Dr Sein Maung: “The bank’s loans account for more than 83pc of deposits.”

FIRST Private Bank Ltd plans to raise its capital from K2 billion to K5 billion in the 2006-2007 financial year, the bank’s president, Dr Sein Maung, said at its annual general meeting on November 12.

“Until the end of September 2006, more than K3.8-billion worth of shares have been sold to the public to help reach the targeted capital of K5 billion,” Dr Sein Maung, a former economist with the World Bank, said at the meeting held at the Myanmar Banks Association building in Yankin township, Yangon.

The bank’s recovery from the 2003 nationwide liquidity crisis continued in 2005-06, which ended March 31, with profits jumping 72 percent to K1491 million from K865 million in 2004-05, according to its annual report.

But while profits reached a record high last year, deposits were down almost 18pc to K15.856 billion from K19.281 billion in 2004-05, the report said.
First Private Bank was to pay out K600 million in dividends, compared with K220 million in its previous financial year, it added.

“One of the reasons our bank made more profit in 2005-2006 was because more loans were issued to the public than in the previous year and income from the interest rate on loans and overdrafts increased from the last year,” said Dr Sein Maung.

First Private Bank increased the amount it loaned by 21.6pc from K10.934 billion in 2004-05 to K13.296 billion in 2005-06 despite holding less deposited funds.

The bank’s deposits have decreased from a high of K27.4 billion at the end of 2004 in line with a regulations issued by the Central Bank that restrict deposits to seven times the amount of paid-up capital a bank holds. By targeting K5 billion in shareholder investment, the bank will be able to increase its deposits and therefore its loans also.

“At the moment, the ratio of the bank’s loans account for more than 83pc of total deposits,” Dr Sein Maung said.

In 2005-06, First Private Bank gave 41pc of its loaned total to the service sector, 27pc to the manufacturing sector and 15pc to the trading sector, with the remainder going to a range of other sectors, its annual report said.

The bank’s report said it had the lowest rate of non-performing loans (NPL) among all financial institutions in Myanmar at 0.05pc of loans at the close of the last financial year on March 31, well below the Central Bank’s guideline of an NPL rate no higher than 10pc.

“The NPL rate of our bank is now zero, which is a record in Myanmar’s banking history and the most significant breakthrough of all the banks (in the country),” Dr Sein Maung said on November 12.

First Private Bank Ltd was established in 1992 and has 15 branches across the country employing more than 460 staff.

“We are now requesting the government allow us to open more branches throughout the country,” Dr Sein Maung said. “Once the authorities give us the green light, we will begin opening new branches.”