The Kingdom’s crowded banking sector yesterday welcomed its latest entrant, Vietnam’s Military Commercial Joint-Stock Bank, the fourth Vietnamese bank to set up operations in Cambodia.
Military Bank has registered US$39 million in start-up capital with the National Bank of Cambodia, which requires commercial banks to hold at least $37.5 million in reserve.
It plans to disburse $200 million in loans during the next 12 months.
“We think Cambodia’s environment is very good, and there is still room for expansion,” CEO Le Cong said yesterday at Military Bank’s launch ceremony at the Phnom Penh Tower.
MB’s arrival means the number of commercial banks in the Kingdom has reached 33. Five have opened branches in Phnom Penh this year alone.
Insiders’ reactions to the industry’s continued expansion yesterday were mixed.
The outlook ranged largely between the increased competition for a still-limited market and the benefits that come as more mature players spur growth in Cambodia’s financial sector.
“We already have too many competitors in the banking and financial business, and it’s getting tougher and tougher,” Kookmin Bank Cambodia CEO and president Jang Ki-Sung said yesterday. Kookmin is South Korean-owned.
Jang said the focus for Cambodia’s commercial banks and the NBC should be to allow the banks presently doing business in the Kingdom to increase their market share, especially given that the market was far from developed.
“The number of customers of each bank and the overall financial share are still small compared to [Cambodia’s] gross domestic product,” he said, adding that banks had plenty of room to grow.
Other experts noted the key role international companies play in boosting Cambodia’s banking operations.
Business Research Institute for Cambodia CEO and chief economist Hiroshi Suzuki pointed to the GDP growth as a result of the loans these banks issue, in addition to deposits and loans increasing by 20 to 30 per cent a year. The banks also attracted more foreign investment, he said.
Suzuki said more mature international institutions provided much-needed investment data to companies and funds interested in Cambodia, as the Kingdom’s own data was often incomplete or non-existent.
“The banks are not only providing a source of money, but also good information, which is very important for business overall,” he said.
Bank of China and Industrial and Commercial Bank of China, which both opened in Cambodia this year, would deliver key financial information to that country’s investors, he said.