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Banks buck global slide as deposits, loans surge

Customers access financial services at an ABA Bank branch in Phnom Penh.
Customers access financial services at an ABA Bank branch in Phnom Penh. Heng Chivoan

Banks buck global slide as deposits, loans surge

Loans and deposits in Cambodia’s financial sector grew 13.8 per cent and 6.4 per cent, respectively, in the first half of 2023 despite the slow global economy which is experiencing low demand due to the prolonged Russia and Ukraine war.

Based on National Bank of Cambodia (NBC)’s first half year performance report, which was released on July 31, loans totalled $58.6 billion while customer deposits rose to $44.4 billion.

In the banking sector, outstanding loans climbed 11.9 percent to $45.8 billion with 1.6 million accounts registered.

The retail segment represented 16 per cent of the total, rising 12.9 per cent from a year ago, home ownership 14.5 per cent (up 17.5 per cent), real estate (9.5 percent, up 13.6 percent), wholesale (9.3 per cent, up 11.7 per cent) and construction (nine per cent, up 8.9 per cent).

Additionally, agriculture, forestry and fisheries loans made up eight per cent (up 13.4 per cent), consumer 8.3 percent (up 0.9 percent), manufacturing 4.3 per cent (up 22.2 per cent) and hotels and restaurants 4.2 percent (up 7.8 percent).

Banking deposits increased 6.4 percent to $39.4 billion, consisting of 13.7 million accounts.

Microfinance loans, which expanded 14.8 percent to $9.7 billion as of June 30, 2023 were given to key sectors - households 34 per cent (up 18.4 per cent year-on-year), trade and commerce 23.2 per cent (up 15 per cent) and agriculture 17.7 per cent (up 13.2 per cent).

The services segment represented 13.4 per cent, transportation 4.2 per cent (up 0.2 per cent), construction 4.4 per cent (up 14 per cent) and manufacturing 1.9 per cent (up 30.8 per cent).

The sector received $4.9 billion in deposits, equivalent to 2.7 million accounts.

Speaking at the launch of the report, NBC governor Chea Chanto said the banking system has been strengthening, with the stability of the banking system playing an active role in promoting economic activity and maintaining financial stability.

“Despite global financial conditions being tight, three US banks collapsing early 2023 while raising concerns in the international financial markets, the Cambodian banking system remains strong and resilient,” he added.

Capital and liquidity continued to be higher than NBC’s regulation, Chanto remarked, sharing that the non-performing loan ratio increased slightly, but it did not pose a risk to financial stability.

He alluded the banking system’s stability to NBC’s push for proactive macro- and micro-prudent policy, regular inspections and tests on the strength of the banking and financial institutions.

Toch Chao Chek, CEO of Cambodia Post Bank said while he is aware of the growth in loans and deposits, including that of his bank, the overall sector’s expansion is at a rate which was slower than 2022.

Unlike before, his bank mostly focused on growing their deposits this year, which saw a higher growth than loans.

“The growth rate in the banking system is slower this year due to rise in interest rates which impacted the demand on loans,” he said.

Most banks are offering loans to small and medium enterprises to help expand their business during hard times.

As of June 30, 2023, there were 59 commercial banks, nine specialised banks, five deposit-taking microfinance institutions, 82 non-deposit-taking microfinance institutions and 118 rural credit institutions.


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