annual report - nibank.mn fileannual report 2018 3 message from the chairman of the board dear...

ANNUAL REPORT2018

ANNUAL REPORT 2018 2

CONTENTS

GREETINGS Message from the Chairman of the Board 3 Message from the CEO 4

MONGOLIA’S ECONOMY 2018 Political 6Economic 7 Social Technological Legal

BRIEF INTRODUCTION OF THE BANK Brief introduction of the bank 12 Vision, Mission, and Core Values of the Bank 13Bank governance 14 Shareholders 15 Board of Directors 15 Executive Management 17Committees under executive management 18 Bank structure 19HIGHLIGHTS OF 2018 20FINANCIAL STATEMENT OF THE BANK IN 2018 22Products and Services for Entities 23Products and Services for Individuals 24 Insurance intermediary 25Risk Management 25 Human Resource Management 29 Foreign Relations 30 Information Technology 32 Social Responsibility 33

AUDITED FINANCIAL STATEMENTSReport of Independent Auditor 35 Statement of Financial Position 37Statement of Income 38 Statement of Changes in Equity 39 Statement of Cash Flows 40Addresses of branches 42


MESSAGE FROM THE CHAIRMAN OF THE BOARD

Dear shareholders, customers, partners and employees, we are happy to announce the achievements and results of the National Investment Bank in 2018. It is pleasant to note that since its establishment, National Investment Bank is committed to the trust of our clients and colleagues and fulfills the criteria established for financial institutions and has successfully achieved its goals. The National Investment Bank provided comprehensive banking services, direct and indirect sources of financing, raised capital from domestic and foreign financial mar-kets, financed projects of key sectors of the economy through its own and other sources and contributed to the sustainable growth of the Mongolian economy.

As a result of this, we have expanded our activities and increased our equity fund by MNT 19.7 billion. In order to provide VIP service to our customers, we have renewed our Gaali branch office and other banking services that are based on modern advanced technologies that meets the needs of our customers through our 14 branches. We have established correspondent rela-tionship with Transkapital bank of Russia in order to expand our international relations and also introduced money transfer service to our customers by starting our cooperation with E9Pay money transfer company from Korea.

The reliability of the bank is one of the most important indicators for the trust of our custom-ers and is the basis of banking and financial institutions existence. Furthermore, we will focus on the quality of our products and services in 2018 in order to further strengthen our position in the banking and financial markets, to provide long term sustainable growth and to maximize the risks and rewards of current economic conditions. I would like to express my deepest gratitude to all of our shareholders, partners, customers and our employees for their continued support, cooperation, and encouragement.

THE CHAIRMAN OF THE BOARD ORGILMAA.S

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MESSAGE FROM THE CEO

Dear customers, shareholders, business partners, associates, and bank employees,

We are pleased to note that the Nation-al Investment Bank has been successfully achieving its targets and consistently ex-panding and developing our bank operations since its establishment complying legislation and regulation and respecting the trust of its valuable customers and partners.

In the framework of our further strategic goals, we are striving to become a bank that is accepted in international level, based on innovative modern financial technology, provides com-prehensive products and services that is economy and society friendly, and to be reliable and sustainable partner in a long-term for our customers.To further enhance these achievements and to be closer to our customers, we have increased the number of our branches to 14 and opened our new branch in MPM complex which located in Bayanzurkh district. Moreover, in order to provide faster financial services that meets the needs of our customers, we introduced QPay service which scan codes, make payments, and money transfers by registering services organi-zations with QR code.

In order to make money remittance service eaisier, we have introduced E9PAY money trans-fer service from Korea which made us the first Fintech organization in Mongolia.


Since our establishment we continued to fulfill our social responsibilities through various programs including “Little Financier” by making 8 parts of videos through online network in order to enhance the financial knowledge of our younger customers, blood donation to “Blood Dona-tion National Center” according to our tradition of organizing it 1to 2 times a year.

We invite you to become a customer and partner of a bank that has created its own unique place in the banking and financial market of Mongolia which also supports national manufactur-ing and services. Furthermore, we wish all our shareholders, investors, partners, and customers a long-term of cooperation and all the best!

CEO TULGA.B

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MONGOLIA’S ECONOMY 2018

I. EXTERNAL ANALYSIS

1. PESTLE ANALYSIS

1.1 POLITICAL

Budgetary Policy:

Annual Budgetary Policy of 2018:

Total balance of budget revenue and grants of the General Government Budget reached USD 9.2 trillion in 2018 and total expenditure and net lending reached MNT 9.2 trillion. Although total equilibirated balance of General Government Budget decreased to MNT 1.7 trillion in 2017, the preliminary performance revenue reached MNT 11.9 billion..

Budget income of the project 5 981.1 5 852.1 7 274.9 9 234.9

Total expenditure 7 138.0 9 519.9 9 519.9 9 222.9

Budget balance of the project -1 156.9 -3.667.8 -3 667.8 11.9

External analysis is made by PESTLE analysis approach and it contains analysis of the fol-lowing 6 main researches:

POLITICAL ECONOMICSOCIAL TECHNOLOGICALLEGAL ENVIRONMENTAL

2015 2016 2017 2018


tax of products by MNT 332.7 billion (20.1%) has mainly affected the above growth.

1.2 2. ECONOMIC

The increase of value added tax by MNT 577.9 billion (35.7%), income tax by MNT 473.2 billion (29.3%), social insurance income by MNT 299.5 billion (22.7%), excise tax by MNT 234.7 billion (45.2%), foreign operation income by MNT 170.1 (33.2%), other taxes and commission income by MNT 125.6 billion (21.4%) has mainly affected the increase of total tax income by MNT 8.2 trillion which is MNT 1.9 trillion (30.0%) more than the previous year.

The General Government Budget Revenue constitutes of 81.5% of tax income,

Gross Domestic Product (GDP) of Mon-golia increased by 5.3% from the previous year in 2017 and increased by 6.9% from the previous year in 2018 in accordance with the comparative prices of 2010. The increase of additional cost of manufacturing and con-struction sector by MNT 357.1 billion (6.2%), additional cost of mining sector by MNT 190.3 billion (5.1%), additional cost of ser-vices sector by MNT 383.4 billion (5.3%), net

10.2% of non-tax income, 6.2% of future fund income, 2.1% of stabilization fund income respectively. Alhtough interest expense decreased by MNT 109.6 billion (9.5%), asset expense by MNT 50.4 billion (3.0%), subsidy by MNT 32.5 billion (12.5%), net loan which deducted repayable by MNT 48.9 billion (15.5%) respectively, the increase of current expense by MNT 304.8 billion (4.3%) has mainly affected the increase of the General Government Budget Expense by MNT 9.2 tril-lion which is MNT 205.6 billion (2.3%) more from the previous year.

The Central Bank of Mongolia has set a goal to stabilize inflation around 8% in 2018-2020 on the main direction of the States Mon-etary Policy in 2018. Although inflation will be kept in set goal in 2018, it seems to increase in 2019-2020 by the increase of salary, budget expenditure and internal demand.

2.1.1 Эдийн засаг /Economic/

Төрөөс мөнгөний бодлогын талаар 2018 онд баримтлах үндсэн чиглэлд Монголбанк инфляцыг 2018-2020 онд 8 хувийн орчимд тогтворжуулах зорилтыг тавьсан. Инфляци 2018 онд зорилтот түвшний орчимд хадгалагдах ч, цалин болон төсвийн зардал өсч, дотоод эрэлт нэмэгдсэнээр 2019-2020 онд өсөхөөр байна.

Монгол улсын дотоодын нийт бүтээгдэхүүн (ДНБ), 2010 оны зэрэгцүүлэх үнээр 2017 онд өмнөх оноос 5.3 хувиар өссөн бол 2018 онд өмнөх оноос 6.9 хувиар өслөө. Уг өсөлтөд аж үйлдвэр, барилгын салбарын нэмэгдэл өртөг357.1 (6.2%) тэрбум төгрөг үүний доторуул уурхай, олборлолтын салбарын нэмэгдэл өртөг 190.3 (5.1%) тэрбум төгрөг, үйлчилгээний салбарын нэмэгдэл өртөг 383.4 (5.3%), бүтээгдэхүүний цэвэр татвар 332.7 (20.1%) тэрбум төгрөгөөр өссөн нь голлон нөлөөлөв. Мөнгө, зээл, үнэт цаас Mөнгөний нийлүүлэлт буюу М2 мөнгө өмнөх оны мөн үеэс 22.8 хувиар өсч 19.5 их наяд төгрөгт хүрлээ. М2 мөнгөний жилийн өсөлтийн 9.7 нэгж хувийг төгрөгийн хадгаламж, 7.2 нэгж хувийг төгрөгийн харилцах, 3.1 нэгж хувийг гадаад валютын хадгаламж, 2.4 нэгж хувийг валютын харилцах бүрдүүлсэн байна. Хүснэгт 2. Мөнгөний зарим үндсэн үзүүлэлт, сарын эцэст, /тэрбум төгрөг/

2.1.1 Эдийн засаг /Economic/

Төрөөс мөнгөний бодлогын талаар 2018 онд баримтлах үндсэн чиглэлд Монголбанк инфляцыг 2018-2020 онд 8 хувийн орчимд тогтворжуулах зорилтыг тавьсан. Инфляци 2018 онд зорилтот түвшний орчимд хадгалагдах ч, цалин болон төсвийн зардал өсч, дотоод эрэлт нэмэгдсэнээр 2019-2020 онд өсөхөөр байна.

Монгол улсын дотоодын нийт бүтээгдэхүүн (ДНБ), 2010 оны зэрэгцүүлэх үнээр 2017 онд өмнөх оноос 5.3 хувиар өссөн бол 2018 онд өмнөх оноос 6.9 хувиар өслөө. Уг өсөлтөд аж үйлдвэр, барилгын салбарын нэмэгдэл өртөг357.1 (6.2%) тэрбум төгрөг үүний доторуул уурхай, олборлолтын салбарын нэмэгдэл өртөг 190.3 (5.1%) тэрбум төгрөг, үйлчилгээний салбарын нэмэгдэл өртөг 383.4 (5.3%), бүтээгдэхүүний цэвэр татвар 332.7 (20.1%) тэрбум төгрөгөөр өссөн нь голлон нөлөөлөв. Мөнгө, зээл, үнэт цаас Mөнгөний нийлүүлэлт буюу М2 мөнгө өмнөх оны мөн үеэс 22.8 хувиар өсч 19.5 их наяд төгрөгт хүрлээ. М2 мөнгөний жилийн өсөлтийн 9.7 нэгж хувийг төгрөгийн хадгаламж, 7.2 нэгж хувийг төгрөгийн харилцах, 3.1 нэгж хувийг гадаад валютын хадгаламж, 2.4 нэгж хувийг валютын харилцах бүрдүүлсэн байна. Хүснэгт 2. Мөнгөний зарим үндсэн үзүүлэлт, сарын эцэст, /тэрбум төгрөг/

Monthly inflationAnnually inflationBasic inflationPurpose of the inflation

Real growth of Gross Domestic Product /assumption/

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Эх сурвалж: Үндэсний статистикийн 6-р сарын тайлан

Нийт хадгаламжийн хэмжээ 13.2 их наяд төгрөгт хүрснээс 84.7 хувь буюу 11.2 их наяд төгрөг нь иргэдийн, 15.3 хувь буюу 2 их наяд төгрөг нь байгууллагын хадгаламж байна. Нийт хадгаламжийн 22.9 хувь нь гадаад валютын хадгаламж байна. Харин иргэдийн хадгаламжийн 16.6 хувийг, байгууллагын хадгаламжийн 41.1 хувийг гадаад валютын хадгаламж бүрдүүлж байна. Банкнуудын зээлийн үлдэгдэл өмнөх оны мөн үеэс 26.4 хувиар, үүнээс иргэдэд олгосон зээлийн үлдэгдэл 34.9 хувиар өсч 8.9 их наяд төгрөгт, хувийн байгууллагынх 16.9 хувиар өсч 7.9 их наяд төгрөгт тус тус хүрчээ. Банкны системийн хэмжээгээр чанаргүй зээл 2018 оны 12 дугаар сарын эцэст 1.8 их наяд төгрөг болж, өмнөх сараас 282.5 (13.7%) тэрбум төгрөгөөр буурч, өмнөх оны мөн үеэс 631.5 (54.8%) тэрбум төгрөгөөр өсжээ. Чанаргүй зээл нийт зээлийн өрийн үлдэгдлийн 10.4 хувийг эзэлж, өмнөх оноос 1.9 пунктээр өссөн байна. Чанаргүй зээл, сарын эцэст, тэрбум төгрөг

CASH, LOAN, SECURITY

Money Supply (M2) money has reached MNT 19.5 trillion or 22.8% from the previous year. 9.7% unit of MNT deposit, 7.2% unit of MNT current, 3.1% unit of foreign currency deposit,

84.7% or MNT 11.2 trillion is individual and 15.3% or MNT 2 trillion is entity deposit which constitutes the total deposit amount of MNT 13.2 trillion. 22.9% of total deposit is foreign currency deposit. In the other hand, foreign currency deposit constitutes 16.6% of indi-vidual deposit and 41.1% of entity deposit.

The bank’s credit balance reached 26.4% from the previous year, loan granted for indi-viduals increased by 34.9% or MNT 8.9 trillion

The Mongolian banks solving non-performing, unable to solve effectively, and non-performing assets only by selling them is affecting the growth of economy negatively. In order to solve this problem, the Central Bank of Mongolia is developing non-performing asset management and operation policy project and its imple-mentation will show positive impact.

Source: International Monetary Fund №18/204

and 2.4% unit of currency current constitutes the annual increase of M2 money. Table 2. Some main indicators of money, at the end of the month /billion MNT/

Source: June report of the National Statistics

and private organization by 16.9% or MNT 7.9 trillion respectively.

Non-performing loan has reached MNT 1.8 trillion at the end of December, 2018, decreased by MNT 282.5 billion (13.7%) from the previous month and increased by MNT 631.5 billion (54.8%) in a whole banking sys-tem. Non-performing loan constitutes 10.4% of total loan debt remainder and increased by 1.9 ops from the previous year.

Эх сурвалж: Үндэсний статистикийн 6-р сарын тайлан

Нийт хадгаламжийн хэмжээ 13.2 их наяд төгрөгт хүрснээс 84.7 хувь буюу 11.2 их наяд төгрөг нь иргэдийн, 15.3 хувь буюу 2 их наяд төгрөг нь байгууллагын хадгаламж байна. Нийт хадгаламжийн 22.9 хувь нь гадаад валютын хадгаламж байна. Харин иргэдийн хадгаламжийн 16.6 хувийг, байгууллагын хадгаламжийн 41.1 хувийг гадаад валютын хадгаламж бүрдүүлж байна. Банкнуудын зээлийн үлдэгдэл өмнөх оны мөн үеэс 26.4 хувиар, үүнээс иргэдэд олгосон зээлийн үлдэгдэл 34.9 хувиар өсч 8.9 их наяд төгрөгт, хувийн байгууллагынх 16.9 хувиар өсч 7.9 их наяд төгрөгт тус тус хүрчээ. Банкны системийн хэмжээгээр чанаргүй зээл 2018 оны 12 дугаар сарын эцэст 1.8 их наяд төгрөг болж, өмнөх сараас 282.5 (13.7%) тэрбум төгрөгөөр буурч, өмнөх оны мөн үеэс 631.5 (54.8%) тэрбум төгрөгөөр өсжээ. Чанаргүй зээл нийт зээлийн өрийн үлдэгдлийн 10.4 хувийг эзэлж, өмнөх оноос 1.9 пунктээр өссөн байна. Чанаргүй зээл, сарын эцэст, тэрбум төгрөг

Non-performing loan, at the end of the month /Billion MNT/

M2 money has been increased by 22.8% from December, 2017

Total loan balance reached MNT 17.1 trillion and increased by 26.5% annually

Money outside the collateralized depositCurrent $Deposit $Current ₮ ₮Deposit ₮ ₮Growth of M2 money

Total loan balanceIndividualsPrivate sectors

Non-Performing loan

Non-performing loan of private sectors

Non-performing loan of individuals


FOREIGN TRADE

In 2018, Mongolia has made a foreign trade with total of 156 countries and it has reached USD 12.9 billion which constituted of USD 7.0 billion of export and USD 5.9 billion of import. However, at the end of December

Total product turnover amount has reached USD 2.3 billion (22.3%) from the previous year, export by USD 811.2 million (13.1%) and import by USD 1.5 billion (35.5%) increased respectively. Although foreign trade balance reached USD 1.8 billion in 2017, it has de-creased by USD 726.5 million (39.0%) from the previous year in 2018 and reached USD 1.1 billion. Foreign trade balance reached USD 27.5 million in December 2018 and has been decreased by USD 53.9 million (66.2%) from the previous year.

The increase of mineral product export by USD 1.1 billion and textile product export by USD 74.3 million has mainly affected the

Export, Import, Balance, monthly Million USD

2018, export reached USD 531.0 million and import reached USD 503.5 million and export decreased by USD 4.9 million (0.9%) and import increased by USD 7.5 million (1.5%) from the previous month respectively.

Гадаад худалдаа Монгол Улс 2018 онд нийт 156 улстай худалдаа хийж, гадаад худалдааны нийт бараа эргэлт 12.9 тэрбум америк доллар, үүнээс экспорт 7.0 тэрбум америк доллар, импорт 5.9 тэрбум америк долларт хүрлээ. Харин 2018 оны 12 дугаар сард экспорт 531.0 сая америк долларт, импорт 503.5 сая америк долларт хүрч, өмнөх сараас экспорт 4.9 (0.9%) сая америк доллараар буурч, импорт 7.5 (1.5%) сая америк доллараар өсжээ. Экспорт, импорт, тэнцэл, сараар, сая америк доллар

Нийт бараа эргэлтийн хэмжээ өмнөх онooс 2.3 (22.3%) тэрбум америк доллар, үүнээс экспорт 811.2(13.1%) сая америк доллараар, импорт 1.5 (35.5%) тэрбум америк доллараар тус тус өссөн байна. Гадаад худалдааны тэнцэл 2017 онд 1.8 тэрбум америк долларын ашигтай гарч байсан бол 2018 онд өмнөх онooс 726.5 (39.0%) сая америк доллараар буурч, 1.1 тэрбум америк доллар болжээ. Гадаад худалдааны тэнцэл 2018 оны 12 дугаар сард 27.5 сая америк долларын ашигтай гарч, өмнөх оны мөн үеэс 53.9 (66.2%) сая америк доллараар буурсан байна. Экспорт 2018 онд өмнөх онooс 811.2 сая америк доллараар өсөхөд эрдэс бүтээгдэхүүний экспорт 1.1 тэрбум америк доллар, нэхмэл бүтээгдэхүүний экспорт 74.3 сая америк доллараар өссөн нь голлон нөлөөлсөн байна. Харин импорт өмнөх онooс 1.5 тэрбум америк доллараар өсөхөд эрдэс бүтээгдэхүүний импорт 339.9 сая америк доллар, үүнээс дизелийн түлш 148.8 сая америк доллар, машин, механик төхөөрөмж, цахилгаан хэрэгсэл, тэдгээрийн сэлбэг, эд анги 363.2 сая америк доллараар, тээврийн хэрэгсэл, тэдгээрийн эд анги 274.1 сая америк доллараар, үндсэн

Монголын банкнууд чанаргүй үр дүнтэй шийдвэрлэх чадваргүй бөгөөд чанаргүй активыг дан ганц худалдан борлуулах замаар шийдвэрлэж байгаа нь эдийн засгийн өсөлтөд сөргөөр нөлөөлж байна. Энэ асуудлыг шийдвэрлэхийн тулд монгол банкнаас чанаргүй активын удирдлага, үйл ажиллагааны журмын төсөл боловсруулж байгаа ба энэ журам хэрэгжсэнээр тодорхой эерэг нөлөөлөл үзүүлнэ.

Эх сурвалж: Олон улсын валютын сангийн тайлан №18/204

increase of export by USD 811.2 million from the previous year in 2018.

In the other hand, the increase of mineral product import by USD 339.9 million, diesel fuel by USD 148.8 million, mashin, mechan-ic equipment, electronic equipment, and its spare parts by USD 363.2 million, transporta-tion and its spare parts by USD 274.1 million, basic metals and product import made by it by USD 206.5 million has mainly affected the increase of import by USD 1.5 billion from the previous year.

Export Import

Balance

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The nominal average rate of the Central bank of Mongola for MNT against USD has reached MNT 2637.35 in December 2018 and decreased by 8.4% from the previous year and 2.1% from the previous month respectively.

Foreign currency reserves of Mongolia reached USD 3.0 billion which makes it pos-sible to regulate high currency fluctuation

flexibly in 2018. In order to keep the price sustainable, the Central Bank of Mongolia is planning to take step by step action and MNT rate is expected not to dramatically decrease from the previous year.

According to International Currency Fund, 84% of Mongolia’s foreign liabilities are made by foreign currency. The rate has been decreased by 25% in 2019 and is expected to equal 90% of the Gross Domestic Product.

Export

Mineral products

Coal

Base metal and things made by it

Raw and processed hides

Textile products

Precious stone, metal, jewelry things

4916.3

3484.1

973.1

86.2

30.2

300.2

761.5

6200.6

4933.7

2267.6

101.0

23.9

335.5

569.9

7011.8

6070.3

2802.5

91.8

17.0

409.8

145.5

113.1

123.0

123.5

90.8

70.9

122.2

24.4

Import

Ready made products of food

Mineral products

Gasoline

Diesel fuel

Base metal and things made by it

Transportation and its spare parts

Mashin, mechanic equipment, electronic equipments

3358.1

329.2

724.3

192.7

254.8

210.9

435.6

680.4

4337.3

378.7

985.9

243.7

427.9

333.9

622.7

922.7

5875.0

436.7

1325.8

308.7

576.7

540.3

896.8

1285.9

135.5

115.3

134.5

126.6

134.8

161.8

144.0

139.4

Performance 2015 2016 2017 2018

XII XII XII XII

USD

Annual change and schedule

Monthly change and schedule

EUR



YUAN



RUB



1995.84

6.0

0.1

2171.72

-6.5

1.4

309.34

1.6

-1.0

28.57

-15.6

-6.9

2482.57

24.4

2.0

2619.89

20.6

-0.5

358.73

16.0

0.8

40.00

40.0

5.8

2433.49

-2.0

-0.6

2879.43

9.9

0.2

369.00

2.9

-0.2

41.52

3.8

-0.1

2637.35

8.4

2.1

3002.43

4.3

2.3

383.03

3.8

3.0

39.15

-5.7

0.6

The nominal average rate of the Central bank of Mongola for MNT against USD has reached MNT 2637.35 in December 2018 and decreased by 8.4% from the previous year and 2.1% from the previous month respectively.


INTEREST LEVEL IMPACT OF MACROECONOMIC POSITION

To conclude macroeconomic performanc-es, condition for economy in 2018-2023 to be sustainable is made but government’s policy’s impact resulted from election of State Assembly in 2020, world class countries’ market war’s impact on the economy of countries of the world in May, 2018 is not stated in the conclusion.

The Central Bank of Mongolia started to take actions in accordance with “Strategy for reducing loan interest 2018-2023”, “The State Guidelines for Monetary Policy in 2018” approved by the President of the Central Bank of Mongolia and it has started to show its impact on loan structure change and interest level of the banking system.

To conclude from above all, Mongolia’s economy will show sustainable growth up until 2023 and source and loan interest rate is expected to decrease. Monetary policy counsil of the Central Bank of Mongolia has decreased

the prime rate to 11%, inflation is being maintained according to the purpose of 2018, exchange rate change is being relatively stable for currency reserves of Mongolia reached MNT 3.0 billion, and debt and income ratio is regulated to be 70% from January 1st, 2019. Maximum period of consumption loan for individuals is regulated to be 30 months in accordance with the new policy of the Central bank of Mongolia. The policy will be applied starting from January 1st, 2019. Total liabilities of Mongolia has been increased by 20% from the previous year and reached MNT 10,587 billion. This consti-tutes 57% of total liabilities. Monetary policy counsil of the Central bank of Mongolia has decided to change loan term for individuals from banks to 30 months the longest for the salary loan term being 40 months was increasing burden for individuals.

12 WWW.NIBANK.MN

The National Investment Bank (NIBank) of Mongolia is a privately held limited liability company with foreign investment, established in 2006. Since our establishment, the bank has been providing comprehen-sive services of a commercial bank and has contributed to the economic stability in a way of participating directly and indirectly in foreign and domestic financial markets in order to establish capital sources and financ-ing large scale projects. By the end of year 2018, total share capital of the bank reached MNT 54.2 billion and total asset of NIBank has reached MNT267.3 billion. Our total asset takes 13% of the market share in C

BRIEF INTRODUCTION OF THE BANKcategory, and 1% of the total market share. As a way of expanding our operation, the Bank has expanded banking operations to serve our customers through 14 branches and settlement centers and launched modern online banking services which meet the needs of every client. The National Investment Bank is a member of the Mongolian Bankers Association and Mongolian Mortgage Corporation. As a result of such contribu-tion, the Bank has received an award “Fast-est growing customer service in Mongolia” and “Fastest growing corporate bank in Mongolia” from the Glоbal Banking and finance review respectively.


VISION:

A leading bank in the field of investment and a partner of national wealth creators.

CORE VALUES:

Valued customers

We highly respect our customers and provide the high quality financial services that meet their needs.

New technology

We will strive to introduce new services and modern approaches using new technologies and innovations in the development of the banking system.

Social responsibility

Realizing our social responsibilities, we will preserve our environment and cultural heritage, and promote human rights and the green economy.

MISSION:

We aim to be the productive bank that respects its customers, values their confidence, enriches and delivers comprehensive complex financial services in new ways and contributes to sustainable development of the country.

Effective performance

We will increase the efficiency and sustain the principles of effective cost management and prudential ratios of risk and return.

Productive institution

We develop corporate culture and recognize and respect its employees and their digni-ty, and create leading, creative and initiative team.

14 WWW.NIBANK.MN

Our bank’s governance is comprised of Shareholders, Board of Directors /BoD/ and Executive Management team. By implementing governance at the bank, we are hoping to establish an effective monitoring system and proper allocation of revenue, authority and to protect investors, customers, and their interests as well as increasing their trust in the bank.

Even though the main objectives of the Shareholders, Board of Directors, and Executive Management differ from each

other, the final point is to implement the bank’s vision, mission, and its objectives as well as maintain the transparency of the bank.

In order to implement governance transparency principle we are webcast-ing and renewing our Shareholders, Board of Directors, and Executive Management’s information monthly, and the bank’s vision, mission, organizational structure, events, quarterly financial statement, related party loan and other information.

BANK GOVERNANCE

Shareholders

Board of Directors

Executive Management

DIRECTION

INFORMATION

INFO

RMAT

ION

TO C

HOOS

E ASSET

BENEFIT


The national investment bank’s high power authority is the Shareholders’ meeting and our shareholders consist of foreign and domestic entities and individuals. Bank’s total share capital structure:

The Board of Directors consists of the following members with many years of experience in the banking and financial sectors and business sectors:

Chairman of the BoD: Orgilmaa S.

Members of the BoD: Tulga B. Erdembileg J. Hidetoshi Tonooka

Independent member of the BoD: Munkhnasan N.BoD Secretary: Mandkhai P.

The Board of Directors establishes open governance, focusing on honesty and transparency at all levels of the bank and directs the banking operations with the vision, strategy, and poli-cy suitable for any conditions. Moreover, to implement the Board’s rights and responsibilities appropriately, Audit, Risk Management, Human Resources and Remuneration Committees have been established under the Board and the committee by-laws have been adopted by the Board.

3.5% of foreign investors

96.5% of domestic investors

SHAREHOLDERS

BOARD OF DIRECTORS

3.5%

96.5%

16 WWW.NIBANK.MN

AUDIT COMMITTEE UNDER THE BOARD OF DIRECTORS

RISK MANAGEMENT COMMITTEE UNDER THE BOARD OF DIRECTORS

HUMAN RESOURCES AND REMUNERATION COMMITTEE UNDER THE BOARD OF DIRECTORS

The committee overviews all the bank risk associated reports and conclusions completed by the internal and external audit of the bank, and monitor the implementation of further actions in a timely manner.

Chairman of the Audit Committee: Munkhnasan N.

Members of the Committee: Orgilmaa S.

Erdembileg J.

Tulga B.

The Committee determines and controls the levels of risk that may arise in any banking unit, take the necessary measures to control, reduce risk and provide the BoD with professional assistance for the implementation of appropriate risk management.

Chairman of the Risk Management Committee: Orgilmaa S.

Members of the Committee: Erdembileg J.

Tulga B.

Munkhnasan N.

The Committee has been set up to monitor implementation of corporate governance, nomina-tion and appointment of candidates and the issues related to remuneration, and therefore re-solve them and have the following composition.

Chairman of the Human Resources and Remuneration: Erdembileg J.

Members of the Committee: Orgilmaa S.

Tulga B.

Hidetoshi Tonooka

In order to improve the bank’s system of internal audit control, internal audit established as

an independent unit under the BoD and follows decisions, conclusions, opinions of the Audit

Committee and report to the Audit Committee.


EXECUTIVE MANAGEMENT

TULGA B. CEO

TUGULDUR G.First Vice Director

GANBOLD S.Asset and Liability

Department Director

SARANTUYA U. Branch Management Department Director

BAATAR CH.Financial Management

Department Director

MUNKHZAYA J. Operation

Department Director

In 2018, the bank has successfully implemented changes in the organization-al structure and in the framework of its operation, the bank has focused on building highly skilled professional upper and mid-level management team.

All the decisions in connection to the operation of the Bank have been made through the management committees framed by the Executive Management team.

Executive Management consists of highly skilled managers with many years of expe-rience in the banking and financial sectors, and the company’s corporate governance structure and experience of the management team provides the foundation for the bank, and ensures the long-term profitability and further increases the value of shareholders’ equity.

18 WWW.NIBANK.MN

COMMITTEES UNDER EXECUTIVE MANAGEMENT

MANAGEMENT COMMITTEE The Management has an advisory function for the CEO to make an appropriate decision

related to day-to-day management and implementation of objectives, mission, business plan

and strategy of the bank. In addition, Management is responsible for the appointment of new

personnel of the bank and consider the issues related to the recruitment of personnel, to monitor

the performance, awards, promotions, social and labor discipline.

ASSET AND LIABILITIES MANAGEMENT COMMITTEE (ALMC)

GENERAL AND SUB CREDIT COMMITTEE

Based on sustainable development, profitability and effectiveness, and financial responsibility of

the Bank, the Committee plays the role to implement asset and liability management, control the

market risks and liquidity risks, and take actions to keep the maximum balance of the profitability

within approved risk frame.

Within the boundaries of power set by the Board of Directors, the Credit Committee has obligations to discuss and decide the matters of granting loan for individuals, organizations and legal entities, control the quality of loan, monitoring whether assets are classified, provisioned, and take appropriate actions in order to implement the Credit risk management policy and prin-ciples and prevent the credit risk.


BANK STRUCTURE

Shareholders’ meeting

Board of directors Internal auditdivision

Financial managementdepartment

Operation department

Legal division

International relationsdivision

Insurance intermediarysub-division

Branch managementdivision

Branches and settlement centers

Housing creditsub-division

Credit’s suitsub-division

Corporate loan division

Project and investment sub-division

Informationtechnology division

Human resourcedivision

Information technologydevelopment sub-division

Product development,Marketing division

Operational risk and internalcontrol sub-division

Information technology system sub-division

Report and planning division

General affairssub-division

Trading sub-division

Asset and liabilitysub-division

Special assetdivision

Credit risk and policysub-divisionSettlement division

Safety and securitysub-division

Archive and clerkshipsub-division

Electronic bankingsub-division

Business development department

Channel managementdepartment Loan department

Asset and liabilitymanagement department

Risk and safetycommittee

General creditcommittee

Asset and LiabilityManagement committee

Management committee

Human Resource, Compensation committee

Risk managementcommittee

Audit committee

CEO

First vice director

Vice directorInnovation committee

Tender committee

Risk managementdivision


HIGHLIGHTS OF 2018

In order to expand the bank’s operation, we have organized an opening ceremony for our new VIP branch in “MPM Complex” on September 17th, 2018 and cut ceremonial ribbon.

In the framework of enhancing financial knowledge of the public, National Investment Bank has organized a training for nursing home children partnering with Banking and Finance Academy.

БАНКНЫ БҮТЭЦ, ЗОХИОН БАЙГУУЛАЛТ

2018 ОНЫ ОНЦЛОХ ҮЙЛ ЯВДАЛ

1. Бид банкныхаа үйл ажиллагааг өргөжүүлэх зорилгоор 2018 оны 09 дүгээр сарын 17-ны өдөр буюу намрын дунд сарын шинийн 8-ны билэгт сайн өдөр “МПМ Цогцолбор”-т өөрийн ВИП өндөр зэрэглэлийн үйлчилгээ бүхий салбарын нээлтийн арга хэмжээг зохион байгуулж ёслолын тууз хайчиллаа.

2. Түүнчлэн бид харилцагчдынхаа хэрэгцээ шаардлагад нийцүүлэн санхүүгийн үйлчилгээг илүү хялбар, хурдан шуурхай гүйцэтгэх үүднээс худалдаа, үйлчилгээний

Moreover, in order to provide faster financial services that meets the needs of our customers, we introduced QPay service which is able to scan codes, make payments, and money transfer and we registered services organizations with QR code.

The equity fund has been increased by MNT 19.70 billion.

Euro Remittance with zero commission campaign has been organized for 4 months.

We have organized “Little Financier NIB” deposit campaign with the highest interest.

On children’s day, our “Naiman sharga” branch offered financial education training for 4th graders of 2nd school and distributed children’s day gifts to those students.

On the 3rd year anniversary of Bayanzurkh branch, we celebrated it by giving out gifts for our new born mothers in the district and by open-ing deposit accounts for the new born babies.

National Investment Bank has been awarded as the “Supporting bank of the Financial Knowdledge Project”.

In order to provide children with financial knowledge, we have prepared 8 parts of videos under the theme of “Little Financier” through online network.

байгууллагуудыг QR кодоор бүртгэн тухайн кодыг уншуулж төлбөр төлөх, мөнгө шилжүүлэх боломжтой QPay үйлчилгээгээ нэвтрүүллээ.

3. Дүрмийн сангаа 19.70 тэрбум төгрөгөөр нэмэгдүүллээ. 4. Шимтгэлгүй евро гуйвуулгын аяныг 4 сарын хугацаанд зохион байгууллаа.

5. Олон улсын виза картын урамшуулалт аян зохион байгууллаа.

6. Жил бүрийн 5-р сарын эхний долоо хоногт зохион байгуулагддаг Golden week буюу "Хаврын баяр 2018"-ыг Токио хотын Нэрима дүүргийн Хикаригаока цэцэрлэгт хүрээлэнд 5 сарын 4, 5-ны өдрүүдэд амжилттай зохион байгууллаа.

“Хаврын баяр”-ын үеэр хүрэлцэн ирсэн япон улсад ажиллаж амьдарч буй монголчууд болон япон харилцагчиддаа зориулан Үндэсний хөрөнгө оруулалтын банкны Япон дах төлөөлөгчийн газраас банкны бүтээгдэхүүн үйлчилгээгээ танилцуулан оролцлоо.






хамтран ирээдүй хойч үеийн төлөөлөл болсон Асрамжийн газрын хүүхдүүдийг хүлээн авч сургалт зохион байгууллаа.

10. Хамгийн өндөр хүүтэй "Бяцхан санхүүч NIB" хүүхдийн хадгаламжийн урамшуулалт аян зохион байгууллаа.

11. Үндэсний хөрөнгө оруулалтын банкны Баянзүрх салбарын 3 жилийн ойн баяраа тохиолдуулан дүүргийнхээ шинээр төрсөн ээжүүдэд гарын бэлэг, шинэ иргэддээ хадгаламж нээж өгч баярлууллаа.

12. Эх үрсийн баярыг тохиолдуулан "Найман шарга" салбар маань 2-р сургуулийн 4-р ангийн сурагчдад санхүүгийн боловсрол хичээл зааж хүүхдийн баярын бэлэг тарааж бяцхан үрсээ баярлууллаа.









13. Үндэсний хөрөнгө оруулалтын банкыг ‘’Санхүүгийн боловсрол’’ төслийг дэмжигч банкаар өргөмжиллөө.

14. Хүүхдүүдэд санхүүгийн мэдлэг олгох зорилгоор “Бяцхан санхүүч” сэдэвт 8 цуврал видео сургалтаа Цахим сүлжээ ашиглан нийтэд танилцууллаа.

15. Үндэсний Хөрөнгө Оруулалтын Банк нь Солонгос улсаас мөнгө шилжүүлэх үйлчилгээг илүү хялбар болгохоор БНСУ-ын Е9РАУ компанитай хамтран “E9Pay” үйлчилгээг нэвтрүүлээд байна. Уг үйлчилгээг нэвтрүүлснээр бид Монгол дахь хамгийн анхны олон улсын Fintech байгууллага боллоо.








The Golden Week (“Spring Festival 2018”), event, which is regularly organized in the first week of May, was successfully held on May 4 and 5 in Hikarigaoka Garden, Namibia District, Tokyo this year. During the Spring Festival, National Investment Bank’s Representative office in Japan introduced its products and services for Japanese and Mongolian customers, who work and live in Japan.

We have organized hand-drawing competition under the theme of “Dream of the Little Financier” for our younger customers and granted prizes to 2 of the best drawings.

National Investment Bank employees participated in the “Ulaanbaatar Marathon 2018” successfully.

International Visa card campaign has been organized.

In order to make money remittance service eaisier, we have introduced E9PAY money transfer service by starting our cooperation with E9PAY money transfer company from Korea which made us the first Fintech organization in Mongolia.

As our tradition of donating blood 1-2 times a year, we have donated our blood to “Blood Donation National Center” this year as well.

During “Guren Mongol-2” festival organized in South Korea, Nibank and E9Pay offered services such as opening ac-count, ordering international Visa card, downloading E9Pay service application, and consulting.
















7. Үндэсний Хөрөнгө оруулалтын Банкны хамт олон "УЛААНБААТАР МАРАФОН 2018"-д нэгдэж, автомашингүй өдрийг спортлог өнгөрүүллээ.

8. “Бяцхан санхүүчийн мөрөөдөл” сэдвийн хүрээнд хүүхдийн уран зургийн тэмцээн зохион байгуулж банкны зүгээс зургийн ур чадвар, агуулгаар 2 бүтээлийг шалгаруулан, шагнал гардууллаа.

9. Үндэсний хөрөнгө оруулалтын банк нь олон нийтийн санхүүгийн боловсролын хүртээмжийг нэмэгдүүлэх хөтөлбөрийн хүрээнд Банк Санхүүгийн Академитай










16. Үндэсний хөрөнгө оруулалтын банк Авлагагүй цусны донор болох үйлсэд тогтмол хувь нэмрээ оруулан ЦССҮТ-тэй хамтран ажиллаж ажиллагсад нь цусаа хандивладаг бөгөөд энэхүү буянтай үйл ажиллагааг жил бүр 1-2 удаа зохион байгуулдаг уламжлалынхаа дагуу энэ жил мөн зохион байгууллаа.

17. Бүгд Найрамдах Солонгос улсад зохион байгуулагдсан “Гүрэн Монгол-2” наадмаар Үндэсний хөрөнгө оруулалтын банк, E9Pay хамтран явуулын банк ажиллуулан шинэ харилцагчдад данс нээх, ОУ-н Виза карт захиалах, E9Pay үйлчилгээний аппликэйшныг татах, заавар зөвөлгөө өгөх зэрэг үйлчилгээг үзүүллээ.






FINANCIAL STATEMENT OF THE BANK IN 2018

In 2018, National Investment Bank of Mongolia worked with MNT 267.3 billion of assets.

Deposit balance accumulated from individuals and customers in that year reached MNT 151.9 billion which was higher than 2017 and was the highest performance compared to the previous years.

Billion MNT

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Asset 16.3 19.8 32.7 19.5 21.9 42.0 59.2 101.5 152.6 213.3 277.1 351.6 267.3

Loan (net) 7.6 10.3 25.8 15.4 12.1 24.9 20.2 58.5 91.1 109.4 154.3 173.8 99.6

Accumulated asset 8.10 11.4 23.8 18 14.9 34.4 53 87.3 137.4 187.7 243.51 330.1 264.7

Owner’s property 8.30 8.4 8.8 1.5 7 7.6 6.2 14.2 15.2 25.6 33.60 21.53 2.6

Total income 0.9 1.6 6 1.4 6.3 4.4 6.7 7.0 14.2 25.6 23.7 34.8 26.8

Total expense 0.8 1.5 5.5 8.7 0.5 3.7 8.1 6.9 13.2 19.9 29.7 46.9 61.8

Profit 0.1 0.1 0.5 -7.3 5.8 0.7 -1.4 0.1 1 5.7 (6.1) (12.0) (35.0)

Current 7.2 9.1 12.7 9.5 6.5 11 12.5 16.9 28.9 19.1 24.1 97.3 19.5

Deposit 0 0 4.9 2 3.7 10.2 5.8 10 40.6 44.7 103.2 136.8 151.9

LIABILITY STRUCTURE

At the end of 2018, sources accumulated from individuals and entities’ current and deposit products constituted 68.5% out of total liabilities.

Liability structure 2018

Other banking and financial organization’s current and deposit 29.7 11.2%

Repo agreement 10.0 3.8%

Current and deposit of the customers 181.4 68.5%

Finance received from loan certificate and other loans 24.9 9.4%

Other liabilities 18.7 7.1%

TOTAL LIABILITIES 264.7 100.0%


100

50

0

INCOME AND EXPENSE OF THE BANK

PRODUCTS AND SERVICES FOR ENTITIES

In 2018, although the increase of MNT 26.8 billion was lower than 2017, it has increased from the previous years.

In 2018, the increase of commission and income rate and amount of total income

In 2018, the bank has focused on expanding its products and services for entities and improving its customer service.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total income Total expense

Current asset loan

Investment loan

Project loan

Credit line

Deposit collateralized loan

indicates that the products and services of the bank is reaching its targeted customers.

In 2018, loans worth of MNT 170.5 was granted to entities and the loan portfolio has been increased by 8% from the previous year at the end of the year.

34%

29.3%

20.7%3.7%

12.3%

20.7%

12.3%

3.7%


In 2018, we have mainly invested and put fund to the main problems of the business

In 2018, total loans worth of MNT 25.0 billion has been granted.

Among the individual loan, turnover means loan has been increased by 25% and individual salary loan by 3% respectively which expanded individual loan scope.

which are investment and current asset deficit.

In addition, we have granted MNT 2.1 billion of apartment loan with 8% interest to 16 debtors in order to contribute to the providing apartment to those with small and medium income, supporting construction and stabilizing its price project.

Entity loan structure 2018

Investment loan 34.4 29.3%

Turnover means loan 40.0 34.0%

Credit line 14.4 12.3%

Deposit collateralized loan 4.3 3.7%

Project loan 24.4 20.7%

TOTAL 117.6 100.0%

Individual loan structure 2018

Investment loan 0.6 2.3%

Turnover means loan 4.7 17.2%

Deposit collateralized loan 12.1 44.9%

Apartment loan 4.7 17.3%

Project loan 0.3 1.2%

Salary loan 3.0 11.3%

Card loan 0.5 1.7%

Consumption loan 1.1 4.1%

TOTAL 27.0 100.0%

PRODUCTS AND SERVICES FOR INDIVIDUALS


In October 8th, 2014, the bank obtained its license for insurance intermediary services. In cooperation with 13 standard insurance companies and a life insurance company, the National Investment Bank has been provid-ing insurance intermediary services through all of its branches. We provide advice to our clients on choosing insurance products, executing insurance agreements and claiming for reimbursement.

The main purpose of Risk Management department is to keep risk and benefit ratio optimal by identifying, preventing, evaluating, managing, decreasing and monitoring risks may occur in the bank’s operation.

The Risk Management department is operat-ing under the structure of Risk Management sub-division, Compliance sub-dvision, and Information security sub-division in 2018.

At the end of 2018, insurance intermediary constituted MNT 437.86 million or 19.42% of the commission income. In the future, we are committed to combining insurance products and guarantee services with the core bank-ing products and services, bringing these services to insurance intermediary service closer to customers.

The National Investment Bank is classifying and monitoring the following risks into main types:

Liquidity within the risk management framework

Market

Operation

Money laundering and Terrorism financing risk

Loan and Information security risk

INSURANCE INTERMEDIARY

RISK MANAGEMENT

INSURANCE INTERMEDIARY


CREDIT RISK

Credit risk means bank’s economy facing a loss due to the debtor’s failure to fulfill its obligations under the agreement. Therefore, the bank’s risk management aims at predict-ing and preventing from risks that may occur in the future.

The bank is implementing risk management policy based on the calculation and research and managing risk by making analysis on quantity and quality of the loan portfolio in

LIQUIDITY RISK

In order to ensure the liquidity at appropriate level, the bank is maintaining liquidity ratio and other indicators of the liquidity set by the Central Bank of Mongolia.

The bank’s liquidity management focuses on determining, monitoring, and managing liquidity levels for completing its financial

accordance with the Central Bank of Mongo-lia’s policy and International Financial Report-ing Standard.

We monitor whether we comply with the Central bank of Mongolia and internal limit of risk or not, monitoring on loan concen-tration, quality of portfolio, and operation of loan. Moreover, we are regularly preparing ex-ecutive reports on asset activity and further problems to pay attention to.

obligations in normal and abnormal condi-tions of the market. For this, risk manage-ment division manages liquidity risk and submits opinion and suggestions related to it to its related units and committees and puts control over it based on the appropriate level of liquidity, future assumptions, and stress test results.


MARKET RISK

Market risk consists of currency rate, interest and security fund risk. Risk management of the bank manages interest, exchange rate, risks that may occur due to price change on the bank’s balance or out of its balance and supports its profitability.

In the framework of foreign exchange rate of risk management, not only complying with criteria of the Central bank of Mongolia, the bank is also evaluating its internal rate risk by the most risk based method, predict potential risks and exchange rates weekly and month-

ly, introduce results from tests to related units and committees and use it for decision making.

In the framework of interest risk manage-ment, the bank conducts an analysis on impact of the bank’s planned net interest income resulted from sensitive asset and liabilities’ repayment period report of the bank’s interest and interest change in the market and introduces and manages it to its related units and committees.


OPERATION RISK

Operation risk of the bank is determining and implementing effective and prompt moni-toring system directed to predicting, detect-ing, and neutralizing operation risk. We are conducting the operation risk by risk matrix method, activating the usage of operation risk registration program and expanding

MONEY LAUNDERING AND TERRORISM FINANCING RISK

The bank approved and implemented internal anti-money laundering policy and regulation in accordance with the Mongolian Law, as well as domestic and international standards, supporting international activities against financial crime and actively participating in information and organizational activities.

INFORMATION SECURITY RISK

The bank provides its employees with infor-mation on how to keep information asset and its confidentiality, safety, and availability safe, identifying potential risks in accordance with risk management policy, take appro-priate action and put regular monitoring on

database of operation risk. In order to improve the understanding of overall frame-work of operation risk management and activating its implementation, we are regular-ly providing our employees with both internal and distance-learning trainings.

The bank is focusing on improving risk eval-uation method and its operation, putting control on the risky customers, continuesly providing the bank employees with instruc-tions and trainings. Moreover, we are working under the aim of improving monitoring oper-ation of compliance, applying compliance to all levels of the bank, and conducting compli-ance operation that meets the international level.

security of the data environment, introducing reports related to security to the executive management in a weekly and monthly basis, and managing security action based on the inspection of audit and system.


The bank is operating with CEO, Opera-tion Director, 9 Departments, 15 Divisions, 23 sub-divisions, 9 branches, 4 settlement

In order to implement the bank’s strategic goals, vision, and mission, we are focusing on hiring people with high efficiency, right attitude and we are training and developing our employees and ensuring them to work for a long term and sustainably.

centers and total of 116 employees and 20 contract employees as of December 31st, 2018.

Moreover, we have successfully renewed Human resource program by renewing management and evaluation of work performance last year.

HUMAN RESOURCE MANAGEMENT

136Employees 9

Department15

Division23

Sub-Division9

Branch

4Settlement

centerMain - 116

Contract - 20

The following is the classification of employees by their gender, education, and age:

Gender ratio: Age ratio:Education ratio Main and Contract employees’ ratio

43% Female 85% Main

47% 30-40

15% 40-50

84% Higher

57% Male 15% Contract

37% 20-30

1% 50-60

13% Secondary

3% Special secondary

43% 43%57% 57%

84%

13%3% 1% 50-60

47%

37%15%

30-40

20-30

40-50 15%

85%


CAREER DEVELOPMENT POLICY OF THE BANK

In order to support employees’ career development policy, the Bank announces new job positions to its employees first. For we follow a principle that helps employees get promoted and develop as a professional.

For example, our First Vice Director started his career in our bank as a Project

In order to satisfy the needs of our custom-ers, the bank continues to expand its network in global markets.

Currently, the Bank has correspondent relations with total of 9 banks such as Agri-cultural Bank of China, China Construction Bank, Bank of Inner Mongolia, VTB, Sberbank, Transkapital bank of Russia, Halykbank of Kazakhstan, Kookmin bank of South Korea, and OTP bank of Hungary.

Moreover, the Bank provides a number of investment news, reports, introductions and comprehensive news of projects to poten-

TRAINING AND DEVELOPMENT POLICY OF THE BANK

The bank pursues a policy that helps entire employees to develop its personal skills, progress, and develop.

and Investment Division Director in 2014 and our CEO started his career as Risk Management Division risk analyst in 2011.Moreover, 60% of total 20 executive officers in all the branches have been transferred from specialist to executive management level.

tial foreign investors through its Represen-tative office in Japan to increase investment towards Mongolia.

As of 2018, we are cooperating with 9 banks from 5 countries by making trade with all currencies and settlelements and also has established correspondent relationship with Transkapital bank of Russia starting from this year. In addition, we also have started our cooper-ation with “E9Pay” money transfer company of Korea and since our cooperation, we have already made 20,740 transactions in 6 months.

In 2018, within the framework of training and development activities, the bank has organized 42 both internal and external trainings for 220 employess /overlapping numbers/ partnering with Banking and Finance Academy.

FOREIGN RELATIONS


№ Улсын нэр Корреспондент банкуудын нэр Вальют Свифт хаяг

1 Оросын Холбооны Улс VTB USD RUB VTBRRUMM

2 Оросын Холбооны Улс Sberbank

USD RUB EUR JPY

SABRRUMM

3 Оросын Холбооны Улс Transkapital Bank RUB USD EUR

TJSCRUMM

4 Бүгд Найрамдах Солонгос Улс Kookmin Bank KRW

USD CZNBKRSE

5 Бүгд Найрамдах Хятад Ард Улс

China Construction Bank Corporation CNY

PCBCCNBJNME (Erlianhaote) PCBCCNBJGPS (Beijing)

6 Бүгд Найрамдах Хятад Ард Улс

Agricultural Bank of China CNY ABOCCNBJ050

7 Бүгд Найрамдах Хятад Ард Улс Bank of Inner Mongolia CNY

USD HSSYCNBH

8 Бүгд Найрамдах Казакстан Улс JSC Halyk Bank

KZT USD EUR

HSBKKZKXXXX

9 Бүгд Найрамдах Унгар Улс OTP Bank Plc EUR OTPVHUHB

№ Country nameName of the

Correspondent banksCurrency SWIFT address

1 Russian Federation VTBUSD

RUBVTBRRUMM

2 Russian Federation SberbankUSD RUB

EUR JPYSABRRUMM

3 Russian Federation Transkapital BankRUB USD

EUR TJSCRUMM

4 Republic of Korea Kookmin BankKRW

USDCZNBKRSE

5 People’s Republic of ChinaChina Construction Bank Corporation

CNYPCBCCNBJNME (Erlianhaote)

PCBCCNBJGPS (Beijing)

6 People’s Republic of ChinaAgricultural Bank of China

CNY ABOCCNBJ050

7 People’s Republic of ChinaBank of Inner Mon-golia

CNY

USDHSSYCNBH

8 Republic of Kazakhstan JSC Halyk BankKZT USD

EURHSBKKZKXXXX

9 Republic of Hungary OTP Bank Plc EUR OTPVHUHB


INFORMATION TECHNOLOGYIn order to ensure the safety and security of the information technology, we regularly mon-itored appropriate system improvements, failure risks of the main financial system and databases. As it was specified in the“Bank’s Information Technology Criteria Procedure” which was approved by the Central Bank of Mongolia in 2017, the reserve center must be located at least 200km away from the main center of the reserve, therefore the reserve center was successfully transferred and lo-cated 200km away from the main center. Thus, being protected from the area, sudden potential risk becomes our advantage.

In order to improve the security of the sys-tem, the bank has purchased fire wall that is internationally accepted and which ranks at

1-2 by research organization result and using it for the security of our information. In order to provide cheap and fast services to our customers, we have partnered with international Fintech companies and started our cooperation with E9Pay money transfer company from Korea and developed a solu-tion that enables customers to receive trans-actions within only 1 minute.

Currently, we partnered with information ex-change system of the Governement “KHUR” which helps customers pay for their trans-portation easily, penalties and taxes through kiosk and online banking services. Moreover, we are working on introducing COBIT stan-dard in order to improve the general control and structure of our information technology.


SOCIAL RESPONSIBILITY

We have prioritized social responsibility, ever since the establishment of our bank.

In 2018, we have organized grants, scholar-ships, human resource events, campaign, awards and public events such as sport and art competitions to activate our employees.

Moreover, informal activity club is one of the activities which our community is grateful for. The employees of the Bank have been

76th anniversary of the Social Insurance Agency of Songinokhairkhan districtMongolian Disabled Individuals AssociationOrganized public event “Saga’s food festival”60th anniversary of the National University of Mongolia

actively involved in and volunteered to the Education club, Sports club, Entertainment club, and Eco club in order to influence the employees to have companionable atmo-sphere.

Within the framework of social responsibility, the Bank have contributed and supported the following activities through donations and collaborations. Participations include:


AUDITED FINANCIALSTATEMENTS


AUDITED FINANCIAL STATEMENTS

“NIISLEL AUDIT” LLC

INDEPENDENT AUDITORS’S REPORTFor the Managemant of “National Investment Bank” LLC

We have audited the financial statements of your Organization, which comprise the statement of financial position as at December 31, 2018, and the statement of comprehensive income, state-ment of changes in equity and statement of clash flows for the year then ended, and notes to the financial statement, including a summery of significant accounting policies.

Opinion

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Organization as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing. Our responsibil-ities under those standards are further described in the auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Organization and have fulfilled our responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit Matters

Key audit matters are those matters that, in our professional judgement, were of most sig-nificance in our audit of the financial statement of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion of these matters.

CERTIFIED AUDIT, APPRAISAL AND ACCOUNTING CONSULTANCY COMPANY

Baga toiruu 44-01, 6th khoroo, Sukhbaatar district, Ulaanbaatar, Mongolia Phone: +976-11-318918, Fax: +976-7012-0095, E-mail: [email protected]


Other information

Our opinion on the financial statements does not cover the other information and we do not ex-press any form of assurance conclusion thereon.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preperation and fair presentation of these financial state-ments in accordance with International Financial Reporting Standards, and for such internal control as management determines is neccesary to enable the preperation of financial state-ments that are free from material misstatement, whether due to fraud or error. Management is responsible for overseeing the Organization’s financial reporting process.

Auditor’s responsibilities for the Audit of the Financial StatementsThe objectives of our audit are to obtain reasonable assurance about whether due to fraud or er-ror, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high lev-el of assurance , but is not a guarantee that an audit conducted an accordance with International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisionss of users taken on the basis of these financial statements. As part of an audit in accordance with International Stamdards on Auditing , we exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit.

Purpose of the ReportThis financial report was prepared to present to Organization’s Shareholders. In the content of this financial report we are not responsible in front of the third party.

Abbreviation of Audited Financial Report is applied.


Audited statement of Financial Position as at 31 December, 2018

Assets Notes 2018 MNT’000 2017 MNT’000Cash and balances with banks 11 48,727,258 102,348,987

Depositswith other non-bank financial institutions 12 40,000,000 2,000,000

Financial investment – available for sale 13 1,953,519 1,383,619

Financial investment – held to maturity 13 5,000,000 11,994,658

Derivative financial instruments 4,421Loans and advances to customers 14 116,219,640 195,991,839Income tax receivables 19,005 23,285Property and equipment 15 12,965,514 16,262,342Intangible assets 16 10,156,450 10,088,390Other assets 17 8,971,809 7,756,503Assets as held for sale 18 3,333,995 7,756,503

TOTAL ASSETS 267,347,191 351,638,308

LIABILITIES

Due to banks and financial institutions 19 29,658,241 27,155,714

Repurchase agreements 20 10,000,000 20,000,000Derivative financial instruments 2,160Due to customers 21 181,423,338 234,046,325

Debt issued and other borrowed funds 22 24,908,556 46,576,541

Other liabilities 23 18,709,889 2,323,503Income tax payable - -TOTAL LIABILITIES 264,700,024 330,104,243

CAPITAL AND RESERVES

Share capital 24 54,200,000 35,130,000Revaluations surplus 24 4,260,125 7,221,125Retained earnings (55,812,958) (20,817,060)

TOTAL SHAREHOLDERS’ EQUITY 2,647,167 21,534,065

TOTAL LIABILITIES AND EQUITY 267,347,191 351,638,308

National Investment Bank LLCNotes to the Financial Statements for the Year Ended 31 December, 2018


Audited statement of Profit or Loss and other Comprehensive Income for the Year Ended 31 December, 2018

Notes 2018 MNT’000 2017 MNT’000

Interest and similar income 3 24,159,907 32,364,633

Interest and similar expense 4 28,746,920 27,151,772

Net interest income (4,587,013) 5,212,861

Fee and commission income 5 2,250,185 2,121,312

Fee and commission expense 5 338,876 226,684

Net fee and commission income 1,911,309 1,894,628

Net trading income 6 385,031 23,066

Other operating income 7 16,921 314,733

Total operating income (2,273,752) 7,445,288

Operating expenses 8 7,067,088 6,917,394

Profit (Loss) before credit losses (9,340,840) 527,894

Impairment losses 9 25,638,212 12,533,532

Loss before tax (34,979,052) (12,005,638)

Income tax expense 10 16,846 31,076

Loss for the year (34,995,898) (12,036,714)



Audited statement of Changes in Equity as at 31 December, 2018

At January 1, 2017 Share capitalMNT’000

Revaluations surplus

MNT’000

Retained earningsMNT’000

Total equityMNT’000

Total comprehensive income 35,130,000 7,221,125 (8,780,346) 33,570,779

Profit (Loss) for the period - - (12,036,714) (12,036,714)


Revaluations surplus - - - -

Changes in Equity - - - -

Fair value movements on equity instruments - - - -

At 31 December, 2017 35,130,000 7,221,125 (20,817,060) 21,534,065

At January 1, 2018 35,130,000 7,221,125 (20,817,060) 21,534,065

Total comprehensive income 35,130,000 7,221,125 (20,817,060) 21,534,065Profit (Loss) for the period (34,995,898) (34,995,898)


Revaluations surplus - (2,961,000) - (2,961,000)

Changes in Equity 19,070,000 - - 19,070,000

At 31 December, 2018 54,200,000 4,260,125 (55,812,958) 2,647,167



Audited statement of Cash Flows for the Year Ended 31 December, 2018

CASH FLOWS FROM OPERATING ACTIVITIES 2018 MNT’000 2017 MNT’000

Loss before tax (34,979,052) (12,005,638)

Adjustments for:

Net impairment losses 9 25,694,218 12,533,532

Depreciation of property and equipment 15 858,153 842,285

Net gain on sale of property and equipment 7 16,921 (247)

Property and equipment written off 4,137

Amortisation of intangible assets 16 110,505 94,735

Profit/(loss) before changes in working capital (8,299,255) 1,468,804

Net increase/(decrease) in derivative assets (15,626)

Net decrease/(increase) in loans and advances to customers 52,045,323 (43,429,149)

Net decrease/(increase) in other assets 15,146,241 984,598

Net increase/(increase) in statutory reserve with BoM (26,429,039) (12,612,438)

Net decrease/(increase) in due to banks and financial institutions 9,768,476 (6,822,829)

Net decrease/(increase) in repurchase agreements 20 10,000,000 (9,904,584)

Net decrease/(increase) in due to customers (33,514,907) 106,717,974

Net decrease/(increase) in other liabilities (33,469,233) 275,607

Other decrease/(increase) 7,725,536 2,323,503

Income taxpaid (12,566) (29,831)

Net cash flows from operations (7,039,424) 36,632,526

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property and equipment - 144,326

Proceeds from assets as held for sale (20,119,631) 832,879

Purchase of property and equipment (522,328) (2,500,296)

Purchase of intangible assets (162,900) (244,565)



Proceeds from Financial investment 6,994,658 (8,656,050)

Net cash flows from investing activities (13,810,201) (10,423,706)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from share issue 24 19,070,000 -

Proceeds of long term borrowing 663,922 11,432,629

Repayment of long term borrowing (22,241,821) (15,096,242)

Net cash flows from financing activities (2,507,899) (3,663,613)

Net (decrease)/increase in cash and cash equivalents (23,357,524) 22,545,207

Cash and cash equivalent at the beginning of the year 70,794,990 48,249,783

Cash and cash equivalents at the end of the year 47,437,466 70,794,990



BRANCH ADDRESS AND TIMETABLE№ BRACH,

SETTLEMENT CENTERS ADDRESS TELEPHONE BUSINESS HOURS

SUBSIDIARIES IN ULAANBAATAR

1 CENTRAL BRANCHNational Investment Bank building, Usnii-1 street,

3rd khoroo, Sukhbaatar district, Ulaanbaatar, Mongolia

1800-11887575-7070

#1001

Mon-Fri: 09.00-18.00 Sat-Sun: closed

2 ARD BRANCH 8th building, 1st khoroo, Chingeltei district, Ulaan-baatar, Mongolia

1800-11887575-7070

#1501 #1502

Mon-Fri: 09.00-18.00 Sat: 10:00-17:00

Sun: closed

3 CIRCUS BRANCH IT World building, Usnii-1 street, 3rd khoroo, Sukh-baatar district, Ulaanbaatar, Mongolia

1800-11887011-1353

#3007


4 DRAGON BRANCH 2nd floor, Dragon terminal center, 29th street, Moscow khoroolol, Ulaanbaatar, Mongolia

1800-11887575-7070

#9001 #9002


5 BAYANZURKH BRANCH“National Association of Mongolian Agricultural

Cooperatives” office, Bayanzurkh district, 1st khoroo, Ulaanbaatar, Mongolia

1800-11887595-7070


6 NAIMAN SHARGA BRANCH Mungut sharga office, Tumurchnii street, 2nd khoroo, Chingeltei district, Ulaanbaatar, Mongolia

1800-11887011-1434

#8001


7 “GAALI” BRANCH MPM office, Unesco street, 1st khoroo, Sukh-baatar district, Ulaanbaatar, Mongolia

1800-11887575-7070

#6002


8 “SONGINOKHAIRKHAN” SETTLEMENT CENTER

One-stop service hall, 1st floor, Governors office, Songinokhairkhan district, Ulaanbaatar, Mongolia

1800-11887575-7070

#9001 #9002


9 “DA KHUREE” SETTLEMENT CENTER

“3rd shopping center” building, “Da Khuree” auto market, Bayanzurkh district,

Ulaanbaatar, Mongolia

1800-11887595-7070

Wed-Sun: 09.00-18.00 Mon-Tue: closed

10 “361” SETTLEMENT CENTER

“361” garam, 21th khoroo, Songinokhairkhan district, Ulaanbaatar

1800-11887575-7070

#9001 #9002


11 “AUTO TRADE CENTER” SETTLEMENT CENTER

One-Stop service, Auto Trade Center, 32th khoroo, Songinokhairkhan district, Ulaanbaatar, Mongolia

1800-11887575-7070

#9001 #9002

Mon-Fri: 08.30-17.30 Sat-Sun: 09:00-17:30

SUBSIDIARIES IN RULAR AREAS

12 DARKHAN BRANCH 2nd building, 1st floor, left wing, 13th khoroolol, 11th bag, Darkhan city, Darkhan-Uul province

1800-11887575-7070

#5001 #5002 #5003


13 UMNUGOBI BRANCHCulture and Information Center for Youth and

Children, 3rd bag, Dalanzadgad soum, Umnugobi province

1800-11887053-3188 Mon-Fri: 09.00-18.00

Sat-Sun: closed

REPRESENTATIVE OFFICE IN JAPAN

14 Akasaka 2-14, Plaza building, 14-32, Akasaka 2 – chome Minato-ku, Tokyo, Japan

+81-3-3505-0578

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