Logo of Phnom Penh Post newspaper Phnom Penh Post - Requests for loans drop 34% in April-June

Requests for loans drop 34% in April-June

Content image - Phnom Penh Post
Consumer credit applications decreased overall by 34 per cent, Credit Bureau (Cambodia) Co Ltd (CBC) said in its ‘Consumer Credit Index Report: Quarter 2, 2021’. Heng Chivoan

Requests for loans drop 34% in April-June

Applications for loans in the financial sector continued to drop in the second quarter of this year over concerns regarding the coronavirus outbreak and economic repercussions of the ensuing health crisis, according to a new report.

Consumer credit applications decreased overall by 34 per cent, Credit Bureau (Cambodia) Co Ltd (CBC) said in its “Consumer Credit Index Report: Quarter 2, 2021”.

“The most significant decrease was reported in personal finance applications dropping 34 per cent from the previous quarter, followed by [a] 32 per cent decrease in mortgage applications. Meanwhile, there was [a] 25 per cent decline in credit card applications compared to previous quarter.

“The total number of credit accounts saw a marginal decline by 0.40 per cent bringing it to around 1.30 million accounts. Outstanding balance grew by 3.42 per cent to reach $10.75 billion by the end of the quarter.

“In the second quarter of 2021, the number of consumers attempting to acquire credit in three different forms – personal finance, credit card, or mortgage – fell [overall at a] rate of 34 per cent.

“The largest drop was found in personal finance applications which decreased by 34 per cent with the highest decline of 37 per cent in the Plain region,” it said, using one its four denominations for Cambodian geographical regions – the other three being “Plateau”, “Coastal” and “Tonle Sap”.

“Mortgage applications decreased by 32 per cent whereas credit card applications fell by 25 per cent,” CBC added.

CBC CEO Oeur Sothearoath corroborated that the overall credit market situation remains under stress due to the impact of the Covid-19 pandemic.

“Similar to previous years, [the] credit market in the second quarter … slowed down [as per usual].

However, the drop[s] in quarter-on-quarter growth of both number and amount of credit application[s] [were] smaller compared to same quarter in 2020, when we witnessed major impact from the onset of the global pandemic.

“The 30+ DPD [days past due] ratio continue[d] to rise to 2.57 per cent, indicating a [quarter-on-quarter] drop in credit quality,” he said.

Prasac Microfinance Institution Plc senior vice-president Say Sony underscored some of the Covid-induced headwinds facing the sector, such as a slump in business activity and clients putting off expansion plans.

“Hands down, consumer credit dropped for the most part, due to the impact of recent Covid-19 outbreaks. Nevertheless, we at Prasac can still manage and our business will stay resilient in these hard times, particularly after the government and the NBC [National Bank of Cambodia] advised us to keep lending and implement all the best, special practices to help our clients,” he said.

As of July 31, Prasac’s loan portfolio stood at $3.348 billion, up by 10.5 per cent from $3.030 billion in March 31, and the number of borrowers grew by two per cent quarter-on-quarter, according to Sony.

For reference, Prasac noted in its first-quarter report that it had offered 13.024 trillion riel in loans to 447,999 borrowers as of March 31.

However, Sony raised concerns over the Kingdom’s inability to contain the third coronavirus outbreak – dubbed the “February 20 community event” – and now the spread of the Delta variant in local communities.

“That would have a direct impact at the macro level, which as one may plainly see, has prompted a new economic growth projection of around two per cent.

“Even so, we can see that our government, through relevant authorities, is working very hard to end the outbreak and rein in the spread of this Delta and ensure the success of the vaccine campaign.

“We do hope the situation will get better and better,” he said, stressing that Prasac is committed to “keep growing together with our clients”.

CBC added: “The percentage change in the loan amount sought through credit application also went down by 35 per cent which is significantly higher than that of last quarter [a six per cent contraction] yet relatively [low] compared to [the] same quarter in previous year [a 47 per cent reduction]”.

“This was due to the drop in application amounts across all product types – personal finance 39 per cent, credit card 27 per cent, and mortgage 17 per cent.

“[However, the] consumer loan balance continued to rise, increasing at 3.42 per cent as of June 2021. By the end of the quarter, there was a total of $10.75 billion outstanding consumer loan balance.

“Although mortgage loan shares only 11.26 per cent of total loan accounts, in terms of amount it captured more than half of the total consumer outstanding loan balance with the share of 52.47 per cent, whereas personal finance loans accounted for 46.93 per cent.

“The share of credit card loans remained low at 0.60 per cent. In overall, loan balance saw a positive growth in all regions – Plateau 4.4 per cent, Plain 3.6 per cent, Coastal 3.4 per cent, and Tonle Sap 2.7 per cent,” CBC said.


  • Purging Sihanoukville’s past with a new masterplan

    Amid illicit activities, haphazard development and abandoned projects, the coastal city of Sihanouk province needs a reset to move forward. A new masterplan might be the answer to shake off its seemingly mucky image to become the Shenzhen of the south Gun toting, shootouts, police

  • Chinese may be first in tourism revival: PM

    Cambodia's tourism industry is gearing up to roll out the red carpet for Chinese travellers after Prime Minister Hun Sen on September 17 indicated that the Kingdom could soon throw open its doors to international holidaymakers vaccinated against Covid-19 – starting with guests from China. Cambodia Chinese

  • Tourism concerns laid bare

    To ensure the success of plans to reopen the tourism market for international visitors, Cambodia must pay utmost attention to two primary determinants – the ongoing paradigm shift in domestic tourism services towards the ‘new normal’, and the factors influencing choices of destinations among foreign holidaymakers.

  • Airline says ready for green light to reopen international tourism

    Sky Angkor Airline Co Ltd on September 21 said it is ready to transport South Korean and Chinese tourists to the Kingdom once the Cambodian government makes good on plans to reopen its borders to vaccinated travellers. The Siem Reap-based airline made the remark during a

  • Covid jab drive for 6-11 age group to begin Sept 17

    Prime Minister Hun Sen has permitted Covid-19 vaccinations for over 1.8 million children aged 6-11 across the country from September 17 in order for them to return to school after a long hiatus. Hun Sen also hinted that vaccinations for the 3-6 age group will follow in

  • No ‘Crown Prince’ exists to buy France football club: ministry

    The Ministry of the Royal Palace has denied media reports that a Cambodian “Crown Prince” had purchased the AS Saint Etienne football club of France’s top-flight LIGUE 1 at the cost of €100 million ($117 million). In a press statement on September 19, the ministry stressed that Cambodia