Fitch: Mongolian Banks Face Rising Risks from Subsidised Mortgages

(The following statement was released by the rating agency) HONG KONG, October 31 (Fitch) Mongolian banks' mortgage exposure continues to rise amid the government's commitments to provide affordable housing to low- to medium-income households, and to contain inflation, Fitch says in its Asia-Pacific Banks: Chart of the Month report. Ongoing securitisation by the Mongolian Mortgage Corporation supports banks' liquidity as banks can repay 90% of funding from the Bank of Mongolia with the senior tranche of the residential mortgage-backed securities. The securitisation also improves banks' interest spread. However, most of the credit risk remains in the sector as banks retain the equity tranche carrying a 1,250% risk weight for regulatory capital purposes. The mining sector and the volatile operating environment for the banks remain the key pressure points for Mongolian banks. The report "APAC Banks: Chart of the Month" is available at www.fitchratings.com or by clicking on the link above. Contact: Sabine Bauer Senior Director +852 2263 9966 Fitch (Hong Kong) Limited 2801, Tower Two, Lippo Centre 89 Queensway, Hong Kong Ivan Lin Associate Director +852 2263 9984 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable Criteria and Related Research: APAC Banks: Chart of the Month