Logo of Phnom Penh Post newspaper Phnom Penh Post - Private sector loans hit $50.7B: NBC

Private sector loans hit $50.7B: NBC

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Workers toil away at a construction site in the capital’s Prampi Makara district, in May. Heng Chivoan

Private sector loans hit $50.7B: NBC

Cambodia's financial institutions have delivered a solid performance in the first quarter of this year, underpinned by a quick rebound in business following the government’s move to allow the resumption of socio-economic activity in mid-November.

However, industry players have reported slowdown in the second quarter, citing a number of external factors.

In a report released on June 30, the National Bank of Cambodia (NBC) said the balance of loans from domestic banking and financial institutions to the private sector reached 205.4 trillion riel ($50.7 billion) as of March 31, growing by 22.4 per cent year-on-year, to meet demand for investment and other economic activities.

Construction represented the lion’s share of loans, at $13.7 billion or up 29.3 per cent year-on-year, followed by wholesale and retail ($12.6 billion; up 26.1 per cent), services ($5 billion; up 11.5 per cent), agriculture ($4.8 billion; up 11.6 per cent), households ($2.7 billion; up 37 per cent) and manufacturing ($1.7 billion; 24.8 per cent). Other areas accounted for $10.2 billion, up 16.8 per cent.

Post Bank CEO Toch Chaochek told The Post on June 30 that his bank’s loan portfolio had grown 20 per cent year-on-year in the first quarter of 2021, but cooled to 10 per cent in the corresponding period of this year.

“Performance of the industry as a whole has been good, with more business and investment demand. But at the same time, the current issues tied to the Ukraine war that have pushed up inflation, sending petrol prices spiralling, also hindered the flow of foreign direct investment in the second quarter, leading to a slowdown in loan demand too,” he said.

In a financial statement filed to the Cambodia Securities Exchange (CSX) on May 17, Advanced Bank of Asia Ltd (ABA), a subsidiary of National Bank of Canada, reported 12,622 new loans worth $590.3 million in the first quarter, raising its gross loan portfolio by eight per cent to $5.8 billion as of March 31.

On a quarterly basis, ABA’s deposit portfolio gained six per cent to $6.7 billion, while its customer base grew by eight per cent, with accounts totalling 2.2 million at end-March.

ABA chairman Yves Jacquot stressed that the Kingdom in January-March was on a “recovery curve” from the acute phases of Covid.

“The country’s reopening in November last year was amplified in March 2022 when Cambodia abolished PCR and rapid tests for fully vaccinated passengers. It is believed to improve international tourism and positively impact local businesses, especially in the hospitality sector,” he said in the filing.

Despite global economic uncertainty, Chaochek remains optimistic that business activity will remain relatively solid and that inflation rates will stay within a reasonable range. “We’ll continue to disburse loans to sectors where there is demand but there’ll need to be a bit more caution.”

He said that Post Bank plans to boost its deposit base by encouraging affluent clients to put more money into the bank.

Cambodia Microfinance Association (CMA) spokesman Kaing Tongngy contended that the growing volume of loans granted by banking and financial institutions to the private sector signalled “significant progress” in the Cambodian economy. “Cash injection is very important for economic recovery during Covid-19.

“A few reasons contributing to credit growth in Cambodia include: effective economic recovery policies by the government, slow impacts from the pandemic, and the fast growing MSMEs [micro-, small- and medium-sized enterprises] in Cambodia.

“For the MFIs [microfinance institutions], credit growth means more cash reaches our clients who are in need of growing their economic activities both in urban and rural areas.

“As the microfinance sector representative, CMA carefully monitors loan disbursements to ensure loan quality, resulting in more income generation for our clients. This will translate into sector sustainability when both MFIs and customers benefit from loan growth.

“The war in Ukraine has resulted in some negative impacts on Cambodia, in areas such as fuel prices, logistics, agricultural inputs, and others which are affecting our clients. This will certainly impact microfinance as well, but we have been trying to minimise it by ensuring loan quality and strong support for our clients,” he said.

As of March 31, Cambodia has 56 commercial banks (25 locally-incorporated, 18 subsidiaries and 13 foreign bank branches), 10 specialised banks (four locally-incorporated and six foreign), and 84 MFIs – five of which are licensed to take deposits.

There are also 232 rural credit operators, 17 leasing companies, 30 payment service providers and six representative offices of foreign banks.

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