know um that is a
[26:09] 20 pips. So as we all know um that is a little bit like the ceiling for a lot of
[26:11] little bit like the ceiling for a lot of um our banks and also you know uh uh
[26:14] um our banks and also you know uh uh businesses um credit ratings. So that
[26:16] businesses um credit ratings. So that kind of lifted also the ceiling. So um
[26:19] kind of lifted also the ceiling. So um it is uh really to uh enable uh cheaper
[26:23] it is uh really to uh enable uh cheaper funding resources um into the economy
[26:27] funding resources um into the economy whether it's sovereign or non- sovereign
[26:28] whether it's sovereign or non- sovereign right because the sovereign credit
[26:30] right because the sovereign credit rating becomes the benchmark for the
[26:32] rating becomes the benchmark for the ceiling for all the other um uh private
[26:35] ceiling for all the other um uh private um companies or private sector companies
[26:37] um companies or private sector companies credit rating. So the focus is really to
[26:40] credit rating. So the focus is really to um keep it and if possible also upgrade
[26:43] um keep it and if possible also upgrade it. Yeah. But we also know that um we
[26:47] it. Yeah. But we also know that um we just came from a IMF World Bank spring
[26:49] just came from a IMF World Bank spring meeting where all the ministries,
[26:51] meeting where all the ministries, ministers of finances and central bank
[26:53] ministers of finances and central bank governance come together um to talk
[26:55] governance come together um to talk about the issues and the Middle East
[26:57] about the issues and the Middle East conflict and you know the Washington
[26:59] conflict and you know the Washington throwing surprise every other day does
[27:01] throwing surprise every other day does not help us um it gives us um you know
[27:05] not help us um it gives us um you know more um uncertainty and to be more uh
[27:08] more um uncertainty and to be more uh proactive. But the but the policy uh
[27:11] proactive. But the but the policy uh that the ministry of finance is taking
[27:13] that the ministry of finance is taking is really to keep the fiscal um um the
[27:17] is really to keep the fiscal um um the budget uh disciplined. Um four six years
[27:20] budget uh disciplined. Um four six years ago um the budget deficit was 12% of the
[27:24] ago um the budget deficit was 12% of the GDP and now it's um the ceiling is 2% of
[27:27] GDP and now it's um the ceiling is 2% of the GDP. So it's been intact and also
[27:30] the GDP. So it's been intact and also complementaryary to the debt management
[27:32] complementaryary to the debt management uh policy and framework we have taken
[27:35] uh policy and framework we have taken combined uh all of those uh would would
[27:38] combined uh all of those uh would would help us uh keep the rating or even to
[27:41] help us uh keep the rating or even to upgrade it
[27:42] upgrade it >> and and in your view that that upgrade
[27:46] >> and and in your view that that upgrade is lagging like it should it should be
[27:48] is lagging like it should it should be done. Is it lagging like uh the
[27:51] done. Is it lagging like uh the fundamentals and the situation in
[27:52] fundamentals and the situation in Mongolia is already deserves an upgrade
[27:56] Mongolia is already deserves an upgrade or you think that you are not there uh
[27:59] or you think that you are not there uh yet?
[28:01] yet? >> So um representing Ministry of Finance,
[28:04] >> So um representing Ministry of Finance, I'm not going to say anything. I'm going
[28:05] I'm not going to say anything. I'm going to quote I'm going to quote one of our
[28:08] to quote I'm going to quote one of our investors um investors. So MFG which uh
[28:12] investors um investors. So MFG which uh in DC we had a two rounds of investor
[28:14] in DC we had a two rounds of investor meeting uh where they all subscribed
[28:16] meeting uh where they all subscribed into our sovereign bond and we had a Q&A
[28:19] into our sovereign bond and we had a Q&A session where um we answered you know a
[28:22] session where um we answered you know a lot of the uh questions and some of them
[28:24] lot of the uh questions and some of them were white noises relating to the
[28:26] were white noises relating to the political you know um uh change etc. So
[28:30] political you know um uh change etc. So the MSG said that our credit rating is
[28:33] the MSG said that our credit rating is um underestimated
[28:35] um underestimated but we're going to see we're going to
[28:37] but we're going to see we're going to see as I said we're we are cautiously
[28:39] see as I said we're we are cautiously positive because of the new uncertainty
[28:42] positive because of the new uncertainty and uh the Middle East conflict uh will
[28:45] and uh the Middle East conflict uh will definitely have an impact on everybody
[28:46] definitely have an impact on everybody including Mongolia. So that's going to
[28:49] including Mongolia. So that's going to uh push the inflation higher and also um
[28:53] uh push the inflation higher and also um that that means you know some of the
[28:55] that that means you know some of the fuel prices and also like explosives and
[28:58] fuel prices and also like explosives and fertilizers etc are going to be more
[29:00] fertilizers etc are going to be more expensive and as a government we are not
[29:03] expensive and as a government we are not trying to wrestle with the prices
[29:05] trying to wrestle with the prices because that's first of all
[29:06] because that's first of all unsustainable and second of all not uh
[29:09] unsustainable and second of all not uh smart. So um we will let the market uh
[29:13] smart. So um we will let the market uh dictate the price and our focus is
[29:16] dictate the price and our focus is really to be on the supply chain side
[29:18] really to be on the supply chain side and not not not to have an interrupted
[29:21] and not not not to have an interrupted uh supply chain for the key ingredients.
[29:24] uh supply chain for the key ingredients. >> Thank you very much. So I don't know if
[29:27] >> Thank you very much. So I don't know if there is any question from the public.
[29:34] >> Hi uh my name is Michael Madden. Uh I'm
[29:37] >> Hi uh my name is Michael Madden. Uh I'm involved in banking in Mongolia.
[29:39] involved in banking in Mongolia. um statement and question uh as it I'm
[29:43] um statement and question uh as it I'm on the board of HSBank and have been
[29:45] on the board of HSBank and have been involved with HSBank uh from many years
[29:48] involved with HSBank uh from many years ago. Um HBank is probably one of the
[29:52] ago. Um HBank is probably one of the most profitable banks in that five
[29:54] most profitable banks in that five category sector. Um it compli in terms
[29:57] category sector. Um it compli in terms of the ownership rules just to clarify
[29:59] of the ownership rules just to clarify what Nikolai said uh there's no more
[30:02] what Nikolai said uh there's no more than 20% owned by any one shareholder.
[30:04] than 20% owned by any one shareholder. The only bank that is complying but
[30:06] The only bank that is complying but they're just facts. I think all the five
[30:08] they're just facts. I think all the five banks do a great job. Hanbank, Golamont,
[30:10] banks do a great job. Hanbank, Golamont, TDB, and Hass. Uh HS is primarily
[30:14] TDB, and Hass. Uh HS is primarily internationally owned but operated
[30:16] internationally owned but operated locally. All the executive team are are
[30:18] locally. All the executive team are are local. Um I think there's a couple of
[30:21] local. Um I think there's a couple of issues that I see having been involved
[30:23] issues that I see having been involved in the banking market for so long in
[30:25] in the banking market for so long in Mongolia and Nikolai touched on them as
[30:27] Mongolia and Nikolai touched on them as well. it doesn't really open it up for
[30:30] well. it doesn't really open it up for investors to come into the market and
[30:32] investors to come into the market and it's good having that cap on ownership
[30:35] it's good having that cap on ownership at 20% but if a strategic wants to come
[30:37] at 20% but if a strategic wants to come into Mongolia it really is limited uh
[30:41] into Mongolia it really is limited uh there's very little activity on the
[30:43] there's very little activity on the stock market I think the biggest
[30:44] stock market I think the biggest activity is our share buyback as it
[30:46] activity is our share buyback as it relates to has bank shares so if if
[30:49] relates to has bank shares so if if there's true belief in scaling the
[30:51] there's true belief in scaling the banking market and opening up the
[30:53] banking market and opening up the banking market I think some of these
[30:55] banking market I think some of these things need to change and it's not just
[30:57] things need to change and it's not just moving the ownership from 20% up to 34%.
[31:00] moving the ownership from 20% up to 34%. That's just symbolic at the end of the
[31:02] That's just symbolic at the end of the day. If you want to get strategics in
[31:04] day. If you want to get strategics in and you really want to turn this market
[31:06] and you really want to turn this market around, you need to allow for foreign
[31:08] around, you need to allow for foreign banks to come in and play a role in the
[31:10] banks to come in and play a role in the Mongolian market. And I think it will
[31:11] Mongolian market. And I think it will open up and provide financial access to
[31:14] open up and provide financial access to other parts of the economy as well
[31:16] other parts of the economy as well because some of it is taken offshore.
[31:18] because some of it is taken offshore. Um, so my question really is, and we
[31:20] Um, so my question really is, and we hear this noise all the time, but it
[31:23] hear this noise all the time, but it needs fundamental change and um, I'll
[31:27] needs fundamental change and um, I'll say this as an Irish guy, I think
[31:28] say this as an Irish guy, I think there's a bit of protectionism. That's
[31:29] there's a bit of protectionism. That's my perception because the other banks
[31:32] my perception because the other banks are held by other groups and unless that
[31:36] are held by other groups and unless that is unlocked and we get strategics in, I
[31:39] is unlocked and we get strategics in, I don't think the market's really going to
[31:41] don't think the market's really going to change. So anyway, just a just an
[31:43] change. So anyway, just a just an observation as you're talking about
[31:45] observation as you're talking about investors coming in. very hard for
[31:47] investors coming in. very hard for investors to come into the market. Very
[31:49] investors to come into the market. Very very hard. And it's kind of like
[31:51] very hard. And it's kind of like translating those words into action. And
[31:52] translating those words into action. And I know in government it's difficult, but
[31:54] I know in government it's difficult, but a lot of you have come from the private
[31:56] a lot of you have come from the private sector. You know how it works.
[31:59] sector. You know how it works. >> Thank you very much.
[32:10] >> Hi. Um my name is Andre Zordola with the
[32:13] >> Hi. Um my name is Andre Zordola with the trends uh geopolitical and business
[32:14] trends uh geopolitical and business advisory. Question for the deputy
[32:16] advisory. Question for the deputy minister. Uh, is Mongolia going to allow
[32:21] minister. Uh, is Mongolia going to allow the mere system to uh, uh, be integrated
[32:24] the mere system to uh, uh, be integrated into the financial system? I've seen
[32:26] into the financial system? I've seen reporting saying that there are, you
[32:28] reporting saying that there are, you know, steps being taken for a few years
[32:30] know, steps being taken for a few years now. Um, and I wonder where where the
[32:32] now. Um, and I wonder where where the state of that is uh, today.
[32:37] >> Can you elaborate a bit more on the
[32:39] >> Can you elaborate a bit more on the mirror system?
[32:40] mirror system? >> Yes. So, Union Pay, Visa, Mastercard,
[32:42] >> Yes. So, Union Pay, Visa, Mastercard, right? The Russian system is mirror. Um
[32:45] right? The Russian system is mirror. Um and I was wondering uh if you know kind
[32:47] and I was wondering uh if you know kind of where the new government's uh plans
[32:49] of where the new government's uh plans for integrating that into the country or
[32:51] for integrating that into the country or if any of you know.
[32:55] >> I think it's more to question to Anar
[32:57] >> I think it's more to question to Anar who is sitting there uh from our central
[32:59] who is sitting there uh from our central bank.
[33:00] bank. >> Um yeah but uh with uh in terms of the
[33:03] >> Um yeah but uh with uh in terms of the uh payment system the banking sector in
[33:05] uh payment system the banking sector in Mongolia is probably you know one of the
[33:08] Mongolia is probably you know one of the uh I think the banking system is quite
[33:11] uh I think the banking system is quite advanced in terms of payments and
[33:12] advanced in terms of payments and settlement and transactions. um compared
[33:15] settlement and transactions. um compared to you know the peer economies. Um when
[33:18] to you know the peer economies. Um when you say the mirror system I would rather
[33:21] you say the mirror system I would rather um open the floor to central bank. Of
[33:24] um open the floor to central bank. Of course we have uh certain challenges
[33:26] course we have uh certain challenges because we have two big neighbors and we
[33:29] because we have two big neighbors and we have to keep the uh payment to the fuel
[33:33] have to keep the uh payment to the fuel and diesel uh flow. But that doesn't
[33:35] and diesel uh flow. But that doesn't mean that we are also very cautious that
[33:37] mean that we are also very cautious that we won't be captured by any of the
[33:39] we won't be captured by any of the sanctions you know. Thank you. Wait,
[33:50] wait, wait, wait. I think from the
[33:51] wait, wait, wait. I think from the central bank they want to
[33:56] >> Yes. Uh I'm honor and director general
[34:00] >> Yes. Uh I'm honor and director general of the payment system. Uh yes and the
[34:04] of the payment system. Uh yes and the payment uh payment system pay payment
[34:08] payment uh payment system pay payment ecosystem is quite
[34:11] ecosystem is quite uh advanced level in Mongolia and almost
[34:14] uh advanced level in Mongolia and almost uh 98 99% of payment through the digital
[34:18] uh 98 99% of payment through the digital and of course you mentioned
[34:21] and of course you mentioned um WeChat, Apple Pay, Google Pay
[34:24] um WeChat, Apple Pay, Google Pay recently last like two years and we
[34:27] recently last like two years and we accepting all uh Apple Pay, Google Pays
[34:31] accepting all uh Apple Pay, Google Pays and also that uh crossber payment and of
[34:35] and also that uh crossber payment and of course we have a mainly swift but uh
[34:38] course we have a mainly swift but uh there are two giant neighbor uh which is
[34:41] there are two giant neighbor uh which is the sips maybe recently that but sips
[34:44] the sips maybe recently that but sips have a advanced and good side and also
[34:48] have a advanced and good side and also the weak side because of the sips of one
[34:52] the weak side because of the sips of one currency system and also the Russia side
[34:55] currency system and also the Russia side they approaching uh SPFs and the Russian
[34:59] they approaching uh SPFs and the Russian system but Uh but at the moment we only
[35:04] system but Uh but at the moment we only more the
[35:06] more the uh main mainly in the swift. Swift is
[35:10] uh main mainly in the swift. Swift is the main or crossber system. Of course
[35:12] the main or crossber system. Of course the application and more retail payment
[35:15] the application and more retail payment systems we still accepting we are also
[35:19] systems we still accepting we are also using here.
[35:21] using here. You have more question and reach out to
[35:23] You have more question and reach out to me.
[35:30] Sure. Um, yes, good morning. Uh, my name
[35:34] Sure. Um, yes, good morning. Uh, my name is Jake Hartnett. I'm an economic
[35:35] is Jake Hartnett. I'm an economic adviser. So, my question is about risks
[35:39] adviser. So, my question is about risks and where you see the main risks facing
[35:41] and where you see the main risks facing the Mongolian economy. U c certainly on
[35:44] the Mongolian economy. U c certainly on the consumer side for the banking
[35:46] the consumer side for the banking sector. There's been a very uneven
[35:49] sector. There's been a very uneven recovery postcoid. Household debt is
[35:51] recovery postcoid. Household debt is very high on the state side. We see
[35:54] very high on the state side. We see recently the failure of or the
[35:57] recently the failure of or the bankruptcy of just Mongol the stateowned
[35:59] bankruptcy of just Mongol the stateowned enterprise and it's a reminder of some
[36:02] enterprise and it's a reminder of some of the past problems around the
[36:04] of the past problems around the development bank and so forth and
[36:06] development bank and so forth and offbudget financing. So I'm wondering as
[36:08] offbudget financing. So I'm wondering as as you think about these things you know
[36:10] as you think about these things you know what is what is keeping you up at night?
[36:11] what is what is keeping you up at night? What are you keeping an eye on? Thank
[36:13] What are you keeping an eye on? Thank you.
[36:16] >> So thank you very much for your
[36:18] >> So thank you very much for your question. Um a couple of years ago from
[36:21] question. Um a couple of years ago from macro credential uh perspective uh
[36:24] macro credential uh perspective uh obviously the uh consumer uh indebtness
[36:28] obviously the uh consumer uh indebtness was um becoming more of an issue and
[36:30] was um becoming more of an issue and since then both central government uh
[36:33] since then both central government uh central bank of Mongolia and the
[36:35] central bank of Mongolia and the financial regulatory commission has been
[36:37] financial regulatory commission has been taking some action to attain um the
[36:40] taking some action to attain um the consumer loans. So uh there were certain
[36:42] consumer loans. So uh there were certain actions for example um uh both in in
[36:46] actions for example um uh both in in terms of uh funding and also in terms of
[36:49] terms of uh funding and also in terms of the dispersement. So that is been quite
[36:51] the dispersement. So that is been quite intact so far. So um
[36:55] intact so far. So um on the consumer loan. So in terms of the
[36:58] on the consumer loan. So in terms of the um you mentioned about uh
[37:01] um you mentioned about uh >> Mongolist
[37:05] Mongol. So um during the last government
[37:08] Mongol. So um during the last government day it was decided that the Mongol has
[37:11] day it was decided that the Mongol has become you know the non-mining group
[37:13] become you know the non-mining group which is uh similar to timc and
[37:15] which is uh similar to timc and Singapore and just to streamline um
[37:19] Singapore and just to streamline um streamline the businesses and operations
[37:21] streamline the businesses and operations etc. But then it was also on the
[37:23] etc. But then it was also on the government governance side it was um
[37:27] government governance side it was um there was a bit of an issue in terms of
[37:29] there was a bit of an issue in terms of whether the ministry of energy is in
[37:32] whether the ministry of energy is in charge of certain things or whether HS
[37:34] charge of certain things or whether HS Mongol is in charge of certain things.
[37:35] Mongol is in charge of certain things. So um
[37:38] So um and at the end it was uh decided by the
[37:40] and at the end it was uh decided by the cabinet meeting to to demolish it. So it
[37:43] cabinet meeting to to demolish it. So it is um from governance perspective um we
[37:46] is um from governance perspective um we see it's maybe better that way to to
[37:49] see it's maybe better that way to to have more streamlined decision making
[37:52] have more streamlined decision making because energy sector is quite important
[37:54] because energy sector is quite important as deputy minister has said and we can't
[37:57] as deputy minister has said and we can't afford to have um you know any problem
[38:01] afford to have um you know any problem and then
[38:03] and then after the problem we can't we don't know
[38:05] after the problem we can't we don't know who is held accountable for
[38:09] who is held accountable for >> and you mentioned about DBM right?
[38:18] So in terms of the the development bank
[38:20] So in terms of the the development bank of Mongolia, so the governing
[38:22] of Mongolia, so the governing supervisory um minister is ministry of
[38:24] supervisory um minister is ministry of economy and development and I think we
[38:27] economy and development and I think we all know the story of development bank
[38:29] all know the story of development bank of of Mongolia but recently uh the
[38:32] of of Mongolia but recently uh the decision has been made to recapitalize
[38:35] decision has been made to recapitalize uh the develop bank of Mongolia and to
[38:38] uh the develop bank of Mongolia and to bring it back on on trajectory.
[38:42] Thank you very much. Uh do we have uh
[38:44] Thank you very much. Uh do we have uh maybe couple of of maybe a one minute
[38:47] maybe couple of of maybe a one minute for a final remark maybe from starting
[38:49] for a final remark maybe from starting from mod but our a final remark to the
[38:52] from mod but our a final remark to the public and then we can go with Nick and
[38:54] public and then we can go with Nick and Miss Kulan.
[38:58] So as a Mongolian banking secretary he
[39:01] So as a Mongolian banking secretary he asked
[39:04] asked the last few years
[39:07] the last few years that consumer loan port will increased a
[39:09] that consumer loan port will increased a lot but central bank of Mongolia
[39:12] lot but central bank of Mongolia together with the financial regulation
[39:14] together with the financial regulation commission they did tremendous job for
[39:17] commission they did tremendous job for last year. So as of today Mongolian
[39:20] last year. So as of today Mongolian banks we don't see that consumer loan
[39:23] banks we don't see that consumer loan and PL is a problem. So all the big
[39:26] and PL is a problem. So all the big banks all the banks and all the big
[39:28] banks all the banks and all the big NBFIs as of today
[39:31] NBFIs as of today uh supplying its data to credit bury
[39:34] uh supplying its data to credit bury system on time. So that means we won't
[39:38] system on time. So that means we won't see uh that consumer loan and PL
[39:41] see uh that consumer loan and PL increases as a not that much problem and
[39:45] increases as a not that much problem and Mongolian banking sector always
[39:48] Mongolian banking sector always uh we keep increasing our risk
[39:49] uh we keep increasing our risk management
[39:51] management and you know as I mentioned before
[39:55] and you know as I mentioned before always the leading sector for the
[39:57] always the leading sector for the government's reporting
[40:00] government's reporting and also Mongolian banking secret
[40:02] and also Mongolian banking secret Mongolian banking association CEO is
[40:04] Mongolian banking association CEO is also sitting
[40:06] also sitting So you can ask the risk related question
[40:09] So you can ask the risk related question from him also. So Mongolian banking
[40:12] from him also. So Mongolian banking sector performing well. So next few
[40:14] sector performing well. So next few years we expecting there will be huge
[40:17] years we expecting there will be huge growth not only profit side also risk
[40:20] growth not only profit side also risk mut government government side. So there
[40:23] mut government government side. So there will be soon many Mongolian banks
[40:27] will be soon many Mongolian banks issuing the bond in international
[40:29] issuing the bond in international market. So as investors I can assure you
[40:34] market. So as investors I can assure you self-governance related party ratio
[40:38] self-governance related party ratio reporting transparency
[40:41] reporting transparency it's best bonds to buy is Mongolian
[40:44] it's best bonds to buy is Mongolian bank's bond. So thank you Nick.
[40:51] Yeah, just on the consumer lending side,
[40:53] Yeah, just on the consumer lending side, the the central bank, by the way, um
[40:57] the the central bank, by the way, um took some macro potential measures to to
[40:59] took some macro potential measures to to kind of slow down that growth and and
[41:02] kind of slow down that growth and and we've seen that already taking place. Uh
[41:04] we've seen that already taking place. Uh they lowered the debt to income ratio
[41:07] they lowered the debt to income ratio that you need to satisfy. It used to be
[41:09] that you need to satisfy. It used to be fairly aggressive at 60%. They brought
[41:11] fairly aggressive at 60%. They brought to 55, then most recently 50%. they
[41:14] to 55, then most recently 50%. they increased the increased the um reserve
[41:17] increased the increased the um reserve requirements for both local currency and
[41:19] requirements for both local currency and and dollars more recently. So they're
[41:21] and dollars more recently. So they're they're trying to kind of make it you
[41:23] they're trying to kind of make it you know more expensive to uh to lend. That
[41:26] know more expensive to uh to lend. That being said, if you kind of look at how
[41:29] being said, if you kind of look at how the the banking system has evolved over
[41:31] the the banking system has evolved over the last three years um you know it grew
[41:33] the last three years um you know it grew 20% in 2023 then it grew 35% that was
[41:37] 20% in 2023 then it grew 35% that was the peak in 2024.
[41:40] the peak in 2024. um loan growth moderated to again 20% in
[41:43] um loan growth moderated to again 20% in 2025 and is guided for another 20 20%.
[41:47] 2025 and is guided for another 20 20%. So uh what I'm going to do as an analyst
[41:50] So uh what I'm going to do as an analyst um is I'm going to keep a very close eye
[41:52] um is I'm going to keep a very close eye on on the seasoning of those books.
[41:55] on on the seasoning of those books. We've already seen um non-performing
[41:58] We've already seen um non-performing exposure early delinquency buckets kind
[42:00] exposure early delinquency buckets kind of start um you know going up and a lot
[42:03] of start um you know going up and a lot of that takes it's it's kind of
[42:05] of that takes it's it's kind of intuitive to take place as as the book
[42:06] intuitive to take place as as the book starts seasoning. Um, one thing that
[42:09] starts seasoning. Um, one thing that I've noticed is that the reserve
[42:12] I've noticed is that the reserve coverage ratios of the banks are getting
[42:14] coverage ratios of the banks are getting thinner and thinner at a time when
[42:15] thinner and thinner at a time when they're growing at a very fast rate. So,
[42:17] they're growing at a very fast rate. So, there's there's stuff to be um steps to
[42:20] there's there's stuff to be um steps to be taken there. Um, and on the capital
[42:22] be taken there. Um, and on the capital side, they used to have pretty strong
[42:26] side, they used to have pretty strong capital buffers, but because of that
[42:28] capital buffers, but because of that very low very strong loan growth, over
[42:30] very low very strong loan growth, over the last three to four years, a lot of
[42:32] the last three to four years, a lot of those buffers, you know, have been
[42:34] those buffers, you know, have been eroded. So, they still look good. It's
[42:36] eroded. So, they still look good. It's just that excess capital is not there
[42:38] just that excess capital is not there anymore, right? And because they're
[42:39] anymore, right? And because they're listed entities, they pay 30 to 40%, you
[42:43] listed entities, they pay 30 to 40%, you know, uh, of their profits as dividends.
[42:45] know, uh, of their profits as dividends. So that kind of ability to to rebuild
[42:47] So that kind of ability to to rebuild those capital very quickly, capital
[42:49] those capital very quickly, capital ratios very quickly is is is not that
[42:51] ratios very quickly is is is not that easy anymore, right? So that should
[42:53] easy anymore, right? So that should serve as a as a deterrent to uh to to to
[42:56] serve as a as a deterrent to uh to to to expected uh loan growth. Um but when we
[42:59] expected uh loan growth. Um but when we talk about Mongolia the sovereign in
[43:01] talk about Mongolia the sovereign in itself um one thing that we want to do
[43:04] itself um one thing that we want to do is they're obviously doing a great job
[43:05] is they're obviously doing a great job with you know all the um all the these
[43:08] with you know all the um all the these mining uh projects um ideally and I
[43:13] mining uh projects um ideally and I think it came up in in a couple of the
[43:14] think it came up in in a couple of the presentations we want to see the
[43:16] presentations we want to see the Mongolian economy start diversifying
[43:19] Mongolian economy start diversifying right and and the sectors that were
[43:21] right and and the sectors that were mentioned this is clearly where Mongolia
[43:24] mentioned this is clearly where Mongolia has a competitive advantage whether it's
[43:26] has a competitive advantage whether it's tourism renewable energy
[43:28] tourism renewable energy agriculture, Kashmir, uh you name it. Um
[43:32] agriculture, Kashmir, uh you name it. Um another thing that ideally we want to
[43:33] another thing that ideally we want to see and I know this is not going to
[43:35] see and I know this is not going to happen tomorrow, it's going to take time
[43:38] happen tomorrow, it's going to take time is um there is a very big inequality gap
[43:41] is um there is a very big inequality gap and we want to see just for the sake of
[43:43] and we want to see just for the sake of social stability that Mongolia is able
[43:46] social stability that Mongolia is able to build a a good solid uh middle class
[43:50] to build a a good solid uh middle class which which we currently don't have.
[43:52] which which we currently don't have. Again, this is this is going to take
[43:54] Again, this is this is going to take time, but these are kind of my my two uh
[43:57] time, but these are kind of my my two uh recommendations for on a sovereign
[43:59] recommendations for on a sovereign level.
[44:00] level. >> Thanks, Nick. Miss Glenn,
[44:03] >> Thanks, Nick. Miss Glenn, >> well, I can't agree enough with Nick on
[44:06] >> well, I can't agree enough with Nick on building middle class and diversifying
[44:08] building middle class and diversifying away the economy. Um just to add uh from
[44:11] away the economy. Um just to add uh from minister of finance perspective um
[44:15] minister of finance perspective um starting from 2025 we've started
[44:18] starting from 2025 we've started rebuilding the domestic yield curve
[44:20] rebuilding the domestic yield curve which were non-existent for about since
[44:23] which were non-existent for about since 2017. So that's really uh important mile
[44:27] 2017. So that's really uh important mile we are uh taking and uh not only the um
[44:32] we are uh taking and uh not only the um the rate itself but also the maturity
[44:34] the rate itself but also the maturity profile is important. So we have now
[44:37] profile is important. So we have now like from 6 months to seven years uh
[44:40] like from 6 months to seven years uh maturity profile on six notches and we
[44:43] maturity profile on six notches and we will continue building the yield curve.
[44:45] will continue building the yield curve. So this was also in line with um what
[44:47] So this was also in line with um what Moody's and rating agencies has been
[44:49] Moody's and rating agencies has been advising us to do so and just because
[44:51] advising us to do so and just because back in 2017 you know our debt level was
[44:54] back in 2017 you know our debt level was unsustainable and we didn't have the
[44:56] unsustainable and we didn't have the political and social license to continue
[44:58] political and social license to continue to do so. So that's uh one thing uh
[45:01] to do so. So that's uh one thing uh we've started doing and we'll keep on
[45:03] we've started doing and we'll keep on keep on doing that. On the rating side I
[45:05] keep on doing that. On the rating side I think we've discussed enough we'll try
[45:07] think we've discussed enough we'll try and keep keep it if not upgrade it and
[45:10] and keep keep it if not upgrade it and uh that doesn't that includes you know
[45:13] uh that doesn't that includes you know all the macro fundamentals and as well
[45:15] all the macro fundamentals and as well as the outlook of the economy.
[45:17] as the outlook of the economy. >> Thank you very much. Well thank you
[45:19] >> Thank you very much. Well thank you everybody and thanks everybody.