Service and Tourism sector holds the highest NPL with 41.8% compared to other sectors
As of September, this year, the economy absorbed about Nu 191.96bn in loans from the entire financial sector in the country.
This is an increase from Nu 6.05bn in June this year, a rise by 3.1%.
According to the financial sector performance review conducted by the Royal Monetary Authority (RMA), the growth in total loans was attributed to strong demand in the housing and trade sectors.
A rough calculation of sectoral loans shows the credit grown by Nu 16.17bn in September this year compared to last year, a rise of 9.20%. The Sectoral loan in September 2021 accounts for about Nu 176bn.
The sector includes the agriculture and animal husbandry sector, trade and commerce sector, production and manufacturing sector, service and tourism sector, the housing sector, transport sector, personal loan sector, staff loan sector,and education sector amongst others.
The service and tourism sectors had the highest loan with Nu 55.6bn, followed by the housing sector with Nu 51.8bn, and the production and manufacturing sectors with Nu 20.7bn
In the review conducted by the central bank, there was a decrease in sectoral loans in many sectors including agriculture and animal husbandry sectors, trade and commerce sectors, production and manufacturing sectors, and loans to FIs, amongst others by -15.63%, -18.5%, -6.3%, -67.93% respectively.
However, the highest percentage change in the sectoral loans is in staff loan sectors with an increase of about 209%. As of September, this year, the staff loan sectors were about Nu 5.6bn and about Nu 1.8mn in September last year.
Meanwhile, the sectoral non-performing loan (NPL) has decreased by about 56%. The sectoral NPL in September this year was about Nu 11.7bn and about Nu 26.2bn as of September last year.
According to the review by the RMA, the service and tourism sector hold the highest NPL with about 42%, followed by the housing sector with about 14%, trade and commerce sectors with about 13%, while, the transport sector and manufacturing sector hold about 11% and about 9% respectively.
Meanwhile, the decrease of the sectoral NPL is mainly attributed by a decrease in sectoral NPL in the housing sectors with about 78%, followed by a decrease of sectoral NPL in the production and manufacturing sectors with about 74% and about 60% and 56% decrease in trade and commerce sectors and agriculture and animal husbandry sectors each.
For instance, about Nu 197bn was deposited by customers as of September this year, an increase of about 11.4% as compared to September last year. It was an increase of about Nu 20bn as compared to last year.
The increase in the deposit by customers is attributed to retail deposits at about 62%, followed by individual deposits at about 61% and corporate deposits at about 39%, while, the least percentage of deposits by customers is held by foreign currency with about 0.51% and 0.55% by public companies.
However, there was a decrease in deposits by private companies by about 9% as of September this year. It is a decrease of about Nu874mn, which, total deposit by the private companies was about Nu 9bn and about Nu 9.9mn last year.
According to the report on the state of the Nation 2022, all sectors exhibited robust growth due to strong domestic demand and were on track with the global economic recovery, which, industrial output grew by 1.9% after an all-time low of -12.9 % in 2020. The mining and quarrying sector and construction sector contributed to industrial growth.
Similarly, the report stated that the service sector recorded a growth of 6.3 % in 2021 despite the tourism industry being at a standstill, the revival in retail trade and other domestic businesses, steered the growth of the sector, contributing around 44% to the GDP in 2021.
In addition, the manufacturing production (cement, food, chemical, and metal industries) also improved, buoyed by counter-cyclical programs and monetary relief measures.
The report also states that the agriculture growth decelerated to 2.1% in 2021 compared to 4.6% in 2020, attributable to reduced production in the livestock and forestry sector.
For instance, according to the report, the primary sector (agriculture, livestock, and forestry) saw one of the highest growths in the last five years. “However, it slowed to 2.1% in 2021 compared to 4.57% in 2020.”
Meanwhile, the secondary sector has increased to 1.96% in 2021 as opposed to -13.10% in 2020, while, the tertiary (services) sector grew by 6.32% in 2021 from -6.9% in the previous year.
Sherab Dorji from Thimphu