TDB Presentation

TDB Presentation
June 2019
September 2023

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> Mongolian Macroeconomic Developments
Banking Industry
TDB Overview
Green and Social FinanceMongolia’s Macroeconomic Overview
Main macroeconomic indicators’ historical data
Real GDP growth
17.3%

12.3%

11.6%
7.9%

6.4%

7.7%
5.6%
2.4%

15.10%
14.60%
15.00%
14.40%

4.8%
1.6%

1.5%
-4.6%

2011

2012

2013

2014

2015

2016

2017

2018

2019

16.10%

16.00%

5.6%

14.00%

14.20%

15.70%
13.80%

14.50%

14.40%

14.40%

14.50%

13.00%

2020

2021

2022

13.20%

12.30%
12.20%

12.00%

11.30%

12.20%

11.00%

10.60%

11.30%

10.00%

Unemployment rate

9.00%

9.20%

9/30/2023

7/31/2023

6/30/2023

5/31/2023

4/30/2023

3/31/2023

2/28/2023

1/31/2023

12/31/2022

11/30/2022

9/30/2022

10/31/2022

5.3%

8/31/2022

6.6%

7.6%

7/31/2022

8.1%
6.6%

6/30/2022

8.1%

8.6% 7.3%

8.3%

5/31/2022

7.8%

4/30/2022

7.0%

6%

7.9%

3/31/2022

9.4%

8%

2/28/2022

8.00%

1/31/202210%

10.10%
10.00%

8/31/2023

2010

CPI YoY

17.00%

4%

Export14,000Goverment Budget Balance

11,296

12,000
9,241

-632

3.0

-224.6 -808
-1,130.7-627.8-1,157-979.3-1,742.5-2,908.8-3,667.8

8,000

7,012

4,000

6,201

5,774

6,000

4,818 4,385

4,269

7,620 7,576

4,669 4,916

2,909

2023Q3

2,000

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

-4,539.1

USD Million

10,0002011

2010

2,000.0
1,000.0 41.8
0.0
-1,000.0-2,000.0-3,000.0-4,000.0-5,000.0

1,818.2

12,540Source: Bank of Mongolia, National Statistical Office, Ministry of Labor and Social Protection

03Mongolia’s Macroeconomic Overview
Main macroeconomic indicators

GDP

INFLATIONUNEMPLOYMENTFX RESERVESEXPORT GROWTH

6.0%

10.2%

5.8%

US$4.1 billion

21%

Average real GDP growth
2010-2022

YoY inflation asof 2023Q3

Unemployment rate as of
2023Q22023Q3

YoY export revenue growth
as of 2023Q3

Mongolia's economic summary
Mongolia’s GDP growth improved from 1.6% YoY in 2021 to 4.8% YoY in 2022. In the 4th
quarter of 2022, Mongolia’s economic activity was stronger than anticipated, owing to theeasing of Zero-Covid policy in PRC and higher growth in all economic sectors. As easing
border restrictions and intensifying activities in the mining sector, the economic growth
outlook has been upgraded in comparison with the previous projections. The labor market has
returned to its pre-pandemic levels, and household consumption has been steadily increasing
for the past 4 consecutive quarters. The outlook for foreign demand and process of main
export commodities have improved.
Policy Interest Rate is 13.0%
On September 15th, 2023, MPC decided to keep the policy rate steady at 13.0%, withconsideration of the current state of the economy and financial markets as well as the outlook
and risks to the domestic and foreign economic environment.
15%
13%

2013-1
2013-52013-92014-1
2014-5
2014-92015-1
2015-5
2015-92016-1
2016-5
2016-92017-12017-52017-92018-1
2018-5
2018-92019-1
2019-52019-92020-1
2020-52020-92021-12021-52021-92022-12022-52022-92023-12023-52023-9

14%
13%
12%
11%
10%
9%
8%
7%
6%

Source: Bank of Mongolia, National Statistical Office

Trade balance surplus reached USD 4,540.7 million
In September 2023, the total turnover of goods reached to USD 18 billion or increased by
18.13% from the same period last year. While exports increased by 21% from previous
year, imports increased by 6.28%. The trade surplus reached USD 4,057.10 million by
the end of Q3 2023, an increase of 76.8% or USD 1,972.87 million from Q3 2022.
The budget balance results in surplus
Government revenues outgrow expenditures for the first time in the last four and a halfyears, resulting in surplus of MNT 2,157.9 billion. This surplus is mainly driven byincrease in exports boosted by sales of mineral products As of Q3 2023, the government
revenues reached MNT 17.7 trillion which is up 40.7% YoY.
Inflation rate rises to 10.2%
In Q3 2023, the inflation rose from 9.2% to 10.2% in due to tuition fees rising by morethan 20%, which is twice the long-term average.
Economic diversification policies
Mongolia has identified leading economic policies for 2023 to address fluctuations incommodity prices and dependency. These include restructuring the macroeconomy,
boosting exports to pre-pandemic levels, improving outputs of agricultural and mining
products, liberalizing lower growth sectors, and supporting the private sector andentrepreneurial activity.
4

Laying the Foundations for Long-Term Growth
Supported by strong post-pandemic recovery, future holds promising prospects.
Projections of Mongolia’s economy by MDBs and leading international financial institutions•

In World Bank’s outlook, Mongolia’s economy is projected to accelerate to 5.2
percent growth in 2023 as mining and exports expand and the post-pandemic
recovery in services continues.

•

According to World Bank’s latest Mongolia Economic Update, economic growthis also anticipated to be supported this year by household consumption, which is
expected to remain steady as the labor market improves, along with substantial
public investment. Services, particularly tourism, are projected to continue
recovering from restrictions associated with pandemic, offsetting sluggish
agricultural production due to the recent harsh winter.

•

As per EBRD’s outlook on Mongolia’s economy, Mongolia’s real GDP is forecast
to grow by 7.5 percent in 2024. The tourism industry has experienced a complete
resurgence, contributing to the enhancement of the performance of the hospitality
and cashmere sectors. Increased growth in exports, mining and tourism could
potentially bolster the overall outlook.

•

In 2022, despite weak performance in the early months of the year, Mongolia’s
economy grew by 4.8 percent. China’s re-opening in the second half of 2022
enabled a rapid expansion of mining and quarrying activities, providing a major
boost for coal exports. The strong recovery continued in early 2023 with a boost
from high industrial output, increased export activity, and rescinded travel
restrictions.

USD Millions

Mongolia GDP growth rate, % per year
2020

2021

2022

ADB

WB

4.6%

1.6%

IMF

15%

10%

2023

2024

forecast as ofApril 2023

forecast as of
September
2023

5.7%

5.9%

forecast as ofApril 2023

forecast as of
September
2023

5.2%

6.1%

forecast as ofApril 2023

forecast as of
September
2023

5.5%

4.5

forecast as ofApril 2023

forecast as of
September
2023

7.2%

7.5%

4.8%

EBRD

Net FDI inflow steadily growing since COVID-19 pandemic
5,000 4,335.7
4,000
3,000
2,075.1
2,203.1 2,332.7
1,910.9
1,742.6
2,000
1,651.0
1,522.1
667.7 449.3
1,000
0-1,000-2,000-3,000-4,000-5,000-4,419.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
FDI (LHS)
GDP growth (RHS)
Source: ADB – ADO 2022, IMF, EBRD, WB Outlook

MDBs/IFIs

Buoyant commodity prices underpinning strong recovery
81% 84%

80%

5%
0%

2021

-5%

24% 24.3%

72.4%

2022
25% 29.6%-10%

Mining sector's share Mineral exports'
in GDP
share in total exports

Mineral exports'
share in fiscal
revenue

FDI in the mining
sector5

Trade Balance Continues to Show Surplus
The main commodities export increase as economy recovery continues.
By the end of September 2023, both export and import increased
respectively.

As pandemic restrictions ease, export of some commodities continue togrow, boosting post-pandemic recovery.

External trade

15

Export of main commodities(2016 through 2022 and 2023 Q3)

12.5

12

11.3

9.2

USD Billion

7.6
6.7

6.2

5.8
5.2

6
4.4

7.6

7.0

6.4
4.7

4.3

3.8

5.9

6,518.10

6,000

8.7

9

7,000

6.8

6.8

6.1

5,000

5.3

4.9
4.3
3.4

4.5

4,000

3.8

3

1.6

0

0.5
-2.4

2.3

1.9
1.1

0.9

2.4

3,000

1.5
2,000.00

2,000

-2.1

-3
1,000

560.79323.64271.02

ExportImportTrade Balance0

Copper

Source: National Statistical Office

Coal

Crude OilIron OreGold

6

Update on Current Price of Main Export Commodities
Some of the main commodity exports has increased from the same period of the previous year.
WTI Crude Oil Price (USD/barrel)
160

350

Iron Ore Price (USD/ton)

90,79
300

120
80
40

250

0

138.21

200

-40

150

9/30/2023

6/30/2023

3/31/2023

12/31/2022

9/30/2022

6/30/2022

3/31/2022

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/30/2020

100

Gold Price (USD/ounce)

1848.63

Coaking Coal price (USD/ton)
329

350

2,100
2,000
1,900
1,800
1,700
1,600
1,500
1,400

300
250

200

Copper Price (USD/ton)

150
100

Source: Bloomberg

9/30/2023

6/30/2023

3/31/2023

12/31/2022

9/30/2022

6/30/2022

3/31/2022

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

0

3/30/2020

50

8270.512,00011,00010,000
9,000
8,000
7,000
6,000
5,000
4,000

7

External Accounts Have Stabilized
FX reserves are enough to cover imports for 5 months

Balance of payments
The country’s current account balance has recorded a surplus in 2023.
Current Account Balance

Gross Foreign Exchange Reserve (September 2023)
2023
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Q3

6,000.00

504

5,000.00

4,000.00
-675

-700

USD Million-948

3,000.00-1,1552,000.00-1,934-2,207 -2,162-2,108-2,3041,000.00

01-2020
03-2020
05-2020
07-2020
09-2020
11-2020
01-202103-202105-2021
07-2021
09-2021
11-202101-202203-202205-202207-2022
09-2022
11-202201-2023
03-2023
05-2023
07-2023
09-2023

0.00-4,732-5,381

Source: Bank of Mongolia

8Gross Domestic Product, by Sectors
Government of Mongolia is diversifying the economy
GDP Summary

GDP composition by sectors /2022/

The National Statistical Office reported Mongolia’s GDP increased
by 4.8%, to MNT 52.9 trillion in 2022.
GDP Composition by
sectors

2017

2018

2019

2020

2021

2022

Agriculture, forestry
and fishing

10%

10.9%

11%

8.6%

13.2%

13.2%

Mining and quarrying

23%

23.7%

23.8%

26.5%

24.3%

24.3%

Manufacturing

9%

9.2%

9.6%

15.9%

7.6%

7.2%

Electricity, gas, steam,
air conditioning supply

2%

2.1%

1.7%

3.0%

2.4%

2.0%

Construction

4%

3.3%

3.6%

7.0%

2.8%

3.6%

Transportation andstorage

5%

4.7%

4.6%

2.9%

3.1%

4.0%

Wholesale and retailtrade, repair of motor
vehicles

10%

9.7%

9.2%

12.9%

9.7%

9.5%

Information andcommunication

2%

1.8%

1.8%

1.6%

1.9%

1.9%

Service

26%

23.7%

24%

16.2%

24.9%

23.4%

Taxes less subsidies on
products

9%

11%

10.9%

6.1%

10.2%

10.9%

Service
23.4%

Total GDP
MNT 52.9 Trillion

Information andcommunication
1.9%

Mining andquarrying
24.3%

Manufacturing
7.2%

Wholesale and retail trade;
repair of motor vehicles
9.5%
Transportation andstorage
4.0%

Source: National Statistical Office

Agriculture,
forestry andfishing
13.2%

Taxes less subsidies
on products
10.9%

Construction
3.6%

Electricity, gas, steam, airconditioning supply
2.0

9

Comprehensive infrastructure development to boost exports
and to provide long-term economic development platform

Production Facility for Cathode
Copper from Oxidized Ore

Mongol Refinery

Large scale copper production plant USD 1.2 billion “Oil Refinerysupported by USD 529 million Construction” project to lay foundation
for new petrochemical industry ininvestment
Mongolia▪ Implemented by Erdenet Mining▪ Expected production capacity if
Corporation SOE (“EMC”)
1.5Mtpa oil, 43Ktpa liquified gas,
▪ Serves to accommodate increasing
339Ktpa of 95-octane gasoline,
ore resources to provide lower cost
864Ktpa diesel and 40Ktpa jet, furnace
to boost cathode copper production
fuel eachfor export▪ GDP forecasted to rise, oil imports are▪ Operation of the plant will create
expected to reduce, SMEs will prosper,
139 jobs
foreign exchange outflows will be
reduced at least by 20%▪ Expected completion is 2024H1▪ Financed through a line of credit fromthe Government of India

Erdeneburen Hydro Power Plant

Tavan Tolgoi-Gashuunsukhait
Railway

Construction of 90MW Hydro Power
Plant with USD 275 million
investment

267 km railway project financed by
the USD 1 billion Preferential
Buyer’s Credit Loan Agreement▪

Designed to meet increasing energy
demand from a reliable renewablesource to substitute high-cost power
imports and become energy
independent•

Commenced
operation
September 2022▪

Class 1 railway capable oftransporting up to 30Mtpa to theborder▪

Located at the intersection of
Khovd, Bayar-Ulgii and Uvs
provinces•

Boosts mining export to Japan,
South Korea, India through Chinese
ports

▪

Expected to generate an average of
366GWh of electricity per year andis expected to fully satisfy local
energy demands•

Connected to UBTZ (Ulaanbaatar
Railway) railway network and built
in 1,520mm broad gauge▪

Implemented by Mongol Refinery ▪
State Owned LLC▪

MEIL has clinched a significant dealin Mongolia. The company received a ▪
Letter of Agreement (LOA) for
constructing a state-of-the-art crude oil
refinery plant. The total value of thefour projects is put at $1.4bn

Construction began in April 2022,
and expected to be operational in
2027

Tavan Tolgoi-Zuunbayan Railway

414.6 km railway supported by USD
316 million investment▪

Began trail operations on March 15,
2022▪

First major railway construction
with 100% domestic power andresources▪

Connects Tavan Tolgoi with theTrans
MongolianRailway,
allowing exports to eastern China
through Zamiin-Uud and to Russia
through Sukhbaatar province▪

Part of the UBTZ (Ulaanbaatar
Rilway) railway network▪

Railway will be capable of 15Mtpa
of mining export at a materiallylower cost than road infrastructurein

Expected to offer 800-1000
temporary, 60-80 permanent job
vacancy, diminishing cost of 1820billion MNT paid to Russia

Source: EMC, Mongol Refinery, Montsame News Agency, Ministry of Finance, Ministry of Economic Development

10

“Oyu Tolgoi” Project
Oyu Tolgoi (OT) copper and gold mine project•

OT is one of the largest high-grade copper deposits in the world, located 80 km
north of Chinese border. Third largest copper mine after expansion. Estimated
2.7 million tons of recoverable copper and 1.7 million ounces of recoverable
gold in reserves.

•

Comprehensive Investment Agreement was signed in 2009. Government ofMongolia owns 34% and Rio Tinto owns 66% through Turquoise Hill
Resources.

•

Approximately USD 6.2 billion invested in the first phase development (OT
Phase I) as of March 31, 2014.

•

OT started exporting copper concentrate from its open-pit operation in July
2013.

•

In May 2015, Government of Mongolia and Rio Tinto signed OT Underground
Mine Development and Financing Plan (OT Phase II).

•

USD 4.4 billion OT Phase II project financing facility agreement was signed on
December 15, 2015. The project financing was closed on May 25, 2016, withfull disbursement and the underground work has commenced.

•

IMF estimates OT will generate up to 1/3 of Mongolia’s GDP once it reaches
full production.

••

On December 13, 2021, Rio Tinto and Mongolia settled dispute over Oyu
Tolgoi copper mine, allowing the underground mining project to move forward.
As a part of the deal, Rio Tinto confirmed to write off Mongolia’s USD 2.4
billion of debt obligated to its share (34%) in the Oyu Tolgoi copper-gold
project.
Within the industrial recovery policy, a part of the New Recovery Policy of theGovernment, OT’s underground mining development has commenced on
January 25, 2022.

Oyu Tolgoi’s underground mine•

On March 13, 2022, The underground mine commenced operations, extracting
ore from a depth of 1.3 kilometers beneath the Gobi desert’s surface.

•

Preliminary estimates suggest that Oyu Tolgoi LLC will have sales worth about
USD 5 billion, with tripled royalties to Mongolia, reaching MNT 700 billion per
year.

•

Oyu Tolgoi is expected to become the fourth-largest copper mine in the world
by 2030, operating in the first quartile of the copper equivalent cost curve.

•

Developing the underground mine is an investment of over USD 7 billion,
unlocking the most valuable part of the copper resource. The mine is expected
to produce around 500,000 tons of copper per year, on average, from 2028 to2036.

Source: Oyu Tolgoi, Turquoise Hill Resources, Oyu Tolgoi Underground Mine Development and Financing Plan, Erdenes Tavan Tolgoi, Erdenes Mongol, Government of Mongolia,
Montsame News Agency, Reuters

11Renewable Energy (RE) Development in Mongolia
The renewable energy sector in Mongolia
•

•

•

•

In 2015, the Parliament of Mongolia set the country’s mid-to-long term targets inthe energy sector and its plan for 2015-2030. According to which, Mongolia aims
to increase the share of renewable energy generation in its total installed capacity to
20% by 2023 and 30% by 2030.
Mongolia can use its vast renewable energy resources to bolster energy security,
reduce pollution, meet global climate commitments and develop regional electricity
exports.
The National Renewable Energy Center estimates Mongolia’s total renewableenergy potential at 2,600 gigawatts (GW) of installed capacity of clean electricity
generation per year. This is a potentially huge resource base for electricity
production and export, which in the long-term could rely on the solar and windpotential of the country’s Gobi Desert. Also, new policies promise to rapidly
accelerate renewable energy development in the country.
The amount is enough to meet the country’s energy demand and can meet northeast
Asia’s regional energy demand with a suitable transmission infrastructure.

Wind Power Plants operating in
Mongolia:

Solar Power Plants operating in
Mongolia:

Installed capacity - 154.6 MW

Installed capacity - 60 MW✓ 49.6 MW Salkhit (2013)✓ 10 MW Monnaran (2015)✓ 50 MW Tsetsii (2017)✓ 10 MW Darkhan (2017)✓ 55 MW Sainshand (2019)✓ 15 MW Gegeen (2017)✓ 15 MW Bukhug (2018)✓ 10 MW Sumber (2019)

Installed power capacity in Mongolia
Installed power capacity (2019) – 1329.9 MW (~1.3 GW)
Thermal power plants (total)

1,090.0 MW

82.03%

Renewable power plants (total)

237.6 MW

17.8%

Diesel power plants (total)

2.3 MW

0.17%

Source: IRENA, Ministry of Energy of Mongolia, National Renewable Energy Center of Mongolia, ADB, MRIA
12

Mongolia Macroeconomic Developments> Banking Industry
TDB Overview

Green and Social FinanceProactive Management of Banking Sector amidst
Challenging Market Backdrop
Banking sector remains liquid
Liquidity Ratio*

Strong Capital Position
Capital adequacy*

Minimum requirement
18.6%

41.4%

2016

45.7%

2017

41.0%

2018

44.4%

46.2%

2019

2020

41.6%

42.1%

2021

2022 2023Q3

17.4%

Minimum requirement

17.0%

16.6%

18.2%
16.4%

40.6%

2016

2017

2018

2019

2020

17.90%

14.9%

2021

2022 2023 Q3Banking sector asset growth has reached 12% by the end of 2022
74.1%

50

43.7

40.9

MNT Trillion

40

37.6
50.1%

29.8

30

25.6
28.0%

20
10

33.6

32.8

22.4

20.4

19.6

19.1
17.7%

11

8.7

13.6%

14.9%
8.5%

8.1%

0.7

1

2011

2012

2013

12.0%

7.8%

3.2

3.3

3.1

3.1

3.4

4.9

2.4

2.9

5.8

2.1

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023Q3

-4.7%

1.3

11.8%
2.3%

0
Liabilities (LHS)

Equity (LHS)

80%
70%
60%
50%
40%
30%
20%
10%
0%
-10%

Asset growth (RHS)

Source: Bank of Mongolia, Official websites of commercial banks in Mongolia* (Banking sector weighted average ratios) - due to lack of information, some quarterly data were substituted by its prior quarter’s or average value for National Investment Bank andChinggis Khan Bank. However, the miscalculation would be minimal since NIB and CKBank collectively makes up 0.87% of the banking sector total assets.

14

Banking Sector in Mongolia: Overview
TDB and four other banks are classified as systematically important banks
Banks play the largest role in Mongolia’s financial system

Five largest banks account for 90.1% of the sector by total assets(2023 H1)

• Commercial banks are the most important integral part ofMongolia’s overall financial system, accounting for
approximately 90% of the system by assets.
Others10.2%• There are 12 commercial banks and one policy bank in
Mongolia.
• Commercial banks are regulated by the Bank of Mongolia.

• Key players:-

TDB was the number one corporate bank in 2022, with thehighest share in the corporate loans market and increasing
SME/retail banking share.

-

Khan Bank and State Bank have large branch networks
and focus on retail banking.

-Golomt Bank focuses on corporate banking.

-

XacBank focuses on microfinance and SME lending.

• TDB remains the only commercial bank to have accessedinternational bond markets.

State
8.4%

Xac
8.9%

TDB
20.6%

Total Assets MNT
Total
Assets48.0 Trillion
MNT 36.7 Trillion

Golomt
19.4%

Khan
32.5%

Source: Bank of Mongolia, Trade & Development Bank of Mongolia, website of each commercial bank financial reports as of June 30, 2023
15

Banks are Navigating a Changing Environment
Despite a challenging macro environment, sector is managing well
Banks play a prominent role in the economy with structural shift
to increasing Tugrik loans
Loan-to-GDP ratio

Banking Sector Profit
MNT Billion
1,032.0

Loans in MNT %

100%
89.0%

90%

90.7%

92.7%

94.2%
542.0
325.9

84.0%

198.4

81.0%
80%

229.7

218.3

176.5

265.4

249.1
32.7

76.9%
72.7%

70%

78.7%

76.1%

-96.9

67.7%
60%

55.9%

606.3

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022 2023Q3

Aggregate Banking Sector Profit

56.0%

52.4%

50.8% 51.6%
48.2%

47.4%

50%

NPL level

45.5% 47.5%

41.6%

41.6%
Total Loan Outstanding (LHS) /Trillion MNT/40%

NPL ratio (RHS)
20%

30
25

30%

16%
20

20%

13.0%

2012

2013

2014

2015

2016

2017

2018

Source: Bank of Mongolia, National Statistical Office

2019

2020

2021

2022

-

10.1%

7.1%
8.3%

8.5%

5

0%

12%

10.0%

9.0%

10

10%

11.7%

10.7%

15

8.1%

4.9%

2014

2015

2016

2017

2018

2019

2020

2021

9.2%

8%

4%
2022 2023Q3

16

Banking Law Amendments to Strengthen Mongolian
Banks' GovernanceIn accordance with the amendments of Banking Law on January 29th, 2021, five systemicallyimportant banks (D-SIB) were initially required to become open joint stock companies by June
2022, the deadline was extended by one year to June 2023.
In April 2022, IMF expressed its support for the idea of commercial banks launching IPO but
advised to postpone this work in consideration of the current pandemic situation and theinternational crisis.
In May 2022, Bank of Mongolia viewed it necessary to re-evaluate the quality of banks’ assets
and take measures to reflect the results of the assessment in the financial statements of banks. The
Standing Committee on Economy passed a resolution on May 3rd, 2022, proposing to the Prime
Minister to extend the period for transforming banks into open joint stock companies. In
particular, the draft amendment proposal extends the deadline for the transition of banks to an
open joint stock company until June 30th, 2023.
As stipulated in the amendments to Banking Law, D-SIBs are required to have at least nine
members on their board, with no less than one-third of the directors to be independent. In addition
to that, all commercial banks are required to reduce shareholder concentration by end-2023 with acap of 20% on banks’ shares held individually or jointly.

Initial Public Offering

Fitch Ratings believes that the new amendments to Mongolia’s Banking Law, when fully
implemented, will improve transparency and strengthen the banking system’s corporate
governance in the medium-to-longer term, ultimately contributing to the banking system’s
stability.
By the beginning of June 2023, all D-SIBs have been listed on Mongolian Stock Exchange,
progressing greatly towards banking sector transformation. Looking ahead, D-SIBs are required
to decentralize their shareholder concentration to 20% or less.

Source: Fitch Ratings, Bank of Mongolia

17

Mongolia Macroeconomic Developments
Banking Industry> TDB Overview
Green and Social FinanceLeading Bank in Mongolia
A premier financial institution in the country, celebrating 33rd year
• Most experienced and largest bank in corporate banking by corporate
lending market share.
• Serves approximately 2,400 major Mongolian corporations in nearly every
major sector.
• Well-established network of 87 branches and settlement centers, 282
ATMs and 11,983 POS terminals as of September 30th, 2023.
• Direct correspondent relationships with 344 foreign banks and financial
institutions.
• Leading virtual banking services, e.g., internet banking service, mobilebanking service, e-billing.
• The only commercial bank that has successfully issued bonds
internationally, to date five USD and one CNH international bondissuances.

Financial Results (USD millions)
2018

2019

2020

2021

2022

2023 Q3*

Total Assets

2,756.0

2,862.1

2,848.5

3,361.4

2,802.9

2,954.8

Total Loans (net)1,155.8

1,281.6

1,441.9

1,590.7

1,201.1

1,258.5

Total Deposits**

1,885.8

1,960.1

1,920.2

2,288.1

1,811.7

2,236.2

Total Equity

351.4

257.4

357.1

375.4

342.0

365.5

Net Profit

16.8

23.6

7.4

31.6

56.4

31.5

Capital Adequacy
Ratio

19.5%

17.0%

16.3%

15.1%

15.2%

16.7%

ROAE

5.4%

7.0%

2.6%

8.6%

17.7%

12.0%

ROAA

0.6%

0.8%

0.3%

1.0%

2.0%

1.5%

MNT/USD

2,642.92

2,733.52

2,849.51

2,848.80

3,444.60

3,459.50

Bank Ratings by Moody’s (Jun. 2023)

TDB market shares 2022

Senior Unsecured MTN

B3

LT/ST Bank Deposits (domestic currency)

B2

LT/ST Bank Deposits (foreign currency)

B3

LT/ST Issuer Rating

B3

Outlook

Stable40.7%

B/Stable/B

Senior Unsecured

B

27.3%

Others,72.3%

Others,59.3%

Foreign Settlement

Bank Ratings by Standard & Poor’s (Sep. 2023)
Issuer Credit Rating

Trade Finance Transactions

Corporate Loan

Treasury Products
31.9%
20.0%

26.7%

Others,
68.1%
Money market
Source: Trade & Development Bank of Mongolia
Note: *Unaudited financials,**Including all existing bonds issued

FX market

19Key Players and Performance
TDB is one of the leaders by key measures (2023 Q3)Shareholders’ equity market share (2023 Q3)Others,10.4%
State Bank,
8.8%
Xac Bank,
10.0%

State Bank,
9.0%

TDB,
21.8%

Xac Bank,
7.5%

MNT 5.5
trillion

Others,7.4%

Others,7.7%

State Bank,
9.9%

TDB,
22.1%
MNT 29.3
trillion

GolomtBank,
20.2%

Khan Bank,
33.6%

Golomt Bank,
15.4%

Loans (net) market share (2023 Q3)

Deposits market share (2023 Q3)

MNT 23.6
trillion

Xac Bank,
11.0%

Khan Bank,
33.8%

TDB,
18.1%

Khan Bank,
36.3%

Golomt Bank,
17.0%

Leverage (2023Q3)

Net profit per employee (2023 Q3)
MNT Millions

73.7

10.76

66.3
58.3

56.7

8.08

8.26

TDB

Khan

7.55

8.08

14.9

TDB

Khan

GolomtXac

State

Source: Bank of Mongolia, website of each commercial bank financial reports as of June 30, 2023
Note: * Leverage = Total Assets / Total Equity

Golomt

Xac

State

20

Strong Fundamentals (1)Diversified and reliable throughout business cycles
Diversified loan portfolio (2023 Q3)Segment revenue (2023 Q3)Total MNT 640.2 billion

Mining11.49%

Total MNT 4.9 trillion Other**
22.63%

Other
7.4%

Construction
9.84%
Corporate
Banking
34.1%

Treasury
30.8%

Consumer*
14.46%SME Banking
11.8%

Retail Banking
15.9%

Trade
16.51%

Manufacturing
10.68%

Managed growth in total loans (2023 Q3)Mortgage
9.67%

Petrol Import & Trade
4.72%

Non-performing loans compared to sector average (2023 Q3)
20%

6,000
5,000

561
432

449

MNT in Billions

16%

535

18.5%

15.0%
13.2%

14%

13.4%

910

4,000
373
202

3,000

122

139
569

517

2,000

119
456

103

109

529

491

63
295

426

784

1,035

2011

2012

639

608

2,128

2,168

2,357

2,433

2,615

3,673

3,238

3,210

6%

2%
2014

2015

Corporate

2016

2017

Retail

2018

SME

2019

10.1%

10.0%

5.3%

9.2%
7.4%

5.0%
4.0%

4%

0

2013

10.4%
8.5%
8.5%
7.4%
7.1% 7.5%
6.3%

8%
2,953

12.6%
11.7%

12%
10%

3,524
1,910

948

1,172

674

86

1,000

18.1%

18%

2020

2021

2022 2023Q3

1.1%

0%
2013

2014

2015

2016

2017

2018

2019

TDB

Banking Sector

2020

2021

2022 2023 Q3

Source: Bank of Mongolia, Trade & Development Bank of Mongolia
Note: * Consumer loan includes card loan and saving collateralized loan** Other loan includes transportation and communication; hotel, restaurant and tourism; financial services; agriculture; electricity and thermal energy; health; education and other services

21

Strong Fundamentals (2)Profitable, efficient and reliable
Operating income remains strong by the end of 2022, largely
supported by net interest income

Net Interest Margin (2023 Q3)

400
64

350

250
43

200
150

58

90

100
50

148

121

85

39

30

14

4.4%

100

81

40

3.9%

4.1%

4.3%

3.9%

174

192

179

189

180

202

2015

2016

2017

2018

2019

2020

4.2%

3.9%
3.1%

320

3.5%

3.5%

2.6%
177

173

0
2013

2014

Net Interest Income

2021

2022

2023Q3

2013

2014

2015

2016

2017

2018

2019

2020

2021

Best-in-class operating efficiency (2023 Q3)
250

60%

51.6%

48.5%

194.2

200

45.0%

50%

40.9%

42.0%
34.1%

33.3%

2023 Q3

Net profit and ROAE (2023 Q3)

55.9%
51.5%

39.4%

2022

Non-Interest Income

MNT Billions

MNT Billions

300

40%
150

139.3
109.1
93.5

100

61.0

67.5

73.8

20%

64.4
44.4

50

10%

21.0

12.0%

0
2014

2015

2016

2017

2018

2019

2020

Cost Efficiency Ratio
Source: Trade & Development Bank of Mongolia

2021

2022

2023Q3

30%

90.0

0%
2013

2014

2015

2016

2017

2018

Net Profit (LHS)

2019

2020

2021

2022 2023 Q3

ROAE (RHS)

22

Low Cost and Diversified Funding BaseStrong and prudent balance sheet management (2023 Q3)Funding base (2023 Q3)Derivative financial instruments, 1.85%

High contribution of low-cost deposits (2023 Q3)Other, 1.50%

Total MNT 7.7 trillion

Others, 1.9%
Other liabilities, 2.07%

Borrowings,
9.20%

Current account,
41.4%

Time deposits,
49.9%

Due to Customers,
85.41%

Savings, 6.8%

Strong capital base, above regulatory thresholds (2023 Q3)
Two step loan funded bymultinational FIS, 4.58%

19.6%
17.0%

BOM subprojectand Mortgage loan
funding, 47.09%

Trade financeloans, 27.17%

17.0%
16.0%

16.3%

16.7%16.7%
15.1%
15.1% 15.2%15.2%
14.…

14.0%
11.3%

12%
9%

Other, 6.12%
Green loan,
15.04%

2017

2018
CAR

Source: Bank of Mongolia, Trade & Development Bank of Mongolia

2019
Tier-1

2020

2021

Minimum CAR

2022

2023 Q3

Minimum Tier-1

23

Established Track Record of Debt Transactions
Market recognition of TDBs commitment to the performance of its bonds
•

TDB
is
the
only
Mongoliancommercialbank that has successfully
issuedbonds
internationally.

•

USD 1.24 billion havebeen raised through five
USD and one Dim Sum
bond as well as a syndicate
loan from the international
markets.

•

This consistent approach tomaintain a diversified
funding
portfolioisbeneficial and allows TDB
toweatherchanging
market conditions better
than its peers.

USD
75,000,000

USD
150,000,000

USD
25,000,000

USD
300,000,000

USD
82,000,000

CNH
700,000,000

USD
500,000,000

8.625% Senior Notes,
due in 2010

8.500% Senior Notes,
due in 201312.500% SubordinatedNotes,
due in 2015

8.500% Senior Notes,
due in 2015

Syndicated A/B
Term Loan Facility

10.000% Senior Notes,
due in 2017

USD 150,000,000
EMTN Programme
Fully repaid in 2010

USD 300,000,000
EMTN Programme
Fully repaid in 2013

9.375% Senior Notes,
due in 2020
Guaranteed by the
GoM
USD 500,000,000
GMTN Programme
Fully repaid in 2020

January 2007

October 2010

USD 300,000,000
EMTN Programme
Fully repaid in 2015

October 2010

USD 700,000,000
EMTN Programme
Fully repaid in 2015

September 2012

USD 82,000,000
Syndicated Loan
Fully repaid in 2018

September 2013

USD 700,000,000
EMTN Programme
Fully repaid in 2017

January 2014

May 2015

Performance of Mongolia’s international bonds
125

115
105
95
85
75
65

TDBM 20

Mongol 22

Mongol 23

Mongol 24

Mongol 26

Mongolian Mortgage

Nomad bond*Source: Trade & Development Bank of Mongolia, Bloomberg*Note: On September 29, 2020, the Government of Mongolia together with the Bank of Mongolia issued 5.5-year ‘Nomad’ sovereign bond with 5.125 percent of annual coupon rate, raising USD 600 million oninternational capital market.

24Tight Control on Asset Composition
Focus on quality loans, prudent asset management and liquidity (2023 Q3)Balance asset composition

Gross Loans /Assets Ratio managed below 60%

Property and equipment / intangible ,5.1%
Other ,Cash and balances with Bank of
6.5%
Mongolia ,16.7%

MNT billion
12,0009,576 9,654

10,0008,000

Due from other banks andfinancial institutions ,13.0%

Loans and advances tocustomers (net) ,42.6%

6,645 6,875

7,284

70%
60%

3,934
4,000

80%

7,824 8,117

5,544
5,124 5,413

6,000

100%
10,222 90%

5,029

4,612

50%

4,617 4,948

40%

2,990 3,032 3,225
2,549 2,836 2,744

30%
20%

2,000

10%
0
2013

Financial investments ,14.3%
Derivative financial instruments , 1.8%

98.8%

41.3%

99.1% 103.0%

100%

86.8%

2016

2017

2018

2019

0%
2023
Q3
Gross Loans/Asset Ratio (RHS)

2020

Total Assets (LHS)

2021

2022

Liquid assets significantly above regulatory thresholds

124.0% 123.7%

120%

2015

Gross Loans (LHS)

Loan-to-deposit ratio

140%

2014

44.4%

47.1%

45.7%
42.3%

39.3%

40.6%

43.4%

40.9%

32.1%
79.3%

80%

74.4%
64.6%

25%

60%
40%
20%
2014

2015

2016

2017

2018

2019

2020

2021

2022 2023 Q3

0%

2015

2016

2017

2018

2019

2020

2021

2022 2023 Q3

Source: Bank of Mongolia, Trade & Development Bank of Mongolia

Minimum Liquidity
Ratio at 25.0%

Liquidity Ratio

BoM Requirement

25International Recognition
Strong cross-border franchise, established network and recognized brand name
Cooperation with international FIs (2022)•

Maintains 88 nostro accounts in 16 currencies at 41 top
rated foreign banks in 16 countries.

•

Direct correspondent banking relationship with 344
foreign financial institutions•

Combined USD554.3 million Trade Finance line fromover 40 foreign financial institutions.

•

Cooperation with Visa, MasterCard, UnionPay, JCB,
Diners Club and Discover.

International awards received
Asian Development Bank 2015-2017 “Leading Partner Bank in Mongolia”

Global Finance Magazine
2015 “Best Trade Finance Provider Mongolia”

Green Trade Review 2012-2016 “Best Trade FinanceBank in Mongolia”

2019 “Best Sub-Custodian Bank” in Mongolia”
2019 “Safest Bank” in Mongolia

International Investment Bank 2020 “The Most Active Issuing Bank in
Mongolia” under the TFSP

Asiamoney
2017, “Best Corporate and Investment Bank”, “Best Private Bank” in Mongolia

Green Climate Fund 2020 “Accredited Entity of the GCF”

2018, “Best Private Bank” in Mongolia

2019, “Best Commercial Bank” in Mongolia
The World Economic Forum honoured TDB as a Global Growth Company

Euromoney 2017, 2015, 2013 “Best Bank in Mongolia”

2022, “Best Corporate Bank, “Best Bank for ESG” & “Best Bank for CSR”
VISA 2017 “Best Innovative Product”
VISA Risk Management Award 2018 “Best Acquirer” in Mongolia

FinanceAsia
2016 “Best High Yield Bond”
2014-2016 “Best Bank of Mongolia”
2016 “Best Domestic Bank of Mongolia

Financial and Banking Association of Euro-Asian Cooperation “Standard of
Stability”

Global Banking & Finance Review 2013-2020 “Best Commercial Bank in
Mongolia”

26

Experienced Management TeamWith extensive industry experience in Mongolia and overseas, the management team has successfully
steered the Bank through growth and downturns
Vision and Strategy
Mr. Randolph S. Koppa

Mr. Orkhon Onon

Mr. Rahn Wood

Mr. Banzragch Orig

Mrs. Enkhmend Avgaan

Chairman

Chief Executive Officer

President

First Deputy CEOFirst Deputy CEOFirst Deputy CEO

55+ years of experience25+ years of experience35+ years of experience

20+ years of experience25+ years of experience

29+ years of experience

Mr. Stéphane Lamoureux

Strong Execution Capability and Industry Expertise
Mrs. Gantsetseg
Ganbold

Mr. Ganbayar
TsognyamMr. Munkhnast
Purevdorj

Mr. Gantumur
Lkhagvajav

Mrs. Solongo
Chuluunbaatar

Mr. Baatar
Sukhbaatar

Deputy CEO
17+ years of experience

Deputy CEO
20+ years of experience

Deputy CEO
18+ years of experience

Deputy CEO
17+ years of experience

Deputy CEO
15+ years of experience

Deputy CEO
15+ years of experience

An experienced and dedicated management team:•

The management team of TDB consists of Executives with significant experience.

•

Proven success in maintaining TDB’s strong leadership in corporate and international banking.

•Good mix of foreign and domestic banking experience.

•

Successfully established strong relationships with a wide range of international financial institutions.
Source: Trade & Development Bank of Mongolia

27

TDB’s Vision and Mission
Long term strategy to be a customer-centric, international and platform bank

Our Vision

To provide comprehensive financial services that exceed customer expectation through advanced
technology for customers to achieve their aspirations.

Our Mission

To be the leading bank in prosperities of developing Mongolia.

Long Term Strategy

To be a customercentric bank

Source: Trade & Development Bank of Mongolia

To become aninternational bank

To become aplatform bank28

TDB’s Medium-Term Strategy

Develop a marketingstrategy to build thebrand image of TDB
Strengthen internal
controls, proactive risk
mitigation

Develop organizational
structure enabling the
new customer centric
strategy

Develop customercentric business model

Focus on SME services
expansion

Simplify business &operations by cost
control with
automation &digitalization tominimize risk

Optimize IT andleverage the available
data

Provide banking
services in line withinternational bestpractice and mindset

Source: Trade & Development Bank of Mongolia

Target niche segmentsof retail market

29

Robust Risk Management Framework
Leading risk management framework & robust corporate governance structureMarket leader in risk management•••

Strong corporate governance structureFirst Mongolian Bank to introduce an independent Risk•

Established Audit Committee and Risk Committee in 2011.

Management Committee.

•

Established General Audit Unit, Special Audit Unit and Information Technology Audit Unit
to provide independent and objective assurance and consulting services.

Appointed Chief Risk Officer to oversee risk governanceframework reporting to the RGB and Risk Management•

Based on PwC recommendations implemented comprehensive compliance programs.

Committee on quarterly basis.

•

Delgersaikhan Jamsrandorj was appointed on April 28, 2017, as an independent member on
the RGB.

Strive to apply Basel II / III principles for corporate loan
portfolio and to be the most advanced bank in Mongolia to move•

Bolormaa Jalbaa was appointed on April 29, 2016, as an independent member on the RGB

towards international banking standards.

•

Mrs. Narantuya Zagdkhuu was appointed as an independent member of the Board on
March 14th, 2023, and subsequently as the Chairwoman of the Risk Committee on May
29th, 2023.

Compliance management• Back in 2010, TDB developed its AML/CTF policy in compliance with Mongolian AML law and other international regulations, and since then it was updated in2013, 2016 and 2020, respectively. All policies and procedures had been approved by the Board of Directors.
• The TDB compliance-related policies and procedures include:

Customer acceptance andKYC/CDD policy

Transaction
monitoring/sanction
screening

Suspicious transaction
reporting

Risk based approach, risk
ratingStaff training

Record keeping• In addition, TDB requires from its each employee to be a compliance officer, following Mongolian law and legislature along with the Bank’s internal rules andregulations as well as compliance culture, thus, increasing the value and reputation of the Bank.
Source: Trade & Development Bank of Mongolia

30

Robust Risk Management Framework
Leading risk management framework and robust corporate governance structure
Risk governance framework
Representative Governing Board(“RGB”)

Risk Management Committee(“RMC”)CEO
Asset Liability Committee (“ALCO”)
First Deputy CEO

Members of CC and ALCO

Chief Risk Officer(“CRO”)
Reports to

Operational Risk
Management
Department

Compliance
Unit

Special Assets andDebt Restructuring
Unit

Digital Risk
Management Unit

CreditUnderwriting
Department

Monitors risk limits
and provides day to
day support to thetwo committees
Risk
Management
PolicyDepartment

Credit Committee(“CC”)

Market and Liquidity Risk
Management Unit

To support to monitor and control
credit risk

Source: Trade & Development Bank of Mongolia

31

Stable Ownership Structure

Erdenebileg Doljin

Tulga Erdenebileg•

Mr. Erdenebileg Doljin (Member of the Board) owns 60.8011% ofshares of the bank indirectly through US Global Investment LLC

100%

and Globull Investment & Development Pte. Ltd.

100%•

7.8037%

US Global Investment
LLC, USA4240586

TDB Capital Singapore
Pte Ltd, Singapore
201811637 H

indirectly through TDB Capital LLC (Mongolia), CNB Consulting
and TDB Capital Singapore Pte. Ltd.
•

92.1963%100%

CNB Consulting,Mongolia
6466257

Mr. Tulga Erdenebileg owns 29.6864% of shares of the bank

Goldman Sachs owns 3.1198% of shares of the bank indirectly
through Mongolia Strategic Investments Limited (Malaysia).

•

Following the IPO in May 2023, by which the bank offered 5.0% of
its shares, 6.3927% of the shares of the bank is held by public.

100%
Globull Investment andDevelopment Pte Ltd,Singapore
201303612 E

TDB Capital
LLC,
Mongolia
5479932

Mongolia Strategic
Investments Limited,
Malaysia
LL03301

Public,Mongolia

60.8011%29.6864%

3.1198%6.3927%

Trade and Development
Bank JSC,
Mongolia
2635534

Source: Trade & Development Bank of Mongolia

32

Mongolia Macroeconomic Developments
Banking Industry
TDBM Overview> Sustainable FinanceOverview: Sustainable Development and FinanceGreen Taxonomy of Mongolia
Sustainable finance in Mongolia has been driven by both the public
sector, which has a strong sustainable development vision and national

greenhouse gas (GHG) reduction targets, and the private sector, which
has adopted sustainable finance principles and tracks sustainable finance

INTRODUCTION

according to the Green Taxonomy.
Mongolian Government has an aim to be among the top 30 countries in

RENEWABLE
ENERGYLOW POLLUTION
ENERGY8

3

10

the Global Green Economy Index (GGEI), and country’s nationallydetermined contribution (NDC) targets a 23% reduction in GHG

emissions by 2030. As the Government of Mongolia reports, USD 11.5
billion is estimated to be required for NDC implementation.

ENERGYEFFICIENCYPOLLUTIONPREVENTION &CONTROLGREEN
BUILDINGS

Key private sector initiatives include the Mongolian Sustainable
Finance Initiative, which aims to advance sustainable finance in the

11

13

14

country. Sustainable Finance Principles, launched in 2013, aredesigned to help identify and manage risks in lending and promote green

finance and have been adopted by all banks in the country. Private-sector
led Mongolian Green Taxonomy was published in 2019 and classifies
environmentally sustainable projects and investments.

SUSTAINABLE
WATER ANDWASTE USE
15SUSTAINABLE
AGRICULTURE,
LAND USE,FORESTRY & ECO
TOURISM

CLEAN
TRANSPORT

17

Source: United Nations Environment Programme, International Finance Corporation (IFC), Sustainable Banking Network (SBN) , University of Edinburgh, Mongolian Sustainable
Finance Association (MSFA), Central Bank of Mongolia, Government of Mongolia, Ministry of Environment of Mongolia, Financial Regulatory Commission

19

34

Overview: Sustainable Development and Finance
In March 2022, the Government of Mongolia organized the Regional Forum on
Green Financing, during which Ministry of Finance, Bank of Mongolia, andFinancial Regulatory Commission signed a “Roadmap on the development of
Sustainable Finance in Mongolia” that sets a commitment to increase green loans
to 10% in the banking sector of Mongolia by 2030. In June 2023, during the"Sustainable Finance Week” forum hosted by the Mongolian Sustainable Finance
Association (MSFA), the Mongolia SDG Finance Taxonomy was adopted by
the Financial Stability Council of Mongolia supported by UNDP Mongolia andMSFA.
In third quarter, green loans of all commercial banks represented 2.4% of
Mongolia’s total loans, which resulted in an increase of green loan portfolio of
the country's banking sector by 100.5% YoY and by 94.5% YTD.

LOAN PORTFOLIO HELD BY BANKS
classified by Mongolia’s Green Taxonomy categories (Q3 2023)

TDBM’s green loans represented 1.2% of its own total loan portfolio, while its
outstanding green loans accumulated to near 9.3% of total green loan portfolio of
the banking sector, and by the number of outstanding green loans TDBM
disbursed around 29.0% of total green loans of all commercial banks in
Mongolia in third quarter.
Although are still present barriers to scaling sustainable finance such as highinterest rates of funding, short tenors, as well as underdeveloped toolkit forpolicymakers, and limited technical capacity of market actors, going forward,

significant green investment demand is anticipated in various sectors of thecountry.

Companies and individuals (outstanding loans, in million MNT)
Source: United Nations Environment Programme, International Finance Corporation (IFC), Sustainable Banking Network (SBN) , University of Edinburgh, Mongolian Sustainable
Finance Association (MSFA), Central Bank of Mongolia, Government of Mongolia, Ministry of Environment of Mongolia, Financial Regulatory Commission

35

Milestone for Sustainability
2012 -2013•

Became the first bank in Mongolia toimplement Environmental and Social Risk
Management System (ESRMS) fully into its
banking operation, in partnership with theDutch Development Bank (FMO).

2016, 2017, 2019
•

•
•

•

•

Launched its internal Environmental and Social
Responsibility policy with corresponding
procedures and evaluations (in accordance withIFC Performance Standard-8).
TDBM along with all other commercial banksof Mongolia
joined the Mongolian
Sustainable Finance Initiative, making a big
step towards the development of sustainablefinance in Mongolia.

•

2021

“Best Sustainable Financing Bank” - awarded by
the Mongolian Sustainable Finance Association(MSFA) and the Bank of Mongolia.
Signed up to the Green Investment Principles(GIP).
Joined the Mongolian Renewables Industries
Association and became the first ever bank tobecome its member.
Launched its Gender Equality Policy

•
•
•

•

2020
•

•

Obtained a SPO on the Sustainability Framework, provided by then-Vigeo Eiris (V.E.), now re-branded
as Moody’s ESG.
First Green Finance Forum, with the participation of the UNDP, Bank of Mongolia, and otherrespective organizations.
Launched its Green Business Loan and Women Entrepreneurship Support Loan products for SME andCorporate clients.
Contributed to the ER tool development project of Mongolian Sustainable Finance Association(MSFA) and the Asia LEDS Partnership, to assess the emission reduction projects in Mongolia. ER
tool is currently in use for TDBM’s Green business loans, to calculate baseline emissions/energy andpotential GHG reduction from implementing low emission projects.
“Honorable Sustainable Finance Bank”, “Leading Sustainable Finance Bank” – awarded by the
MSFA and the Bank of Mongolia.

Accredited Entity of the Green
Climate Fund (GCF).
Established its Green Funding
Office.

•

2023
•

2022
•
•

2014-2015•

Implementationofits
Environmental and Social
Responsibility policy withcorresponding procedures andevaluations.

•
•

•
•
•

Collaborated with Forbes Mongolia on “Forbes Mongolia Women’s Summit
2022”.
Partnered with University of Edinburgh on Carbon and Environmental
consulting project, developed a guidance for the Bank to address key challenges
in becoming a “Green Bank”.
Participated in GCF’s Global Programming Conference 2022 and Global Impact
Investing Network’s Investor Forum 2022.
TDBM, in collaboration with MSFA, has commenced implementation of theReadiness program on "Upscaling sustainable and green finance practices in
Mongolia“ approved by the GCF Board.
“Leading Bank in Gender Equality” – awarded by MSFA.
“Best company for advancing women’s career” in Mongolia received from
“Good workplace awards 2022” by Mongolia’s fastest-growing HR platform,
Nitotech LLC.
“Best Bank for ESG”, “Best Bank for CSR” in Mongolia – awarded by
AsiaMoney.

•

•
•
•

•
•

Organized its first stakeholder meeting on the Concept Note of TDBM’s“Climate 30+ Initiative: Green Recovery Program for Mongolian
Corporates”, developed for GCF;
TDBM has been cooperating with the Asian Development Bank on cofinancing of the construction project of an energy-efficient hypermarket in
UB, the aim of which is to reduce GHG emissions by using energy-efficientequipment and to ensure food security through facilitating sustainableagriculture production of the hypermarket’s suppliers.
TDBM participated as one of the main sponsors and co-hosted "Sustainable
Finance week 2023" international forum event.
We got an approval of the “Readiness proposal: Supporting Green Regional
Development in Mongolia” from the Green Climate Fund.
Bank’s Initial Public Offering was launched successfully with 5% of its total
issued shares being offered. Net proceeds from the offering are expected tobe utilized for expanding green and sustainable lending operations of TDB inaccordance with its medium-term strategy of becoming a “Green Bank”.
TDBM was awarded "Outstanding Service Award of 2023" by GIP of theBelt and Road Initiative.
TDBM issued its first Sustainability Report for year 2022.

Source: Trade & Development Bank of Mongolia
36

GCF Accreditation and E&S policy
Trade and Development Bank of Mongolia was approved as the Accredited Entity of the Green Climate Fund in 2020.

•

Modes of access: Direct access entity (National)•

Size: Medium (USD 50-250 million)•

Financial instrument: Loan, Guarantee, Grant (TA)•E&S risk category: Category B (medium risk)*

TDBM’s ESMS policy
In 2012, TDBM became the first bank in Mongolia to fully implement Environmental and Social Responsibility Management System (ESMS), in
partnership with the Dutch Development Bank (FMO). TDBM has been continuously improving the ESMS to manage and reduce our clients’environmental and social risks and impacts. In addition to complying with the relevant laws and regulations of Mongolia, TDBM aims to implement andadhere to the following principles:• Ten principles of the UN Global Compact;• UNEP Finance Initiative: Statement by financial institutions on the environment and sustainable development;• Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (ILO);• Eight Performance Standards of International Finance Corporation (IFC);• Eight principles of Sustainable Finance of the Mongolian Sustainable Finance Association (MSFA/ToC);• Green Investment Principles for the Belt and Road Initiative in its operations and financial transactions.

*Note: According to the GCF’s ESS policy, risk category B means that activities with potential limited adverse environmental and/or social risks and impacts that individually or cumulatively, are few,
generally site-specific, largely reversible, and readily addressed through mitigation measures.
Source: Trade & Development Bank of Mongolia 37

Sustainability Framework
TDBM launched its Sustainability Framework in April 2021, which describes the process of issuing Green, Social and Sustainability bonds (“GSS
Bonds”) and selecting loans that can be financed within Eligible Categories according to the Green Taxonomy of Mongolia.
TDBM’s Framework addresses the four key pillars of the International Capital Market Association (ICMA) Green Bond Principles 2018, Social
Bond Principles 2020 and Sustainability Bond Guidelines 2018.
1

3

2

Use of proceeds
Eligible green categories:•••

Renewable energy

Green buildings•

Sustainable water and waste use
and treatment•

Sustainable agriculture, land use,
forestry & biodiversity
conservation•••

Publishing of allocation andrecorded through a dedicated GSS

impact reporting on at least an

segments

Bonds Accountannual basis or in the case of any

Green Funding Office to assess
environmental and social impacts••

environmental and social risk

the bond’s issuance•Committee

allocated eligible projects,

Affordable housing

across three pillars:

Access to essential services

Environmental; Human Rights &SME financing and microfinanceCommunity; Governance•proceeds will be reallocated

Verification of allocation reportingby external auditor on an annual

In the case of project

postponement or divestment from

ESG controversy monitoring

maturity of the bondto eligible projects 24 months fromthrough ESG officer and Credit•

material developments, until

Net proceeds to be fully allocated

Additional assessment ofClean transport

Affordable basic infrastructure••

Bond proceeds tracked andidentification by TDBM businessEligible social categories:••

Reporting

Energy efficiency••

Management of proceeds

Potential eligible project

Low pollution energy•

4

Project evaluation and selection

basis
•

Verification of impact reporting at
the bond maturity

towards other eligible projects

within 6 months, or within the full
allocation period, whichevercomes latest

TDBM obtained a Second Party Opinion from then Vigeo Eiris (V.E.), now re-branded as Moody’s ESG, and confirmed its alignment to
the International Capital Market Association (ICMA) Green Bond Principles 2018 and the Social Bond Principles 2020.
Source: Trade & Development Bank of Mongolia38

Governance Strategy: Road to Becoming Green Bank

By 2025, TDBM will implement international climate-related risk management and disclosure standards in its banking operations (Task Force on
Climate-related Financial Disclosures (TCFD)/ International Sustainability Standards Board’s IFRS S1 and S2 standards).

By 2030, TDBM will provide sustainable financing worth of USD 2 billion to its SME, Corporate and retail clients and, thus, profoundly
contributing to inclusive and sustainable economic growth of the country.

The main impact of TDBM’s sustainable financing is facilitating climate change mitigation/adaptation in Mongolia, which enables the transition of
normal supply chains of Mongolian companies into sustainable business cycles, by adapting climate-centric practices, operations and governance inagriculture, manufacturing, mining (non-fossil fuel), logistics, energy & renewable energy, solid waste, water management andinfrastructure sectors.

TDBM is planning to reach “Net-Zero” by 2050, through implementing various green projects and programs, undertaking actions towards
reducing carbon footprint from its activities.

39

Sustainability: Impact Focus Areas
TDBM has included the following four Sustainable Development Goals in
its long-term strategy: SDG #4 (Quality education), SDG #5 (Genderequality), SDG #8 (Decent work and economic growth) and SDG #13(Climate action).

Green impact areas
1. Renewable energy, Low pollution energy, Energy
efficiency

2. Green buildings & green infrastructure

Social impact areas
3. Clean transport
1. Affordable basic infrastructure
2. Financial Inclusion

4. Sustainable agriculture & biodiversity conservation

3. Food security
5. Sustainable water & water treatment

4. SME Financing and microfinance
5. Socioeconomic advancement and empowerment(reduced inequalities, gender equality)

6. Waste management

40

UN Sustainable Development Goals✓ GCF’s Readiness program on "Upscaling sustainable and green
finance practices in Mongolia“▪ 21 employees of 15 local FIs, NBFIs and financial
regulatory offices were enrolled in certified courses of theFrankfurt University.

✓ Collaboration with local brands for green development▪ In collaboration with Mobicom, Bank organized "Save thePlanet" campaign aimed at promoting the return of usedcards to the bank.
✓ Library project▪ 53 libraries of local universities, schools and kindergartens
renovated.
✓ Sustainable Finance Week 2023 – Green Forum▪ TDB was one of the main sponsors and co-host of theforum held on June 13th-16th.
▪ Welcomed more than 800 participants from over
40 countries in person, while 250 individuals participatedremotely.
✓ TDB’s Sustainability Report for 2022
▪ Bank successfully published its first Sustainability Report,
apart from its Annual Report.
✓ Green consumption loans▪ Since 2020, TDBM has been issuing its green
consumption loans to individuals for their purchases ofenvironmentally friendly products and services.

✓ Sustainable waste management▪ TDB successfully started the supply of its internal plastic
waste disposal as a raw material to one of the leading
plastic recycling factories in the country.
✓ Gender related information of Bank and its clients as of Q3 2023
▪ TDB developed its Gender Equality Policy in 2019, andalso established its Gender Committee, responsible
for supporting and implementing the policy within
the organization.
Corporate clients by gender
33%

37%
63%

67%
FemaleFemaleMale

Retail clients with business loans
by gender

Male

Retail clients with retail loans
by gender

28%
72%

Female

TDBM’s outstanding green consumption loans(by product types)/as of Q3 2023/

SMB clients by gender

47%
53%

FemaleMale

Male

TDBM Employee Gender Ratio (Q3 2023)

93.3%
Eco car loans
Green consumption loans via
an e-commerce platform
6.7%

Source: Trade & Development Bank of Mongolia

41

Green Loan Portfolio
TDBM’s outstanding green loans amounted to MNT 56.9 billion (eq. to approximately USD 16.5 million) in Q3 2023, which resulted inincrease of the Bank’s green loan portfolio by 21% YoY and by 8.4% YTD.

Green Loans by Categories (Q3 2023)

Clean transport
22.25%

Sustainable agriculture
and land use and eco
tourism
8.14%

Sustainable
water andwaste use
20.31% Pollution prevention andmitigating measures
0.0003%

Source: Trade & Development Bank of Mongolia

Green Loans by Segments (Q3 2023)

Low pollution energy
0.3%

Energyefficiency
47.37%

Green buildings
1.62%

Retail16.23%

SME
11.43%

Corporate
72.34%

42

Green and Women-Targeted Loan Products
Green Business Loan

Women Entrepreneurship Support Loan

In August 2021, TDBM launched its Green Business Loan product within
the framework of its Green Loan Program (GLP), which aims to achievesustainable development and green growth in Mongolia by enabling access tolonger-term green loan offerings to Mongolian corporates, SMEs and retailclients.

In October 2021, the Bank launched its Women Entrepreneurship Support
Loan (WESL) banking product through the implementation of its Women
Entrepreneurship Support Program (WESP), targeting solely womenowned and women-led Mongolian SMEs, particularly those with insufficientcollateral-worthy assets to access financial services.

Bank’s Green Business Loan product enhances financing of green projects
and activities of enterprises, operating their businesses in an environmentallyfriendly way according to green categories described in Mongolia Green
Taxonomy and TDBM’s Sustainability Framework.

Bank facilitates much needed sustainable development and inclusive growth in
the country amid the pandemics through its Green Business Loan product andWomen Entrepreneurship Support Loan.
WESLs by business sector (Q3 2023)*Green business loan and retail loan portfolio, as of Q3 2023, financed by foreign fund43Social Loan Portfolio
TDBM’s social loans outstanding, including its Women Entrepreneurship Support Loans, amounted to MNT 1.131 trillion (eq. toapproximately USD 326.8 million) in Q3 2023, representing 23.6% of the bank’s total loans.

Social Loans by categories (Q3 2023)

Social Loans by segments (Q3 2023)

Source: Trade & Development Bank of Mongolia
44

GHG Emission Reduction

As of Q3 2023, through our Green Business Loans only, totalof 47,833.92 tons of CO2 greenhouse gas emissions are
expected to be reduced annually.

Connecting ger
areas to the district
heating network
27.46%

Sustainable
water andwaste use
34.46%

Energy efficiency
34.10%

Low pollutionenergy3.98%

For Green Business Loan clients, eligible green projects are assessed with Emission reduction
calculation tool developed by South Pole Carbon Asset Management Ltd., to define whether
these projects qualify with requirements of TDBM’s Sustainability Framework, the Mongolian
Green Taxonomy, and to estimate its potential emission reduction.

45

Partnership in Sustainable Development

46

Contact

International Banking Department
T: (976) 11 319 943
F: (976) 11 312 418
E: iru@TDBM.mn

Trade and Development Bank of Mongolia
14210 Peace Avenue 19, Sukhbaatar District 1st Khoroo,
Ulaanbaatar, Mongolia
Swift: TDBMMNUB

www.TDBM.mn

47