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MFI loans, deposits grow in first nine months of this year

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A teller at a branch of Prasac Microfinance Institution Ltd counts $100 bills. The institution recorded a 29 per cent increase in the number of loans and a 33 per cent increase in deposits in the first nine months of this year. Hong Menea

MFI loans, deposits grow in first nine months of this year

Outstanding loans and deposits in Cambodia’s crowded microfinance institution (MFI) sector have seen a sharp rise in the first three quarters of this year.

Financial insiders have claimed the growth reflects sound macroeconomic performance as well as political stability.

The latest report from Cambodia Microfinance Association (CMA), which was received by The Post on Monday, said outstanding loans with MFIs – excluding “small loans” from Acleda Bank Plc and Sathapana Bank Plc – went up by around 28 per cent during the period.

The volume reached $6.9 billion compared to $5.4 billion at the end of last year, as deposits in six microfinance deposit-taking institutions (MDIs) recorded a 44 per cent growth, hitting $3.6 billion compared to last year’s $2.5 billion.

CMA board member Bun Mony told The Post that the industry’s growth is in line with the solid macroeconomic growth as the need for business expansion capital buoys the demand for loans.

“Our economy is performing well. Although there are concerns over the trade preference scheme provided by the EU, I don’t see there being a drop in the demand for loans as our people will continue to take out loans for business expansions – this is good for the economy,” he said.

However, Mony, who is also chairman and CEO of Vithey Microfinance Plc, which was formed in 2017, said: “We [Vithey Microfinance] saw a slight growth of around three per cent in the period ending in September.

“It is a bit tough for us to compete with some of the other large institutions that also provide small loans. However, this is good for our customers, as they can get low-interest rates,” he said.

Prasac Microfinance Institution Ltd, one of the leading Microfinance Institutions, recorded a 29 per cent increase in the number of loans and a 33 per cent increase in deposits in the first nine months of this year.

Prasac vice-president Say Sony said: “Prasac has a stable source of funds from depositors, funders as well as shareholders, thanks to their confidence in us . . . increasing their deposits and continuing to lend us money.

“We especially thank our clients who continue to use our financial services with high credit discipline.

“At the same time, our economy has been performing well as per projections. Growing client business activities and good weather conditions have also been great contributors to our growth.

“Prasac’s upgrades in infrastructure and to more advanced technologies and infrastructure have further contributed [to the growth], as we can offer faster, more comprehensive services to our clients,” he said.

Speaking at a workshop on Rural Economic Development through the Microfinance Sector late last month, CMA chairman Kea Borann said with more than $6.5 billion in loans issued by MFIs as of the first half of this year, the sector is actively contributing to the Kingdom’s rural development process.

MFI operations currently reach about 90 per cent of the Kingdom’s villages, he said. This year, credit provision to rural clients could grow by about 25 per cent.

Some 2.1 million Cambodians currently benefit from MFI financial services and products for their business activities and farming as the expansion of the MFI network into rural areas bolsters small businesses there.

In April, the National Bank of Cambodia (NBC) projected that Cambodia’s economic growth will remain strong this year at 7.1 per cent, with the inflation rate at a low 2.5 per cent.

Last year, there were 43 commercial banks (13 locally incorporated, 13 foreign branches, 17 subsidiaries), 14 specialised banks (one state-owned, five locally incorporated, eight foreign banks), seven MDIs and 74 MFIs, a report from the NBC said.

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