Logo of Phnom Penh Post newspaper Phnom Penh Post - Election to have little impact on banks: MSP

Election to have little impact on banks: MSP

Election to have little impact on banks: MSP

Next year’s national election is unlikely to slow the rapid pace of bank lending growth but could put a temporary crimp in deposits, though the sector is expected to have sufficient liquidity to absorb the impact, according to a report released yesterday.

Reflecting on Cambodia’s last general election in 2013, investment firm Mekong Strategic Partners (MSP) projected that the impact of the upcoming 2018 election on the banking sector would be minimal.

“Lending volumes for both MFIs and banks are unlikely to see a significant impact from the election, but may moderate slightly,” it said in a banking sector performance review. “Deposits will be impacted, however we expect the banks will be holding additional liquidity in the lead up to help absorb this.”

The report noted that the central bank’s move to raise minimum capital levels at all banks and MFIs by March 2018 would help ensure that financial institutions have a stronger capital base ahead of the election, which is scheduled for July 2018.

According to MSP, bank loans and deposits fell during the months surrounding the 2013 national election though quickly recovered.

It noted that while bank loans grew 23 percent during 2013, there was a sharp decline in July immediately preceding the polling. Bank deposits, meanwhile, experienced sudden outflows during the election period, ending the year at 12 percent growth.

“In the first six months of the year, bank deposits were up 10 percent, and were on track to exceed 20 percent for the year,” it said. “However, in July and August, balances fell 10 percent, back to where they were at the start of the year before recovering by December.”

The report said MFI lending growth remained strong in 2013, finishing the year up 48 percent, but anecdotal evidence suggests microfinance deposit-taking institutions saw an outflow of deposits during the election period.

MOST VIEWED

  • Chinese ‘prank’ threat video is no joke for Cambodia

    ‘Preah Sihanouk province, in the next three years, whether safe or chaotic, will be under my control,” declared a Chinese man in a white T-shirt, as another 19 men stood behind him shirtless, in a video that went viral on social media last month. After the

  • Woman detained for murder of hairdresser over unpaid $1K debt

    A woman has been held in connection with the murder of a 40-year-old widow. The victim’s daughter claims the motive was the suspect’s unpaid four million riel ($1,000) debt to her mother. The 17-year-old girl, Pich Sievmey, said her mother, Koem Yaneang, a hairdresser

  • ABA reports $71.8M net profit

    ABA Bank, a member of the National Bank of Canada group, recorded a net profit of $71.8 million last year, up 55 per cent from $46.2 million in 2017, its annual report released on Monday stated. A rise in the bank’s loan portfolio and the expansion of stated

  • ‘Life goes on’ if Cambodia loses Everything But Arms

    Cambodia's business sector is exploring ways to mitigate any fallout from a possible loss of access to the EU’s Everything But Arms (EBA) agreement as talks continue before the 28-member bloc makes a final decision. The EU monitoring process is set to conclude in