CAMBODIA’S central bank painted a rosy picture of the domestic financial sector yesterday, reporting strong growth in deposits and loans among the Kingdom’s 28 commercial banks during the first half of the year.

After a hard 2009, customer deposits totalled US$3.795 billion at the end of June, up 15 percent over December, and outstanding loans increased 9.8 percent to $2.74 billion during the same period, National Bank of Cambodia Governor Chea Chanto said yesterday.

Speaking at a biannual review of the Kingdom’s banking system, he said that growth in deposits and loans came as a result of prudent banking philosophies pursued by both the central bank and the commercial sector.

“The banking system in Cambodia is strong and progressive,” he said. “The global economy is recovering faster than expectations, and so is Cambodia as well.”

Total assets in the domestic banking system were pegged at $4.99 billion on December 31, and have since climbed to $5.45 billion, he said.

Foreign Trade Bank of Cambodia general manager Gui Anvanith agreed the domestic economy was headed for a rebound.

“We are reasonably optimistic about the outlook for the business environment, especially the agri-business, services and infrastructure sectors,” and the firm’s non-performing loan rate had declined to 4.73 percent from 5.65 percent in December, he said

yesterday.

The Foreign Trade Bank also reported $113 million in lending by the end of June, up 7.6 percent from $105 million at the close of last year.

Deposits grew by 8.4 percent to $245 million at the end of the second quarter, from $226 million on December 31.

NBC’s Chea Chanto said returning strength in construction, tourism, agriculture, and garment sectors, along with increasingly diversified private investment, would increase domestic GDP by 5 percent and 7 percent in 2010 and 2011 respectively.

The overall NPL rate at the Kingdom’s commercial banks has declined 4.6 percent at the end of June, from about 6 percent on December 31 last year.

Foreign exchange reserves reached $2.9 billion at the end of June, up 18 percent from $2.45 billion a year earlier, and the level was sufficient to cover about four months of imports, Chea Chantho said.

Ramesh Chandra Baliarsingh, chief executive of the Bank of India, told the Post earlier this month that it appeared the worst was over for the sector.