In the first half 2018, the local financial sector continued the strong growth that has characterised the industry in recent times, with commercial banks and microfinance institutions (MFIs) seeing a robust expansion in loans and deposits, according to the National Bank of Cambodia’s (NBC) semi-annual report released on Saturday.
In commercial banks and microfinance deposit-taking institutions (MDIs), deposits rose by 22 percent, reaching more than $21 billion, while loan portfolios increased by 18.8 percent, amounting to nearly $22.5 billion.
There are now 5.6 million deposit accounts in Cambodian commercial banks and MDIs and 2.6 million loan accounts in commercial banks and MFIs, it says.
According to the report, loan portfolios in the MFI sector reached $4.85 billion during the first half of 2018, an increase of 34.2 percent. Up to 1.8 million Cambodians took out loans with an MFI at some point during the first semester of the year.
Most loans were taken out by small entrepreneurs in the agriculture sector (23.8 percent), trade (18.2 percent), service (10.3 percent), logistics (4.7 percent) and construction (4.3 percent).
“Microfinance institutions have diversified their financial services with money transfer, mobile banking, ATM and micro-insurance services,” the report says.
In the banking sector, meanwhile, most loans went to retail (17.4 percent), wholesale (11.7 percent), construction (9.9 percent), and agriculture, forestry and fisheries (9.8 percent).
“The progress of financial technology and the increase of demand from Cambodian people has pushed the bank and microfinance sectors to develop and upgrade themselves by building more branches, diversifying services, boosting efficiency and quality of products and operation, increasing liquidity and strengthening good governance,” the report reads.
“The MFI and banking sectors continue to show strong and healthy growth which reflects the fact that there is enough capital and liquidity.
Finally, the report notes that loan management continues to be effective as the level of non-performing loans is relatively low: 3.1 percent for banks, and 5 percent for MFIs.
Say Sony, vice-president of Prasac Microfinance Institution, told Khmer Times that he is optimistic about the future of the sector despite the upcoming general election, the interest rate cap that the central bank established in March last year and uncertainty at the international level.
“I think the growth rate for the second half of the year will be even higher because business activity continues to increase,” Mr Sony said. “We don’t have any concerns with the interest rate cap because our interest rate is under 18 percent, and our customers keep renewing their loans and taking out new ones.”
NBC’s director general, Chea Serey, said at the launch of the report that risks in the banking industry are being managed effectively, which has led to solid growth.
She said Cambodia now has a balance of payment surplus of more than $289.4 million, or 2.4 percent of the GDP, which is lower than last year, when it stood at 8.5 percent of GDP.
However, the current account deficit has increased, from 8.4 percent of GDP during the first half of 2017 to 9.5 percent of GDP ($1.1 billion) now.
According to the director of the central bank, the inflow of foreign direct investment rose by 28.4 percent during the first six months of the year.
Cambodia now has 39 commercial banks, 15 specialised banks, 7 MDIs, 70 MFIs and 302 rural credit institutions.