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Finance

Yoma Bank sets the pace as Myanmar's banking sector opens up

Financial deregulation attracts investors from Southeast Asia and beyond

A branch of Yoma Bank in Yangon: The bank is part of the revenue-producing finance unit of First Myanmar Investment.

YANGON -- Myanmar's Yoma Bank, a mainstay lender in the Southeast Asian country, is setting the pace in attracting foreign investment after authorities lifted a ban on foreign financial institutions holding shares in local banks.

In April, the bank announced that it will receive about 131 billion kyat ($94 million) from Greenwood Capital, an affiliate of GIC, and Norfund -- the Norwegian Investment Fund for Developing Countries.

The two funds became the second and third foreign shareholders in Yoma after World Bank Group member International Finance Corporation, which switched its convertible loan into equity in May 2019.

Dean Cleland, Yoma Bank CEO, said in a statement that the infusion will "accelerate our investment into new technology, new partnerships and new ways of banking our target segments."

Yoma is one of the country's top 5 local banks with approximately 3 trillion kyat in assets. It is part of First Myanmar Investment, a core component of the Yoma Group conglomerate established in the 1990s by Serge Pun, a prominent local tycoon.

In January 2019, Myanmar's central bank announced that foreign financial institutions would be allowed to hold up to a 35% share in local banks. Later in November the threshold was raised on a "case-by-case basis." Yoma Bank became the first to take advantage of the deregulation.

The central bank in April approved a 35% investment into Ayeyarwaddy Farmers Development Bank by Thailand's Kasikornbank.

"This equity participation with [Ayeyarwaddy Farmers Development Bank] is a form of business that requires a relatively small investment, and in this case it is more effective than establishment of a foreign bank branch or a locally incorporated institution," said Pattarapong Kanhasuwan, executive vice president of the Thai bank.

First Myanmar Investment, which listed on Yangon Stock Exchange in 2016, has seen revenue surge, lifted by its fast-growing financial unit. Revenue from the financial services business, which includes Yoma Bank, stood at 254.6 billion kyat for the year ended March 2019, up 170% over the past three years.

FMI's core business was once real estate, but it has expanded to banking and health care, both sectors where foreign investment is restricted. Its Singapore-based sister company, Yoma Strategic Holdings, now operates the real estate and consumer business.

The once-thriving real estate unit, however, is suffering from falling land and building prices, while the hospital business is also struggling to catch up with heavy initial investment. As a result, its finance company has become the group's cash cow.

Yoma Bank has been big on digital technology. In 2016, it partnered with Norway's Telenor to launch a mobile remittance service. The bank is also partnering with the group's real estate unit to provide mortgages for middle-class consumers.

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