Both outstanding loans and savings deposits in 35 microfinance institutions (MFIs) continued to grow from January through to June this year, according to the latest report from the Cambodia Microfinance Association (CMA).

By the end of the first half of this year, total loans from MFIs reached $1.08 billion, up from $808 million at the end of 2012. Deposits in the seven microfinance institutions licensed to take them grew to $377.7 million, up from $224.7 million at the end of the last year.

Experts in the microfinance sector said the rise was due to continued business activity in rural areas and a broadening awareness of formal financial services.

CMA president Bun Mony, who is also the general manager at Sathapana Limited, said loans for small businesses and farmers also contributed significantly.

“The economic situation in rural areas continued on a stable path, and the demand for capital to invest grew. We were very surprised with the high growth rates,” he said.

According to a report from CMA, most borrowers from the institutions are not running into trouble meeting payments. Non-performing loans, or those that are at risk of not being paid back, amounted to $4 million, only 3 per cent of the total.

Out of the total $1.08 billion in outstanding loans, the report shows that the microfinance institution Prasac provided $301 million, Amret microfinance $174 million and $139 million came from Sathapana Limited. Hathakasekar Limited lent $113 million of the total, and AMK, the fifth largest institution, put out $69 million.

Din Virak, founder and director of the consultancy Capital Institute, said more savings at MFIs will enable them to provide more loans.

“If the trend keeps up, it will contribute to lower interest rates,” he said.

Sim Senacheat, chief executive officer of Prasac, said deposits jumped during the first half of 2013 because of stronger customer confidence in microfinance and modernised banking services like ATMs.

“Former customers increased the size of their loans more than before, and we’re getting more new customers than we used to,” he said.