Mongolian banks face margin squeeze despite mining tailwind

Banks face tighter monetary measures and strong competition, said Fitch.

Mongolian banks hold a stable outlook thanks to economic growth from mining activity and infrastructure development, said Fitch Ratings.

“This should drive healthy business volumes and resilient banking-sector performance over the next one to two years,” the credit rating company said in a commentary on 7 October 2026.

Banks will face tighter monetary measures and strong competition in the banking sector, however. This is expected to weigh on their net interest margins, Fitch said.

More vulnerable borrowers are also expected to face pressure from the measures and competition, it said.

In a separate report, CreditSights said that consumer lending is a risk to Mongolia’s banking sector.

CreditSights said in an August 2026 report that Mongolia’s non-performing loan (NPL) ratio for corporate loans, which are higher relative to other loan categories, is partly because of inefficiencies in resolving bad debts through its court system.

CreditSights also expressed little confidence in Mongolia’s efforts to establish an asset management company (AMC) tied to the country’s bad loans.

Banks’ ability to manage funding and credit costs will remain a key differentiator of profitability and asset quality, according to Fitch,