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Cambodian bank loan growth in mixed sectors

DOMESTIC lending soared 25 percent in 2010 as banks eyed emerging opportunities in growth sectors, according to National Bank of Cambodia statistics.

Total lending among the Kingdom’s 29 commercial banks and six specialised banks reached US$3.31 billion at the end of 2010, up from $2.64 billion in 2009, on banks’ shifting lending strategies, the NBC’s Supervision Report 2010 showed.

Non-performing loans dropped to 3 percent from 4.4 percent year-on-year.

While total credit increased, the statistics show the growth in lending was unevenly spread across the Kingdom’s economic sectors.

“Overall credit increased … mainly because of the hefty recovery of the garment sector and exports,” as well as tourism, NBC Director General and Spokeswoman Nguon Sokha said yesterday.

However, the construction and real estate sectors have not fully recovered from the financial crisis, she said.

Wholesale trade registered the biggest jump of the 18 sectors surveyed, climbing to 17.5 percent of total loans in 2010 from about 13 percent in 2009.

Cambodian Economic Association President Chan Sophal reckoned exports at least offered banks a safer way to profit.

Firms exporting rice or rubber may need only short-term loans, and can offer a letter of credit from buyers to prove they’ll pay back the banks, he said. The entire process may take just a month, thereby reducing risk for lenders.

“It’s a quick transaction,” he added.

However, the move toward lending to wholesale traders was more strategic for at least one bank.

Canadia Vice President Dieter Billmeier said the bank had noticed a lack of investment in that area in 2009 and made it a priority last year. As a result, Canadia’s lending to wholesale traders more than tripled to $145.6 million from $44.5 million year-on-year.

While that sector saw a bump in its share of loans, other sectors like real estate and construction did not.

The construction industry’s borrowing grew 2.9 percent to $232.7 million between 2009 and 2010, though most other sectors registered double-digit gains.

Meanwhile, real estate and public utilities dropped 7.5 percent to $153.3 million in the same period, making it one of two industries to see declines.

ANZ Royal Bank Chief Executive Officer Stephen Higgins attributed the lackluster performance to the small number of new transactions, “which aren’t enough to replace the continued runoff of existing portfolios.”

“This results in a drop in lending to that sector,” he said.

Still, the NBC pointed out positive changes in regards to non-performing loans, as the NPL rate dipped about 1.5 percentage points in 2010 compared to 2009.

“This favourable trend can be attributed partially to efforts by banks to clean their portfolios,” Nguon Sokha said.

The Kingdom saw credit grow 5.2 percent in 2009, but a sustained economic recovery in 2010 had led to the 25 percent increase, she said.

Among the highest NPLs for 2010 were at Vattanac, Cambodia Mekong and Booyoung Khmer Banks, which reported rates of 14 percent, 26 percent and 54 percent, respectively.

Booyoung Khmer claimed no NPLs in 2009, while Vattanac was at about 8 percent in the year.

Mekong Bank Chairman Michael Stephen said his firm’s NPL rate has shrunk from 36 percent the year before, noting each year’s loan portfolio reflected the economy at that time.

He also said the NBC has very strict guidelines for the various classifications of loans.  

“Even a small delay in payment can trigger a classification although it may not be a true indication that a particular loan is in trouble,” he said.

Officials from Booyoung Khmer and Vattanak did not comment when contacted by The Post.

Canadia’s Dieter Billmeier pointed out that while the NBC’s figures offer a snapshot of the industry, they may differ from those generated by independent accountants.

“These figures do not necessarily conform to external audited reports,” he said.

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