Cambodian finance sector enjoys growth in first half

The country’s financial sector continued to expand robustly during the first half of this year with outstanding loans and deposits increasing compared with the same period last year, reflecting sustainable development and growing public confidence in the sector, according to the latest report by the central bank. However, with enlarged growth the rate of non-performing loans has also increased.
According to the National Bank of Cambodia’s (NBC) first semester report released on Saturday, outstanding loans across the industry grew by 20.4 per cent to US$18.8 billion by the end of June, while deposits increased by 23.4 per cent to US$17.4 billion.The non-performing loan (NPL) rate for banks increased to 2.5 per cent and to 2 per cent for microfinance institutions (MFIs), compared with an industry-wide average of 1.46 per cent for the same time last year.
Chea Chanto, governor of the NBC, said during the release of the report on Saturday that the growth of the Cambodian financial sector in first half of this year was healthy and the enlargement contributed to economic stability.
“Cambodia’s banking and financial sector continues to grow strongly and competitively with more financial inclusion,” he said. He added that the combined banks assets across the sector equalled 150 per cent of Cambodia’s annual GDP, with loans and deposits representing 92 per cent and 85 per cent respectively. However, he warned that the central bank had to stay committed to reducing risk and monitoring the sector.
“The [quality of] credit information will be strengthened in order to reduce credit risk and to boost transparency while we are working on a plan to protect depositors to build stronger confidence in the financial sector,” he said.
The report highlighted that the total outstanding loan amounts for banks reached US$15.1 billion during the first half of this year, an increase of 18.5 per cent compared to the same time last year, while deposits increased 22 per cent to US$15.7 billion. For the MFI industry, outstanding loan amounts reached US$3.6 billion, while deposits increased 38 per cent to US$1.7 billion.
Despite the growth in the NPL rate to 2.5 per cent for the sector, So Phonnary, vice president of Acleda Bank, said that it was not a huge concern despite the quality of loans showing signs of deterioration. She added that for Acleda, the bank’s NPL rate had risen from 0.7 per cent for the first six months of 2016, to over 1 per cent this year.
“The demand and price of agricultural crops was not good this year and it has affected our farmers’ incomes and their ability to make loan repayments,” she said.