A recent surge in lending among Cambodia’s 35 commercial banks has received a mixed response from some of the industry’s leading financial companies.
According to figures from the National Bank of Cambodia, outstanding loans increased sharply by 28 per cent over the first six months of the year, reaching close to $9.5 billion. That compares to $7.4 billion in December last year, while total deposits increased by 15 per cent to $8.7 billion, compared to $7.56 billion at the end of 2013.
Grant Knuckey, chief executive officer of ANZ Royal Bank, said yesterday that an expanding loan-to-deposit ratio was stretching the industry thin.
“Given that the Cambodia system loan-to-deposit ratio was already about 100 per cent at the end of 2013, then the fact that commercial bank loans are growing at twice the rate of deposits is actually quite concerning,” Knuckey said in an email.
“There will always be more and more demand for borrowing, but that does not mean all this demand should be met. Some lending is imprudent. Better to slow things a little now than to create future risks,” he went on to say.
Knuckey called for a loan-to-deposit ratio cap for individual banks, as well as for the imposition of a 12.5 per cent limit on lending from offshore providers.
However, In Channy, Acleda Bank president and group CEO, was less concerned about the rising rate of lending.
Acleda’s outstanding loans rose about 11 per cent in the first six months of the year, reaching $1.6 billion, with deposits up by 20 per cent to $1.9 billion.
“I don’t see any potential risk, as it responds to the surge of the need for business expansion,” he said.
“We have three types of funding [for loans]: from our own capital, deposits and international financial institutions, which provide long-term loans.
“In addition, our commercial banks mostly offer types of productive loans [for businesses], not consumer loans, which are more risky. So, productive loans are, of course, beneficial to the economy,” Channy said.
Charles Van, president of the Association of Banks in Cambodia, said yesterday that while individually each bank needed to keep a close watch on its loan-to-deposit ratio, the overall figures were in line with industry growth and did not represent any immediate cause for concern.
“Cambodian banks are very conservative in terms of lending; banking laws and regulations are very tough,” he said.
The National Bank of Cambodia could not be reached for comment yesterday.