Loans and deposits at Cambodia’s 31 commercial banks grew 35 per cent and 25 per cent respectively during the first quarter of the year on what insiders called increased soundness in the Kingdom’s financial sector.

Outstanding loans at the end of March hit US$4.6 billion, according to data from the National Bank of Cambodia.

The banks held $5.19 billion in deposits.

“We have economic stability pushing more business activities, so the demand for loans is very high,” Ngoun Sokha, the NBC’s director general, said yesterday. “I noticed some improvement for loans in the real estate sector, as well as fast growing loans to the agricultural sector.”

Borrowing in the agriculture sector jumped by 70 per cent year on year, she added.

New consumer loan products showed fast growth, although commercial loans – about 30 per cent of all lending in Cambodia – saw the biggest increase.

Loans and deposits are growing in step with an awareness of banking services among Cambodians, vice president of Acleda Bank So Phonnary said yesterday.

Loans at Acleda hit $1.103 billion at the end of March, up from $1 billion in December. Deposits stood at $1.368 billion in May.

“Small and medium enterprises are growing as economic activity is improving. We have high demand for loans,” she said.

Smaller, foreign-owned banks also reported strong Q1 growth.

Korean-owned Kookmin Bank saw a 50 per cent year-on-year jump in deposits, chief executive and president Jang Ki-sung said yesterday.

Loans at the bank increased by 20 per cent. Kookmin’s lending primarily targeted small- and medium-sized enterprises, although the bank planned to expand its presence in the construction sector, he added.

The NBC’s Nguon Sokha said she expected Cambodia’s banking sector to maintain its current growth rate despite economic turbulence in Europe.

“We have the trust of the public. And Asia will keep attracting more investment because we haven’t had any impact from [the European crisis]. This is why the sector continues to grow,” she said.

A recent World Bank report showed a relatively unbanked Cambodia, with only 4 per cent of nation holding accounts at a formal financial institution in 2011.

About 19 per cent of Cambodians took formal loans last year, the report said, although industry insiders contested the figures, saying numbers were much higher.

To contact the reporter on this story: May Kunmakara at [email protected]