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Myanmar’s Banking Sector Shows Strong Growth Amidst Challenges

The Myanmar banking sector has continued to show strong growth, with total assets reaching MMK 44.3 trillion (USD 27 billion) in June 2022, according to data from the Central Bank of Myanmar (CBM). This represents a year-on-year increase of 12%, driven by an expansion in lending and deposits.

Economic Growth Boosts Sector

The sector has been boosted by the country’s rapid economic growth, with GDP projected to reach 6.8% this year, according to the Asian Development Bank. The government’s efforts to improve financial inclusion have also contributed to the sector’s growth, with the formal financial inclusion rate reaching 48% in 2021.

Challenges Remain

However, challenges remain, including a high level of non-performing loans (NPLs) and a lack of public trust in the financial services sector. NPLs stood at 4.3% of total outstanding loans in June 2022, up from 3.9% a year earlier.

Regulatory Efforts

The CBM has been working to address these issues, including launching a regulatory framework for mobile financial services in 2016 and introducing measures to improve credit reporting. The government has also been promoting the development of fintech, with several foreign companies already operating in the sector.

Fintech Opportunities Abound

The fintech sector in Myanmar has been gaining traction, with several local start-ups active in microfinance and mobile lending. The CBM has also been promoting the development of fintech, with a regulatory framework in place for mobile financial services.

  • One notable example is Mother Finance, a microfinance institution that uses mobile apps to disperse micro- and nano-loans.
  • ZigWay is another fintech company operating in Myanmar, which offers mobile banking services and microfinance products.
  • The government’s efforts to promote fintech have been supported by foreign companies, including Norway’s Telenor, which partnered with Yoma Bank to launch Wave Money.

Road Ahead

The CBM has set a target of reaching 40% formal financial inclusion rate by 2023, and the sector is likely to continue growing in the coming years. However, there are still challenges to be addressed, including NPLs and a lack of public trust in the financial services sector.

  • The government’s efforts to promote fintech and improve financial inclusion will be key in addressing these issues and driving growth in the banking sector.
  • With foreign banks expected to enter the domestic retail market in the coming years, the outlook for Myanmar’s banking sector remains positive.