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NPLs fall amid signs of a strong economy

A STRENGTHENING domestic economy has driven down the rate of non-performing loans at Cambodia’s microfinance institutions by a fifth at the end of September, compared to the end of June, according to industry statistics obtained yesterday.

Figures from the Cambodian Microfinance Association revealed that Cambodia’s non-performing loans, defined as loans in default for more than three months, had declined to $11.5 million, or 1.9 percent of overall, from 2.4 percent worth $12.8 million at the end of the second quarter.

Association Chairman Chea Phalarin pointed to improvement in the economy as a prime driver behind the growth of profits and stronger loan performance among the Kingdom’s 23 microfinance institutions.

“With a better business environment, more customers are coming for loans,” he said. Chea Phalarin is also the general manager of Amret, the Kingdom’s second-largest MFI.

Thaneakea Phum Cambodia MFI was one institute that reported a major decrease in its bad loans. It recorded an NPL rate of 2.6 percent at the end of the quarter, worth $510,784, down from 4.82 percent at the end of the second quarter.

“The drop came as we wrote off 1.3 percent, or about $280,000, of the bad loans,” said the firm’s General Manager Chuon Sophal yesterday.
“We have also stepped up our collection efforts.”

Thaneakea Phum did a thorough assessment of its clients and aimed to have a bad loan rate of below 2 percent at the end of the year, he said. The firm earned a net profit of $600,000 over the first nine months.

Intean Poalroath Rong-roeurng saw improvement and showed a non-performing loan rate of zero by the end of September. It had recorded a NPL rate of 7.44 percent of its portfolio in April, worth $279,000. The firm’s General Manager Hort Bun Song declined to comment on the drop yesterday.

Samic MFI reported a stable non-performing loan rate at 4.9 percent, or $261,765 of its total portfolio, at the end of September. The firm’s General Manager King Kap Kaylan said he hoped the rate would decline in the last quarter as the economy is recovering.

The Kingdom’s MFIs had outstanding loans totalling US$588 million for the July to September quarter, an 11 percent increase on $529 million for the previous quarter, the figures showed.

The figures include data from 23 MFIs.

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