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Seven lenders control half of total assets

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The National Bank of Cambodia (NBC) in Phnom Penh’s Sen Sok district. Heng Chivoan

Seven lenders control half of total assets

A new National Bank of Cambodia (NBC) report has confirmed that seven lenders held the majority of the Cambodian financial system’s total assets as of end-2022, which pundits argue is a perfectly reasonable number that is large enough not to significantly undermine development of the market.

At end-2022, the 58 commercial and nine specialised banks managed total assets to the tune of 272.732 trillion riel ($68.183 billion), or 5.87 times as much as the 46.424 trillion for the more than 300 microfinance institutions (MFI) and rural credit institutions (RCI) formally operating in the Kingdom, the report said. The total 319.2 trillion riel marks a 12.6 per cent increase on 2021.

The top seven lenders managed more than 50 per cent of that total, it indicated, offering a breakdown: Advanced Bank of Asia Ltd, or ABA (13.6%), ACLEDA Bank Plc (13.4%), Canadia Bank Plc (11.6%), Sathapana Bank Plc (4.1%), Hattha Bank Plc (3.6%), Cambodian Public Bank Plc, or Campu Bank (3.4%), and Foreign Trade Bank of Cambodia, or FTB (2.8%).

The next few on the list were Bank of China (Hong Kong) Ltd Phnom Penh Branch (2.7%), Woori Bank (Cambodia) Plc (2.2%), ICBC Bank Ltd Phnom Penh Branch (2.2%), and J Trust Royal Bank Plc (2.0%).

The NBC has set the reserve requirement ratio (RRR) – the minimum amount of cash that financial institutions must hold in reserve – for foreign and domestic currency deposits at 12.5 per cent and eight per cent, respectively, according to the central bank’s website.

The NBC also maintains minimum registered capital requirements for lenders as follows: commercial banks and foreign bank subsidiaries ($75 million), foreign investment bank branches ($50 million), specialised banks ($15 million), microfinance deposit-taking institutions – or MDI ($30 million), and non-deposit-taking MFIs ($1.5 million).

ACLEDA president and group managing director In Channy noted that although a handful of large commercial banks control the bulk of the assets, a fair share of their holdings comprise registered capital, which he emphasised can total in the “billions” of US dollars in the case of some lenders.

He claimed that 10 years ago, ACLEDA’s savings and loans accounted for more assets than all of the Kingdom’s formal MFIs combined. But as those institutions grew and their capital increased, that is no longer the case, he shared.

“Together, five or six commercial banks can control a sizeable portion of the market’s assets, thanks in part to their sizeable registered capital and their extensive networks of branches, ATMs and digital channels, which enable them to amass significant savings and make sizeable loans,” Channy said.

Ngeth Chou, a local economist and financial analyst, remarked that banking services are widely available for even the smallest businesses, although large commercial banks are able to manage far more assets than other institutions due to their corporate clienteles for loans.

“Many major banks are expanding into rural areas, although this isn’t always a positive thing since a lot of it hinges on people’s ability to repay. Overall microfinance loan volumes have also grown considerably in recent years,” he said.

In its 2022 annual report, the NBC indicated that Cambodia’s formal “banking” system comprised 59 commercial banks; nine specialised banks; five deposit-taking and 82 non-deposit-taking MFIs; 224 rural credit institutions; 16 financial leasing companies; five third-party processors; 34 payment service providers; one credit information sharing service provider; six foreign bank representative offices; and 2,869 money exchange businesses.

According to the central bank, the banking system’s consumer loans, consumer deposits, and capital respectively closed 2022 at 226.7 trillion riel, 174.4 trillion riel, and 63.3 trillion riel, up 18.9 per cent, 9.2 per cent and 13.9 per cent on-year.


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