The Kingdom’s banking and financial institutions posted very solid business performance overall last year despite regional and global uncertainty and inflationary pressures tied to Covid-19 and the Ukraine crisis.

This has been attributed to the “prudential” and “flexible” monetary policy and regulations pursued by the central bank to spur economic activity and support healthy growth in the industry.

“Credit in [the] private sector, which was disbursed to various main economic sectors, increased by 21 per cent while consumer deposits rose by 11.3 per cent,” the National Bank of Cambodia (NBC) said in its “Macroeconomic and Banking Sector Development in 2022 and Outlook for 2023” report published last week.

“The banking system has played a crucial role in supporting Cambodia’s economic recovery by actively pursuing financial services to meet the needs of economies.

“Prudential regulations, which were relaxed during the pandemic to relieve financial burden of borrowers and maintain credit intermediation, have been strengthened gradually to [be] in line with domestic economic recovery and the NBC exit strategy to safeguard financial stability and rebuild [a] policy buffer for future needs.

“The loan restructuring policy was withdrawn at the end of June 2022 and the amount of restructured loan[s] declined from 10.5 per cent to only six per cent of total bank credit,” the central bank added.

Although withdrawn after June 30, the NBC’s loan restructuring scheme made a return in the fourth quarter last year following a series of floods that devastated parts of the country.

ACLEDA Bank Plc senior executive vice-president Mar Amara recently confirmed to The Post that her bank’s loan portfolio stood at $5.85 billion as of June 30, marking an increase of $1.23 billion or 26.51 per cent year-on-year.

She said that since the government moved to allow for the full resumption of socio-economic activity in November 2021, “the overall performance of the economic recovery is on track and continues to gain traction”.

Amara attributed this to “robust trade performance; exceptionally resilient export growth in manufacturing – both garment and non-garment – as well as agriculture; recovery in domestic consumption and FDI [foreign direct investment] inflows; and the revival of the service sector”.

Cambodia Post Bank Plc (CPBank) CEO Toch Chaochek told The Post on January 16 that economic activities have shown a gradual recovery since November 2021, pushing up demand for formal loans.

“The financial industry recorded very healthy growth and strong performance last year thanks to the swift pace of economic recovery,” he said, underscoring that “financial support” from industry players has been an important economic growth driver.

Chaochek shared that CPBank’s loans and deposits grew by 19 per cent and 15 per cent in 2022 versus a year earlier.

Cambodia Microfinance Association (CMA) chairman Sok Voeun told The Post on January 16 that the non-performing loan (NPL) ratio for the microfinance industry jumped to a “manageable” three per cent at end-2022, from 2.3 per cent a year earlier.

Excluding all but Cambodia’s five microfinance deposit-taking institutions (MDI), the corresponding figure drops to 2.5 per cent, compared to the two per cent logged at end-2021, he noted.

“The loans have been provided to a variety of sectors, since most businesses are in need of financing to support themselves or expand,” Voeun commented.

For reference, the Kingdom’s five MDIs are: Amret Plc, AMK Microfinance Institution Plc, PRASAC Microfinance Institution Plc, LOLC (Cambodia) Plc, and Mohanokor Microfinance Institution Plc.

On December 11, the NBC had reported that outstanding loans extended by financial institutions to the private sector in all economic domains grew by 23.6 per cent on a yearly basis to 216 trillion riel as of June 30, which the central bank converted to $53.1 billion.