Hous­ing loan tops credit port­fo­lio

Loans and ad­vances have in­creased from Nu. 86.60bn in June 2016 to Nu.95.06bn as of June 2017

Business Bhutan - - Money - Lucky Wangmo from Thim­phu

Out of the to­tal loans pro­vided by the fi­nan­cial sec­tor (banks and non­banks, ex­clud­ing NPPF) amount­ing to Nu 95.06bn in the last fis­cal year (20162017), the largest share of the credit port­fo­lio has been to­ward the hous­ing sec­tor with a to­tal amount of Nu 21.52bn.

Ac­cord­ing to the Royal Mone­tary Au­thor­ity (RMA), the sec­tor-wise distri­bu­tion of credit in­di­cated that the hous­ing sec­tor topped the loan port­fo­lio with a 22.64%.

“As a re­sult of over­build­ing, the ex­po­sure in hous­ing sec­tor is ge­o­graph­i­cally con­cen­trated in sub­urbs of the big cities,” states RMA’s lat­est re­port.

The hous­ing sec­tor is closely fol­lowed by the ser­vice and tourism sec­tor with 21.25 per­cent (Nu 20.2bn). Per­sonal loans came third with 14.35%, amount­ing to Nu13.64bn.

Trade and Com­merce had a share of 13.98% (Nu 13.28bn), while the man­u­fac­tur­ing sec­tor had 13.43% (Nu12.76bn).

How­ever, the loan to­wards the agri­cul­ture sec­tor ac­counted only 5.33% (Nu. 5.07bn) of the credit from the fi­nan­cial sec­tor de­spite be­ing the largest eco­nomic sec­tor.

The Bhutan Devel­op­ment Bank Lim­ited (BDBL) alone fi­nanced 98.70% of the to­tal agri­cul­ture loan port­fo­lio.

Trans­port loans also ac­counted for only 5.26% (Nu 5bn), while the re­main­ing 3.76% were for other types of loans which amounted to Nu 3.57bn.

Of the to­tal credit, 80.71% amount­ing to Nu 76.72bn was fi­nanced by the com­mer­cial banks, while the re­main­ing 19.29% (Nu 18.34bn) was funded by the non-bank fi­nan­cial in­sti­tu­tions.

With an in­crease in loans and ad­vances, the non-per­form­ing loans (NPL) also in­creased from 9.10% in June 2016 to 11.36% in June 2017.

How­ever, the RMA states that the trend in as­set qual­ity is still man­age­able since the re­cov­ery of the loans be­gins from the third quar­ter of the year and the NPL usu­ally sta­bi­lizes to­ward the end of the year.

From the to­tal out­stand­ing loan amount of Nu 76.72bn of the com­mer­cial banks, 12.46% was cat­e­go­rized as NPL. Like­wise, from the to­tal Nu 18.34bn of the NBFIs, 6.78% was clas­si­fied as non­per­form­ing loan.

Ac­cord­ing to RMA’s re­port, trade and com­merce ac­counted for the largest por­tion of NPLs at 22.66%, fol­lowed by ser­vice and tourism (21.87%), hous­ing (13.42%), per­sonal (12.74%), man­u­fac­tur­ing (12.24%), agri­cul­ture (10.73%) and trans­port (5.61%).

Mean­while, the bank­ing sec­tor in Bhutan in­cludes state-owned com­mer­cial banks (SCBs), state-owned devel­op­ment fi­nan­cial in­sti­tu­tion (DFI), pri­vate com­mer­cial bank (PCB) and for­eign di­rect in­vest­ment banks (FDIs).

To­day, there are five com­mer­cial banks in the coun­try with an out­reach of 128 branches.

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