financial stability report - Banka Qendrore e Republikës së Kosovës

Number 3
Financial Stability Report
what currently is characterizing the Kosovo’s banking system. Low exposure to liquidity
risk is also confirmed through the countinuous sustainability of the higher level of liquidity
reserves compared to the minimal level required by the CBK (Figure 47). In June 2012, the
total value of the banking system liquidity reserves was euro 310.3 million, thus exceeding
the mandatory reserve by around
Figure 48. Liquidity gap, in millions of euro
70 percent (requried reserve for
the system was euro 182.8 million).
600
However, besides the effect on
reducing the exposure to liquidity
risk, holding ‘excessive’ liquidity
reserves implies also costs for the
banking system considering that
banks receive interest CBK only
for the amount of the required
reserve, while any amount that
exceeds the mandatory reserve is
not renumerated.
400
200
0
-200
-400
-600
1-7 days 8 - 30 days 31 - 90 days 91 - 180
days
Source: CBK (2012)
Jun-11
Jun-12
181 - 365
days
Over 1 year
Another tool to assess liquidity
risk is the liquidity gap analysis, through which is assessed the adequacy of assets with a
certain maturity period in covering the liabilities within the same maturity period.
However, the primary role of the banking business remains intermediation between
depositors and borrowers, thus the banking system in general converts the short-term
liabilities (deposits) into long-term assets (loans). The analysis is based on the idea that the
value of assets maturing within a certain period should be similar with the value of
liabilities maturing within the same period. The difference between these two amounts
represents the maturity gap or the maturity mismatch. The results presented in Figure 48
are read as follows: the positive gap means that the value of assets is greater than the
value of the liabilities within a certain maturity period, while the negative gap means the
opposite i.e. the value of assets is less than the value of liabilities within a certain maturity
period. 7 Given the fact that in the Kosovo’s banking system loans account for the largest
share of assets and deposits account for the largest share of liabilities, the maturity
mismatch between assets and liabilities primarily reflects differences between the maturity
of loans and deposits.
Maturity mismatch remains similar to the previous years. In June 2012, maturity
mismatch was more pronounced in the category ‘over 1 year’, where the amount of assets
exceeds the amount of liabilities for euro 446.3 million (Figure 48). Compared to June 2011,
there has been an improvement in the maturity gap for the category ‘185-365 days’ which
continues to be positive but lower than last year (euro 53.5 million compared to euro 70.4
million in June 2011). However, for the first three categories that include assets and
liabilities with maturity up to 90 days, not surprisingly, the maturity gap has continued to
be negative due to the fact that loans usually have longer maturities than three months.
7 Maturities of assets and liabilities are divided into the following periods: 1 to 7 days 8 to 30 days 91 to 180 days, 181 to 365 days and more than 1 year.
50 |