Fi­nance in­dus­try grows strongly

The Myanmar Times - - International Business -

THE fi­nance, bank­ing and in­surance in­dus­try ex­panded 7.89 per cent in the first nine months of this year, the high­est level recorded in the past seven years.

Re­ports of the General Statis­tics Of­fice (GSO) re­vealed that the growth rate of the in­dus­try was 6.99 per cent in 2011, 5.97 per cent in 2012, 6.68 per cent in 2013, 5.39 per cent in 2014, 6.7 per cent in 2015 and 7.38 per cent in 2016.

As for in­surance, the GSO re­ported that the in­surance mar­ket main­tained pos­i­tive growth. To­tal pre­mi­ums for the whole mar­ket in nine months were es­ti­mated to swell 18 per cent year-onyear, of which life in­surance pre­mi­ums in­creased more than 22 per cent.

The GSO re­port also showed that as of Septem­ber 20, to­tal money sup­ply in­creased 9.59 per cent com­pared with the end of 2016 and rose 11.76 per cent year-on-year.

Cap­i­tal mo­bil­i­sa­tion of credit in­sti­tu­tions rose 10.08 per cent while credit growth reached 11.02 per cent.

Ac­cord­ing to GSO, good credit growth has shown a pos­i­tive de­vel­op­ment trend and a rel­a­tively good cap­i­tal ab­sorp­tion ca­pac­ity of the econ­omy.

Thanks to the good results of the first three quar­ters, most com­mer­cial banks have ex­pected their busi­ness per­for­mance to ac­cel­er­ate in the last quar­ter of this year, help­ing the av­er­age pre-tax profit of the en­tire bank­ing sys­tem rise 13.63 per cent in 2017, ac­cord­ing to the latest sur­vey on the busi­ness per­for­mance trend of credit in­sti­tu­tions con­ducted by the State Bank of ViӋt Nam.

As per the sur­vey, 89 per cent of credit in­sti­tu­tions es­ti­mated their growth this year to be pos­i­tive in com­par­i­son with last year.

A to­tal of 70.65 per cent of credit in­sti­tu­tions con­tin­ued to be op­ti­mistic about the trend of in­creas­ing de­mand for fi­nan­cial and bank­ing ser­vices in 2017, es­pe­cially de­mand for loans in the fourth quar­ter of 2017.

Cap­i­tal mo­bil­i­sa­tion and lend­ing are ex­pected to ac­cel­er­ate in the last quar­ter of the year, of which cap­i­tal mo­bil­i­sa­tion will grow 5.32 per cent, as against 3.74 per cent in Q4 last year, and credit growth will rise 6.07 per cent, as against 5.91 per cent in Q4 of 2016.

As for in­ter­est rates in Q4, Sta­te­owned banks ex­pected the rate to de­cline by 0.06-0.15 per­cent­age points for both de­posits and loans. Joint stock com­mer­cial banks ex­pected a higher re­duc­tion of 0.45 per­cent­age points for loans and 0.57 per­cent­age points for de­posits.

State-owned banks and joint stock com­mer­cial banks also ex­pected the lend­ing rate in the whole year to re­duce by 0.09 and 0.03 per­cent­age points, re­spec­tively, as against De­cem­ber last year.

Econ­o­mist Lê Xuân Nghƭa told Ðҫu tѭ chӭng khoán (Se­cu­ri­ties In­vest­ment) news­pa­per said ViӋt Nam’s bank­ing in­dus­try in 2017 has wit­nessed a spec­tac­u­lar re­cov­ery, fol­low­ing a pe­riod of sig­nif­i­cant ef­forts to­wards deal­ing with bad debt, es­pe­cially the risk pro­vi­sion. T

he net in­ter­est on to­tal as­sets of the bank­ing sec­tor used to fall to 0.4 per cent but has now reached some 0.8 per cent, while some banks have touched more than 1 per cent. The net in­ter­est on eq­uity fell to 5.6 per cent dur­ing cer­tain times but has now risen to 8 per cent, even more than the 10 per cent at some banks.

Com­pared with the most dif­fi­cult pe­riod, com­mer­cial banks’ prof­itabil­ity has nearly dou­bled. This is the most im­por­tant sign prov­ing that com­mer­cial banks’ fi­nan­cial po­ten­tial has re­cov­ered quite im­pres­sively, Nghƭa said.

Some banks have in­creased their eq­uity through do­mes­tic cap­i­tal, and most of these banks have in­vested heav­ily in tech­nol­ogy to de­velop new ser­vices, such as in­ter­net bank­ing, mo­bile bank­ing and au­to­matic pay­ment, in this dif­fi­cult sce­nario. The afore­men­tioned achieve­ments are re­mark­able, re­flect­ing a new trend of the bank­ing sec­tor in terms of risk man­age­ment, man­age­ment and ser­vice de­vel­op­ment to­wards Bank 3.0, he added. – Viet­nam News

‘VIet­nam’s bank­ing in­dus­try in 2017 has wit­nessed a spec­tac­u­lar re­cov­ery...’

Le Xuan Nghia Econ­o­mist

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