Pawnshop businesses continue to experience growth
Pawnshop businesses continue to experience growth
Pawnshop business growth continues to climb at the same 10 percent rate as last year with room for competition as compared to other finance institutes, according to a sector report.
During its annual meeting the Finance Institute Management Department reported recently that pawnshop businesses are more focused on urban than rural areas so there are still good possibilities for growth.
Even though there are many financial institutes offering loan credit, pawnbrokers can still garner customers by offering lower rates of interest.
For example, in the first three months of last year pawnbrokers granted loan credit of more than 3.9 billion kip to 1,344 customers, compared to the same period in 2015 when they granted 3.6 billion kip in credit to 1,284 customers.
The Financial Institution Supervision Department of the Bank of the Lao PDR recently reported that Non-Deposit Microfinance Institutes' (NDMIs) credit had also risen from 45 billion kip in 2015 to 60.7 billion kip in 2016, an increase of 45 percent.
NDMIs announced their profit of 8.8 billion kip last year as compared to 2015 when it was at 8.2 billion kip, an increase of 6.73 percent.
Moreover NDMIs have continued to enlarge their institutes since 2015 from 31 institutes to 43 institutes; with their total capital also springing up 28.7 percent from 36.2 billion kip to 46.7 billion kip.
NDMIs mainly focused on releasing loans and developing their credit products among other service improvements, aimed to supply their customers by providing loans with the trade and service sectors, which covered 60 percent of their loans.
Another 37 percent was covered by agriculture while approximately five percent went to households and families.
The Finance Institute Management Department reports the growth of the NDMIs as they have greater access to people in rural areas but that the pawnshop businesses shouldn't be affected going forward as they have a different market and offer other more convenient services to their clients.
The majority of pawnbrokers loan credit to urban areas so they will need to be careful with their finance management as customers' overdue debts always have the potential to grow.
However last year, the number of pawn shops in the country had decreased from 32 to 28 due to a lack of finance.
