THE Cambodian Microfinance Association last week reported outstanding loans have dropped 2.7 percent, or US$11.9 million, in the second quarter of this year compared with first quarter results.

"Outstanding loans dropped to $426.1 million at the end of the second quarter from $438 million in the first quarter, stated the CMA report released Thursday, noting that the number of borrowers remained stable at 1.03 million.

The report also noted, however, that non-performing, or at-risk, loans had risen 1.75 percent to 3.39 percent during the same period.

Hout Ieng Tong, president of CMA, said on Friday that the report's data was compiled from 18 MFI institutions as well as from micro-finance loans issued by ACLEDA bank.

"The decline is due to a drop in business activity and reluctance to invest in the wake of the global financial slump," he said, adding that further declines of up to 4 percent could be expected in the third quarter.

He said the fourth quarter would likely see a rebound of about 5 percent coinciding with the end of the rice harvest.

Paul Luchtenburg, CEO of micro-lender AMK, said Friday the lender's outstanding loans were down 6 percent to nearly $22 million at the end of the second quarter compared with first quarter loans but that he expected a bump in coming months.

"We hope that in the second half of the year we will be able to disburse an additional $3 million to $4 million," he said.