Logo of Phnom Penh Post newspaper Phnom Penh Post - Report: Banking system healthy

Report: Banking system healthy

Content image - Phnom Penh Post
A woman exits an ATM on Norodom Boulevard in central Phnom Penh. Political stability, growth in all economic sectors and a strong banking system were major drivers that reinforced public confidence in the Kingdom’s banking system last year, said the National Bank of Cambodia (NBC). Hong Menea

Report: Banking system healthy

Political stability, growth in all economic sectors and a strong banking system were major drivers that reinforced public confidence in the Kingdom’s banking system last year, said the National Bank of Cambodia (NBC).

According to its “Macroeconomic and Banking Progress 2019 Report and 2020 Outlook”, deposits and outstanding loans rose sharply by 25 and 26 per cent respectively over 2018.

Outstanding loans reached $19.6 billion and deposits with Cambodia’s seven money deposit-taking institutions (MDI) reached $22 billion last year.

“The banking sector was healthy and actively contributed to supporting financial inclusion, economic growth and poverty reduction.

“The loans boosted public consumption and contributed positively to the increase in economic activity. However, if the consumer doesn’t use the loan efficiently and with the right goal, the increase in loans will also bear risk to the financial sector,” said the report.

The Kingdom saw the 30 per cent increase in loan growth after three years of deceleration, the report said.

“The rebound was primarily backed by the construction and real estate sector, in addition to consumer lending and commercial loans due to an increase in income, demand and diversity of financial services.

Meanwhile, consumer loans such as product and housing loans rose significantly over the past few years,” it said.

Acleda Bank president In Channy said loans and deposits increased by seven per cent and 12 per cent respectively, contributing to strong revenue growth of around 40 per cent. Meanwhile, non-performing loans rose to around 1.2 per cent.

“These will pave the way and serve as a strong foundation to overcome challenges and ensure growth this year,” he said.

In December 2018, the International Monetary Fund (IMF) projected that Cambodia’s financial sector would continue to enjoy strong growth.

But it warned that factors such as macro-prudential measures and a broad policy response to address issues in the real estate sector may serve as risks.

“Directors noted positively that the Cambodian financial system is profitable, has sizeable capital buffers, and has low non-performing loan ratios.

“They noted, however, that credit has accelerated and is increasingly concentrated in the real estate sector and consumer lending,” said the IMF.

It added: “Lower credit growth, coupled with prudent fiscal policy and structural reforms, would also help reduce external imbalances.

“It is noted that promoting further financial market development and local currency use would allow the central bank to move towards a more robust and flexible monetary policy framework.”

There are 43 commercial banks currently operating in the Kingdom (15 locally incorporated, 15 subsidiaries, and 13 foreign bank branches), 14 specialised banks (one state-owned and 13 private) and seven MDIs.

MOST VIEWED

  • NagaWorld casinos set to reopen, schools to follow

    NAGACORP Ltd has requested that it be allowed to reopen its NagaWorld integrated resorts in Phnom Penh after the government recently approved casinos to operate again, provided they follow Covid-19 prevention measures set by the Ministry of Health. Mey Vann, the director-general of the Ministry

  • ASEM supports Kingdom’s proposal to postpone meeting amid Covid

    The 13th Asia-Europe Meeting (ASEM13) scheduled to be held in Cambodia in November has been postponed until mid-2021 due to the Covid-19 pandemic, a Ministry of Foreign Affairs and International Cooperation press statement released on Saturday said. The decision was made during a two-day meeting

  • Coffee maker roasted for producing fake product

    The Ministry of Interior’s Counter Counterfeit Committee will send a suspect to court on Monday after she allegedly roasted coffee mixed with soybeans and other ingredients, creating a product which could pose a high risk to consumers’ health. On the afternoon of July 2, the

  • Cambodia armed with money laundering laws

    Money laundering will now carry a penalty of up to five years in prison while those convicted of financing terrorists will be jailed for up to 20 years, according to new laws promulgated by King Norodom Sihamoni and seen by The Post on Thursday. Comprising nine

  • Schools to be reopened in ‘three stages’

    With guidance from Prime Minister Hun Sen, the Ministry of Education, Youth and Sport, is in the process of reopening schools in three stages. But no timeline has been set, ministry spokesperson Ros Soveacha said on Thursday. Soveacha said the first stage will be to

  • Thai border crossings eased

    The Cambodian Embassy in Thailand said in an announcement on Wednesday that Thailand’s government has allowed certain passengers from several countries to enter its borders. The visitors must go back to their country immediately after their duties in Thailand are fulfilled, the embassy said.

  • Gov’t says tourism recovers slightly despite pandemic

    The Ministry of Tourism and the Phnom Penh municipal administration have recognised 33 tourism businesses in the capital which have consistently implemented safety measures for tourists and adhered to the code of conduct issued by the ministry. Recently, the ministry announced that tourism businesses had to

  • Mull ASEAN border opening, PM urges

    Prime Minister Hun Sen has requested that ASEAN launch a scenario for gradually reopening cross-border travel and trade between countries in the region. He said ASEAN has had more success combating Covid-19 compared to other regions. The prime minister’s request was made at the

  • Ministry reports 11 new Covid-19 cases, reiterates vigilance

    Minister of Health Mam Bun Heng has urged people to continue practising virus prevention techniques after 11 people tested positive for Covid-19 within two days after arriving in the Kingdom. Speaking on Sunday, Bun Heng stressed the importance of washing hands, wearing masks or scarves when

  • Koh Rong land ‘belongs to firm’

    Preah Sihanouk Provincial Administration spokesperson Kheang Phearum told The Post on Sunday that the 35ha being bulldozed by Royal Group Co Ltd in Koh Rong belongs to it after it was leased to it for 99 years by the government in 2008. Phearum said the land does