THE FOREIGN Trade Bank of Cambodia saw a slight rise in its non-performing loans (NPL) in the first quarter of 2010, while lending was flat, according to official figures.

The bank’s NPL rate – counted as loans the borrower has defaulted on for three months – rose to 6 percent from 5.56 percent in the last quarter of 2009. Lending remained at US$105 million each quarter.

“We’re still cautious in evaluating clients for loans, and it’s currently hard to get a good client with a good business plan,” FTB General Manager Gui Anvanith said last week. “We’ll dare to lend as much as $50 million if it’s a good business project.”

The FTB has witnessed a huge turnaround in its non-performing loans from 2008, when it had the highest NPL rate in Cambodia at 32 percent. By the end of 2009, that rate had been cut to 5.56 percent, surprising bank managers themselves.

Like other banks in the Kingdom, FTB is maintaining high liquidity, with $168 million deposited in the central bank at the end of last year.

FTB is focusing on business ventures, small and medium-sized enterprises and agricultural businesses, rather than real estate developments, Gui Anvanith said.

“We have little appetite for hotel-development projects,” he said. “For those in [Phnom Penh], we might consider them, but those in Siem Reap, we say no, as the province is too crowded with hotels.”

The bank is avoiding other real estate projects, such as apartments, with tens of thousands of units built and many unable to find buyers, he said.

Deposits at the FTB rose 1.7 percent, to $230 million, quarter on quarter, and the bank posted a first-quarter net profit of $1.38 million.

Stephen Higgins, CEO of ANZ Royal Bank, said business conditions for banks have been improving so far this year.

“First-quarter performance has been strong at [ANZ Royal], with revenue more than 20 percent higher than for the first quarter last year,” he said.

Higgins expects his bank to comfortably surpass results for 2009, when the bank’s NPL rate nearly doubled to 5 percent.

Cambodian banks and lending institutions saw their NPL rates rise after the global economic downturn, as borrowers abandoned projects and payments.

The National Bank has said the rate of NPLs is not of great concern, as it has remained below 10 percent of all outstanding loans.