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Myanmar’s Banking Sector Sees Notable Growth Despite Challenges

YANGON, MYANMAR - Myanmar’s banking sector saw significant growth in 2018, with total assets reaching MMK53.9 trillion ($35.1 billion), a 13.6% increase from the previous year. Loans and advances rose by 20.21%, while premises and other fixed assets grew by 28.89%. Equity investment also increased by 39.78%, and claims on financial institutions by 7.1%.

Key Statistics

  • Total assets: MMK53.9 trillion ($35.1 billion)
  • Loans and advances: 20.21% increase
  • Premises and other fixed assets: 28.89% increase
  • Equity investment: 39.78% increase
  • Claims on financial institutions: 7.1% increase

Lending Breakdown

According to data released by the Central Bank of Myanmar (CBM), agriculture and livestock accounted for the largest share of loans and advances, receiving MMK24.2 trillion ($15.8 billion) or 45% of total lending. This was followed by industry and commerce, which received MMK12.5 trillion ($7.9 billion).

Challenges

However, the sector is not without its challenges. Non-performing loans (NPLs) remain a major concern, with banks struggling to recover bad debts. The CBM has implemented measures to address this issue, including stricter lending guidelines and increased provisioning requirements.

Growth Drivers

Despite these challenges, the banking sector is expected to continue growing in the coming years. The government’s Financial Inclusion Roadmap aims to increase access to financial services for low-income households and small businesses. To achieve this, banks are expanding their branch networks, introducing mobile banking services, and partnering with microfinance institutions (MFIs) and fintech companies.

Mobile Banking

Mobile banking has emerged as a key driver of growth in the sector. The CBM launched a regulatory framework for mobile financial services in 2016, allowing fintech companies to offer domestic money transfer and payment services. Several foreign telecommunications operators have entered the market, including Norway’s Telenor, which partnered with Yoma Bank to develop Wave Money.

Cryptocurrencies

Cryptocurrencies have been approached with caution by the CBM, which has barred banks from working with them. However, local fintech start-ups have been active in microfinance, using mobile apps to disperse small loans to low-income households.

Future Outlook

As the banking sector continues to evolve, it is expected that private banks will gain market share, driven by foreign entities entering the domestic retail market. This could lead to increased competition and a more market-based approach to banking. However, the CBM is likely to maintain control over rates and product types to protect the sector from external shocks.

Conclusion

Overall, Myanmar’s banking sector faces both opportunities and challenges as it continues to develop and grow. With the government’s Financial Inclusion Roadmap driving progress in financial inclusion, the sector is well-positioned for future growth and expansion.