Sectors exhibiting high NPL ratios include the service sector, transport loans, and loans to contractors, according to the RMA report
According to a recent report released by the Royal Monetary Authority (RMA), the trade and commerce sector holds loans totaling Nu 16,002.964 mn (Nu 16 billion), accounting for 8.0% of the overall loan portfolio.
However, concerning news emerges as this sector grapples with a relatively higher non-performing loan (NPL) ratio of 10.3%. The report reveals that an alarming Nu 1,649.068 mn (Nu 1.6 billion) has been classified as non-performing in this sector.
Meanwhile, the report also shows the allocation of loans among various sectors and their corresponding non-performing loan (NPL) ratios. It shows the dominance of the housing sector in loan portfolios and the persistently low levels of NPL.
According to the report, the housing sector claims the largest share of total loans, amounting to Nu 56,123.277 mn (Nu 56 bn), which represents 28.2% of the overall loan portfolio.
Meanwhile, the report highlights that the housing sector has a consistently low level of NPL.
NPL are loans that borrowers are not repaying according to the agreed terms. In this case, the housing sector has a relatively small percentage of loans that are not being repaid compared to other sectors.
Despite the significant exposure, the housing sector demonstrates an NPL ratio of only 2.1%, equating to Nu 1,198.48 mn (Nu 1.1 bn) in NPL.
Following closely behind is the production and manufacturing sector, which has the second-largest portion of loans with a total value of Nu 26,080.869 mn (Nu 26 bn) accounting for 13.1% of the loan portfolio.
Production and Manufacturing sector has an NPL ratio of 2% amounting to Nu 525 mn classified as non performing.
Meanwhile, the hotel and tourism sector emerges as another substantial beneficiary of loans, amounting to Nu 24,675.611 mn (Nu 24.6bn), constituting 12.4% of the total loans. This sector maintains a modest NPL ratio of 1.4%, equivalent to Nu 345.441 mn.
Personal loans account for Nu15,675.086 mn, constituting 7.9% of the loan portfolio, with an NPL ratio of 2.6%, amounting to Nu 413.745 mn.
Similarly, the education loans represent a significant portion of the loan portfolio, totaling Nu 14,481.278 mn, which is equivalent to 7.3% of the loans. The sector boasts a low NPL ratio of 1.6%, with Nu 226.146 million categorized as non-performing.
The service sector holds loans valued at Nu12,221.874 mn, constituting 6.1% of the total loans.
However, this sector faces a relatively higher NPL ratio of 8.3%, with Nu 1,016.54 mn (1 bn) classified as non-performing.
Transport loans amount to Nu 9,263.195 mn (9.2bn) representing 4.6% of the loan portfolio. The sector exhibits a higher NPL ratio of 11.3%, equivalent to Nu 1,049.337 mn (1 bn).
Contractors have been allocated a loan portfolio valued at Nu 7,239.997 mn, (7.2bn) accounting for 3.6% of the total loans. This sector faces a significant challenge with an NPL ratio of 13.3%, with Nu 966.529 mn classified as non-performing.
The agriculture and livestock sector holds loans worth Nu 4,553.703 mn (4.5bn), constituting 2.3% of the total loans. It faces an NPL ratio of 8.9%, amounting to Nu 403.501 mn.
Other sectors included in the report are loan against term deposits (Nu 3,806.563 mn, 1.9%), mining and quarrying (Nu 2,877.341 mn, 1.4%), contract-based sector (Nu 2,288.672 mn, 1.1%), staff incentive loan (Nu 2,281.925 mn, 1.1%), loans for shares and securities (Nu 1,360.681 mn, 0.7%), forestry and logging (Nu 203.016 mn, 0.1%).
Tshering Pelden from Thimphu
