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Brief review of results of the activity of banking and insurance system for 2023
In accordance with the Decree of President of the Republic of Tajikistan dated from March 4, 2005, No. AP – 1677 and on the bases of the Plan of arrangement and holding press conferences in ministries, agencies, organizations and institutions, executive bodies of state authority in BMAR (GBAO), regions, Dushanbe city and republican subordination districts as of December 18, 2023, No 26/10-491 on February 14, 2024, the press conference on the results of banking system activity for 2023 was held at the National Bank of Tajikistan under the leadership of Chairman of National Bank of Tajikistan Mr. Tolibzoda Firdavs Nazrimad and participation of local and foreign media.
Following the welcome address, Chairman of the National Bank of Tajikistan Tolibzoda Firdavs has emphasized that with the direct support of the Founder of Peace and National Unity- the Leader of Nation, President of the Republic of Tajikistan honorable Emomali Rahmon, the National Bank of Tajikistan as the body, regulating bank and finance system, continues to implement monetary policy in order to promote the growth of the national economy, maintenance of stability of state banking system and domestic prices.
In 2023, the National Bank of Tajikistan continued its activities in effective implementing monetary policy, increasing the non-cash settlements other financial instruments, took necessary measures to ensure the stability of the domestic costs and national currency, maintenance of the liquidity level of credit institutions and increasing public confidence in the banking system, and maintaining efficient and safe operation of payment system.
Monetary policy
Stable inflation rate
The Chairman of the National Bank of Tajikistan has emphasized that in 2023 inflation rate ended with bottom line target (6% ± 2p.p.) and made 3.8% which is less 0.4 percentage point compared to previous year. This indicator occurred mainly due to rise of foodstuffs prices by 3.4%, non-foodstuffs by 6.6% and the cost of paid services by 1.2%.
In order to manage the solvency rate of credit institutions, reduction of inflation and rate instruments and activation of financial market the National Bank of Tajikistan held 108 securities auctions in the amount of TJS 8.9 billion. At the same time, the deposits of credit financial institutions daily attracted an average of TJS 721.9 million through overnight deposit operations.
The refinancing rate, as the main instrument for implementing monetary policy, on the bases of influence of potential internal and external risks and giving that the inflation rate is set at bottom-line, as well as taking into account improvement of inflationary expectations of population, decreased gradually to 3.0 percentage points from the beginning of 2023 year and set at 10.0% per annum.
Stable state of internal exchange market
It has been pointed out the National Bank of Tajikistan continued the exchange rate policy based on “managed floating exchange rate, without determining and declaring the limits of exchange rate changes”. In 2023 the official exchange rate of TJS against the US dollar decreased by 7.4% (from 10, 2024 somoni as of 31.12.2022 to 10.9571 somoni as of 31.12.2023).
If to look at exchange rate of countries of the region for this period it become obvious that the national currency official rate of a lot of countries – main partners of the Republic of Tajikistan –against the US currencies has decreased. For example, the Russian ruble decreased by 27,5%, Belarusian ruble by 16,1 %, Turkish lira by 57,4%, the Uzbek sum by 9,9%, the Kazakhstani tenge by 4,0%, the Chinese yuan by 1.7 %.
Banking system
Increase in structural subdivisions of credit financial institutions
As of December 31, 2023, there were in total 63 credit financial institutions, including 15 traditional banks, 1 Islamic bank, 1 non-bank credit institution, 19 microcredit deposit organizations, 3 microcredit organizations and 25 microcredit funds functioning in Tajikistan, - Tolibzoda Firdavs stated.
The number of structural subdivisions of credit financial institutions in accounting period amounted to 1,897 increasing by 35 units compared to the same period of previous year.
Ensuring the growth of assets, liabilities and capital
It was also noted that the assets and liabilities of credit institutions as of December 31, 2023 amounted to TJS 37.7 billion and 30.3%, increasing by 25.5% (or TJS 7.6 billion) and 27.8% (or TJS 6.6 billion) compared to the same period in 2022, respectively.
Reported authorized capital of credit financial institutions as of December 31, 2023 amounted to TJS 7,4 billion increasing by TJS 1,1 billion or 16,9 % compared to the same period in 2022.
Increase of deposits balance by 25,5%
It has been pointed out as of December 31, 2023 the total balance of deposits amounted to TJS 19.5 billion, having increased by 25.5% compared to the same period of 2022.
It should be noted that total balances of deposits, the share of deposits in the national currency amounted to 55.5% and in foreign currency 44.5%.
In the structure of total balance of deposits, TJS 8.9 billion or 45.8% are deposits of legal entities and TJS 10.6 billion or 54.2% constituting the deposits of individuals.
Increase of issued loans volume and quantity
As it is known, - Tolibzoda Firdavs said, - credit investment is one of the main tools for ensuring stable economic growth, developing domestic production, increasing export potential and creating new jobs in the country.
The total volume of loans issued in 2023 amounted to TJS 19.0 billion, which is TJS 4,6 billion or 32% more than last year.
From the total volume of loans issued during this period, 43.1% falls on the consumption sector, 14.4% on agriculture, 11.7% on foreign trade, 14.1% on industry, and 7.1% on the service sector, 3.8% for construction and 5.8% for other areas.
At the same time, it should be noted the total volume of loans issued during this period, 37.8 % falls on production entrepreneurs and made TJS 7,2 billion having increased by TJS 1,9 billion or 36,6 % compared to the last year.
In 2023 the volume of issued microcredits amounted to TJS 13.6 billion, having increased by 29.1% compared to the previous year.
The weighted average interest rate on loans in the national currency in 2023 was 23.2%, in foreign currency 11.8%, which is 0.14 percentage points less than last year in the national currency and in foreign currency by 0.16 p.p.
Ensuring sustainable operation of the banking system
As of December 31, 2023 the capital adequacy ratio (CAR), which is one of the main indicators of financial stability of the banking system, amounted to 21.3%, exceeding the established threshold by 9.3 (12%) percentage points.
As of December 31, 2022, the current liquidity ratio of banking system reached 81,0%, exceeding the established threshold by 51 percentage points.
At the end of 2023 year, inactive loans made 12,5 % of loan portfolio and this indicator is 0,5 percentage point more compared to the same period of 2022 year.
In general, the results of financial performance of credit financial institutions as of December 31, 2023 ended with a profit of TJS 999.3 million.
The return on assets (ROA) of credit institutions as of December 31, 2023 accounted to 2.7 % and the return on equity (ROE) – 13,6%.
In order to implement macroprudential policy, control and supervision of banking activities, the National Bank of Tajikistan at the beginning of the year determines systemically important credit institutions (SUE SB RT “Amonatbonk”, OJSC“Orienbonk” and OJSC “Bank Eskhata”) and potential systemically important credit institutions (CLSC “International Bank of Tajikistan”) for 2024 and approved by the Decision of management of the National Bank of Tajikistan.
Payment system development
As of December 31, 2022, the number of bank payment cards amounted to 6.7 million units, increasing by 32.6% compared to the same date of last year. Also, the total number of electronic wallets amounted 8.7 million units, increasing by 37,6 % as of this date last year.
To make non-cash payments 6 939 POS-terminals was installed during reporting period in in trade institutions and service delivery points which is 79,2% more compared to 2022 year. Also, 12,6 QR-codes were installed in in trade institutions and service delivery points decreasing by 28% the reason of which is transmission to QR-codes.
Alongside with it to provide cash to payment cardholders in total 2,240 ATMs and 3,492 electronic terminals were installed by domestic credit financial institutions in exchequers of structural subdivisions of banks which compared to the same date in 2022 is more by 29,9 % and 63,8 % respectively.
In 2023, 15.5 billion non-cash transactions on payment for goods and services to the amount of 8.2 billion somoni were made in trade institutions and service delivery points of the country through electronic means of payment (payment cards and e-wallets). In 2023 the ratio of cash withdrawals and non-cash transacyions was 80% to 20% increasing 8 p.p. compared to 2022 year.
In 2023, non-cash transactions of goods and services were made at the sum of 15,5 billion somoni through electronic payment means (payment cards and e-wallets) in in trade institutions and service delivery points . In 2023, ratio of cash and non-cash transactions share made 80% to 20% and share of non-cash transactions increased 8 percentage point compared to 2022.
Consideration of citizens' appeals in accordance with the law
It had been pointed out that the National Bank of Tajikistan carries out constant and strict control over observance and fulfillment of the requirements of the Law of the Republic of Tajikistan "On Citizens' Appeals".
In this regard in 2022, the National Bank of Tajikistan received 1,053 appeals for consideration, including 467 through the telephone hotline, 336 at the reception of citizens, 235 in written form (applications), and 5 appeals through e-mail, on which the necessary measures were taken within its existing authority.
Human resources policy
Attracting the largest number of women and girls to work in the banking system
The National Bank of Tajikistan and credit financial institutions pay special attention to attracting the largest number of qualified and experienced women and girls to work in the banking system and their promotion to senior positions, - Tolibzoda Firdavs stated.
According to the statistic data as of December 31, 2022, the total number of employees of banking system is 18'841. Out of this number, 7'611 (or 40,4% of total number) are women which is more by 659 compared to the same period of the last year.
Out of this number 3'849 women have been working as employees of front-office. Out of total number of the women working in banking system 515 ones hold managerial position (19,4 % of total number of managerial position).
Increase of insurance organizations indicators
In 2023 year, 16 insurance organizations, including 1 state insurance company and 15 non-state insurance companies with 66 branches provided insurance services to the population in the country.
Aggregate result of the insurance system activity of the country in 2023 showed that the main indicators of the section increased stably, including the assets of the system increased by 18,1 percent compared to previous year, general capital increased by 18,7, authorized capital – 19,6%, insurance reserve 11,3%, insurance premium -33.9%, investment – 6,8% and savings in credit financial institutions 63,4 %.
On the whole, in the reporting year the share of assets of the insurance system in relation to the total assets of the financial system amounted to 2.0 % and 0,6% as against GDP.
The total number of contracts concluded by insurance companies in 2023 reached 2.3 million units, increasing by 207,6 (9.8 % ) compared to the previous year.
The return on assets (ROA) of insurance companies as of December 31, 2023 accounted to 11.9 9% and the return on equity (ROE) – 20,9%, increasing by 0.5% and 0.8% p.p. compared to the same period of previous year, respectively.
Effectiveness of international cooperation
The National Bank of Tajikistan closely cooperates with international financial institutions, including the International Monetary Fund (IMF), the World Bank Group, the European Bank for Reconstruction and Development, the Asian Development Bank, the Islamic Development Bank, the Eurasian Development Bank, the Interstate Bank, the Financial Inclusion Alliance, international funds, central (national) banks and banking structures of foreign countries in order to attract foreign capital.
It should be noted that attracting the largest amount of domestic and foreign capital is one of the main tasks of the banking system. In this regard, as a result of implementation of timely measures to attract foreign investments, the banking system of the country attracted USD 2 204,6 million loan, direct and portfolio investments, which is 66,8% more compared to the same period of last year.
“The National Bank of Tajikistan will continue to take appropriate measures aimed at effective implementation of monetary policy, strengthening regulation and supervision over the activities of credit institutions, protecting the rights of users of banking services, ensuring transparency in the activities of credit institutions, strengthening corporate governance, as well as maintaining public confidence in the banking system, - Chairman of the National Bank of Tajikistan Firdavs Tolibzoda has stated at the end of the press-conference.
At the end of the event, representatives of domestic and foreign media received answers to their questions about the realization of the Decree of President of the Republic of Tajikistan “On measures to expand non-cash settlements”, the Law of the Republic of Tajikistan “On Amnesty in connection with legalization of assets and money of the citizens of the Republic of Tajikistan”, inflation rate, changing the refinancing rate, the implementation of the National Strategy for Financial Inclusion of the Republic of Tajikistan for 2022-2026, increasing the financial literacy of the population, the process of implementing Islamic banking, selling gold bullions, volume of gold reserves of the National Bank of Tajikistan, preventing fraud actions in social nets, loans rate, securities market, attraction of money, opening of foreign banks representations in the Republic of Tajikistan and other important issues of banking system.
In the final part of the event, Mr. Tolibzoda Firdavs, Chairman of the National Bank of Tajikistan, thanked the representatives of mass media for fruitful cooperation, objectively depicting the banking system activities and expressed willingness to continue effective cooperation.
NBT Press Division