In 2017/18, credit growth cooled as banks transitioned to the new regulatory environment and lending remained concentrated in a few sectors according to Colliers International Myanmar.

The Central Bank of Myanmar is now reportedly looking to increase lending and provide more competitive financial services. As reported in The Borneo Post Online the central bank awarded the Myanmar Credit Bureau (MCB) a license to collect credit records and provide them to lenders in May last year. Work is ongoing to prepare for the launch of the MCB’s services, and in December the bureau signed a deal to purchase a credit bureau software license from Equifax New Zealand – a provider of credit risk services.

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The World Bank’s latest statistics show growth in credit to the private sector was 23% in Q4-2017/18, down from 25% in Q3-2017/18. Recent developments suggest that uncertainties in the banking sector led to a further slowdown in lending. The share of credit to agriculture declined from 16% in Q3-2017/18 to 11% in Q1-2018/19. Lending growth remained concentrated, as 68% of new loans in Q1-2018/19 were directed to five sectors: trade, real estate, services, construction, and agriculture.

In terms of real estate, one aspect of the new rules that has been billed as offering the most potential for the growth of mortgages is the introduction of unit registration certificates (URCs), which provide evidence of the ownership of individual apartments, similar to what is known as strata titles in other countries. As stipulated in the rules, the person whose name appears on the certificate will be the legal owner of the condo unit and can use the URC as security for a bank loan. However, lingering confusion over the implementation of the rules meant that they have not had a significant impact on the mortgage market in 2018.

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In the coming years, Colliers sees that the demand for credit will remain strong, and banks could deliver more diversified products to serve their customers. The introduction of term loans helps the banking sector to play a more important role in channeling savings to longer-term loan demand from the various sectors, especially real estate. On the retail banking side, while diversification is still at a very early stage, more banks are likely to start offering mortgage loans with flexible payment terms to finance real estate projects, especially residential developments.

Sources: Colliers International, The Borneo Post Online,

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