Banking and microfinance lending in Cambodia to reach nearly $ 60 billion by 2023, but at a low growth rate

Phnom Penh: According to the report of the National Bank of Cambodia, lending of the banking and microfinance sector in Cambodia by the end of December 2023 reached 59.31 billion US dollars, an increase of 4.8 percent compared to the same period as 2022. This is the lowest credit growth rate in more than two decades.

The report said loans by sector, including hotels and restaurants, rose 0.6 percent, wholesale sales rose 4.8 percent, home purchases rose 6.4 percent and real estate rose 16.9 percent, and construction, up 13.9 percent. Non-performing loans (NPLs) in the banking sector as a whole stood at 5.4 percent and the microfinance sector at 6.7 percent last year.

Dr. Chea Serey, Governor of the National Bank of Cambodia, expressed his pride that the Cambodian banking system continues to be strong in the context of countries such as the United States and Switzerland, which have raised serious concerns about global financial stability.

At the same time, she stated that credit interest rates in Cambodia have remained relatively stable, although slightly higher for some institutions compared to the increase in other countries due to the increase in the benchmark interest rates of central banks in major developed countries such as the United States and Europe.

However, the governor said that non-performing loans also continued to increase, which required higher attention on bank inspections, regular stress testing, and in-depth monitoring of cellular risks also requires the banking and financial institutions to be extra vigilant.

Mr. Sok Voeun, Chairman of the Board of the Microfinance Association of Cambodia, said that the lending of banks and microfinance institutions in 2023 has a lower growth rate than in previous years due to the demand for loans from customers for use to expand their business or other business seems to be less active, especially in real estate and construction.

"The reason for the low growth due to market demand from customers is that in our current economic situation, the demand for him to expand his business, expand something, he is stagnant, or he does not dare to invest in it in the meantime." he said. Especially in the two sectors where we see that in the real estate sector and the construction sector, I see it is declining, when these two sectors are declining, the general environment sees that the growth rate is slightly lower. "

However, Mr. Sok Voeun said that in general, the credit growth rate of around 4 to 5% is still indicative of the strength of the banking and financial sector in Cambodia, which is progressing well.

At the same time, he is optimistic that in 2024, lending to the banking and financial sector will grow better than last year, as the outlook for the microfinance and banking sector continues to support the influx of money into the economy to meet the needs of customers to use, which makes the economy run smoothly and to protect the risk level of the sector to continue to grow sustainably.

It is projected that by 2024, MFI lending will grow by between 5% and 15%, while in 2023 it will grow by around 3% with a total loan size of about $ 5 billion for MFI members. Cambodian Finance. This was confirmed by Mr. Sok Voeun, Chairman of the Board of the Microfinance Association of Cambodia. As of the first half of 2023, Cambodia has 59 commercial banks, 9 specialized banks and 87 microfinance institutions operating throughout the country.