Trade and Development Bank JSC

Profitability is likely to decline due to contracting net interest margins (NIMs) amid lower policy rates. Credit cost could also increase moderately as the benefits of large recoveries and net reversals on corporate exposure in recent years fade. The stable rating outlook reflects our view that TDB will maintain its well-established market presence with strength in corporate banking over the next 12-18 months. We also believe the bank will maintain its current level of capitalization over the period, albeit with a reduced buffer. We believe TDB's inherent credit risk emanating from its concentrated corporate exposures will weigh on the rating. This is despite tightened regulatory oversight and improvements in asset quality metrics. We could lower the ratings if TDB's asset

...Trade and Development Bank JSC's (TDB) good business franchise and strength in corporate banking will underpin its credit profile. The bank has a well-established market presence in Mongolia, with market shares of about 18% in loans and 21% in deposits as of end-June 2024. Its specialty in corporate banking enables it to enjoy more diverse revenue across interest income and fee income than other domestic bank peers. TDB's ongoing diversification of loans toward retail and small and medium enterprises (SME) could also enhance the bank's business stability, in our view. We believe TDB has room to absorb some decline in its capital buffer due to high loan growth over the next one to two years. Credit demand is likely to be high amid solid economic growth. The bank's gross loans increased by about 13% in the first half of 2024. We project loan growth will moderate to 13%-15% annually over the next two years, after high growth of about 25% in 2024. This considers the bank's focus on sustaining...

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