Private banks report flight to quality lenders as rate of non-performing loans increases.
ANUMBER of leading banks have reported a rise in deposits in the first six months of the year compared with the same period last year.
They said the reasons were two-fold. Firstly, clients are turning to quality institutions to manage their deposits, and secondly, the economic crisis means people are saving rather than investing.
The banks reporting higher deposits are ANZ Royal Bank, ACLEDA Bank and the Cambodian Public Bank.
Stephen Higgins, CEO of ANZ Royal, wrote in an email last week that deposits were up 34 percent in the first half.
"We are actually too liquid at the moment... We now have around US$240 million in cash and bank deposits, mainly with the NBC (National Bank of Cambodia)," Higgins said, adding that clients were reassured by the strength of parent bank ANZ.
Higgins said loans offered were up 15 percent to $291 million in the first six months, and he expects to see continued growth in loans and deposits in the second half of this year.
"Lending continues to grow, but not at the same pace as the first half of last year when growth was in fact too fast," he said. "Naturally, our credit provisions are higher as well, which is to be expected for this part of the cycle."
Phan Ying Tong, head of the Cambodian Public Bank, said deposits were up one-fifth to more than $500 million.
"People have sufficient confidence in the bank, and at the same time the lack of business activities and the current investment environment are not good, so they prefer to put their money in a safe bank," he said.
Phan Ying Tong said loans were down 2 percent to $600 million, with non-performing loans (NPLs) slightly above last year's figure of less than 1 percent, although he did not provide a precise figure.
In Channy, president and CEO of ACLEDA bank, said Sunday that deposits were up 25 percent to $610 million by the end of June, with gross loans down 3.5 percent to $446 million. He expects deposit growth of 50 percent by the year-end, he said.
"My forecast is that the banking sector will see loan growth in the second half of the year because that is the crop-growing season - so people will borrow to invest in their businesses," he said.
The bank's NPL percentage had more than doubled in the past six months from 0.44 percent to 1 percent, he added, blaming exposure to construction-material suppliers.
Tal Nay Im, director general of the National Bank of Cambodia, said on Sunday that overall bank deposits are up and loans down, although she was unable to provide figures. She predicted a recovery before the end of the year as other economies pick up.
"Cambodia's banking industry has been stable in the first half of the year. Deposits at commercial banks have increased, but we have seen lower growth compared to the first half of last year before the economic downturn," she said. "Loans are down because of the impact of this crisis, and we have seen that banks are being cautious in offering loans to customers."
She said the downturn in the real estate sector and lower agricultural prices meant NPLs were up from 3 percent at the end of the first semester in 2008 to around 5 percent now.