The National Bank of Cambodia’s Supervision Annual Report 2014 showed that profits for the banking sector stood at $311 million, a 30 per cent increase from 2013, with commercial banks bringing in major portion of these profits – $305 million.

Leading the pack was Acleda Bank with $82 million in profit, followed by Canadia bank with $61.2 million, $40.1 million for Cambodian Public Bank and $18.6 million for ANZ Royal Bank.

The NBC report shows that the greatest losses came from new entrant Hong Leong Bank, with a loss of $2.28 million, and Cambodia Mekong Bank and Cathay United Bank losing $2.2 million and $1.83 million respectively.

According to Grant Knuckey, chief executive at ANZ Royal Bank, while the industry was in good shape overall, he expects returns to have peaked for the sector.

“From here, I expect a combination of cost inflation, rising NPLs [non-performing loans] and the need to increase capital levels will see RoE [return on equity] falling,” Knuckey said in an email.

Across the board, lending rose to $9.5 billion in 2014 up 30 per cent from the previous year, with the highest growth rates seen in construction, which grew by 37 per cent, housing mortgages by 54 per cent and real estate by 55 per cent. While credit in mining shrunk by 40 per cent and information media and telecommunications fell by 36 per cent in 2014.

Knuckey said the increase in credit to the construction and real estate sector is in line with the two industries’ larger contribution to the national GDP last year.

“However a continuation of increased leverage to this sector must be monitored, as it is never healthy in any country when extended for more than a couple of years,” he added.

Charles Van, executive vice president at Canadia Bank, said the banking sector was in a strong place and based on the latest figures he expected that growth to continue in the coming years.

He was less concerned about the increased lending in the construction and housing market.

“With regards to loans in housing, it is good and, currently, I do not think there is a need for any supervision,” he added.

The NBC’s 2014 report revealed an industry-wide loan-to-deposits ratio of 95.9 per cent, just one percentage point lower than 2013, yet still quite higher than the 76 per cent in 2009, with the industry average petering close to the one-to-one ratio.

But, some banks have well surpassed the 100 per cent mark and are supplementing their loan financing from local and foreign inter-bank lending.

Knuckey said that it would be prudent not to exceed the 100 per cent ratio, and that this could eventually “sideline smaller banks here”.

“At an individual bank level, it is already unsustainable for some,” he added.