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Savings, credit on the rise as banking sector swells
More people are depositing their savings at banks as the banking and finance sector grows, according to a report from the Bank of the Lao PDR.
The trend reflects that confidence in commercial banks is on the increase, which will create conditions for the mobilisation of investment funds to boost economic growth.
The central bank released a report on the implementation of its monetary policy over the first six months of the current fiscal year at a meeting in Vientiane last week.
According to the report, the value of deposits at commercial banks around the country reached 17,995 billion kip (US$2.2 billion) at the end of March, a 21 percent increase compared to September last year.
The increased value of savings is partially due to rising income levels in Laos as the nation's economy continues to expand and grow, as well as due to the expansion of banking services around the country.
The central bank said the high saving rates would increase opportunities for commercial banks to provide loans for business expansion, further driving economic growth.
The government has relaxed regulations on the establishment of commercial banks in Laos, boosting investment in the sector. At present, there are 24 commercial banks in Laos.
Banks based in Thailand, Australia, Cambodia, Vietnam and France now have branches in Laos. Chinese investment has seen a major increase over the past five years and a Chinese company has expressed interest in a joint venture with the Lao Development Bank.
The growing number of banks makes it easier for businesses and the public to obtain cheaper investment capital through a more competitive loans market.
The report also states that the value of credit lent by commercial banks in Laos reached 16,917 billion kip (US$2.1 billion) in March, a 14 percent increase from September last year. Credit to the agriculture sector saw a notable increase of 13 percent, primarily in a bid to boost food production and lower prices.
The state-owned Agriculture Promotion Bank and Nayoby Bank released 631 billion kip to agriculture projects, including the cultivation of cassava, rice and sweetcorn and livestock projects, over the first six months of this fiscal year.
The central bank stated that the ratio of non-performing loans for commercial banks remained at 3.6 percent in March, a figure which it describes as acceptable.
vientiane times
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