PROFITS at Cambodia’s fifth-largest microfinance institution Angkor Mikroheranhvatho Kampuchea grew 56 percent to US$322,000 during the second quarter, compared with $206,000 for the first quarter of the year.

“Quarter-on-quarter profit growth is due to an increase in the size of the loan portfolio and a drop in the rate of bad loans,” AMK CEO Paul Luchtenburg said yesterday.

The firm’s outstanding loans totalled $28.3 million at the end of June, up 8 percent from $26.2 million at the end of the first quarter, he said, and its rate of non-performing loans fell to 2.54 percent for the latest quarter, from 2.76 percent previously.

“The drop in non-performing loans was due to continued efforts to work with clients,” he said. He also said the firm had not written off any bad debts in the last three years, apart from clients who had died.

He added that the firm is committed to cutting its NPL rate to less than 2 percent by year’s end. AMK’s outstanding portfolio would continue growing until the end of the year, he said, as the firm extended loans to remote areas it presently does not serve.

Cambodian Microfinance Association president Chea Phalarin said the domestic economy was improving, leading to a slight growth in loans during the second quarter. NPL rates were likely to have dropped in the second quarter as clients increasingly repaid bad debts, he said.

In the first quarter of 2010, outstanding loans at Cambodia’s MFIs, excluding ACLEDA bank, totalled $312.7 million, up 4.5 percent from $299 million in the previous quarter.