The National Bank of Cambodia (NBC). Hean Rangsey
Business performance in the banking and financial sector remained strong in 2021 in terms of the quality of credit and deposits, despite the fallout from the Covid-19 outbreak that has hampered economic activity for two years, according to the National Bank of Cambodia (NBC).
Outstanding loans extended by financial institutions to all sectors have grown by 21.2 per cent to 186.4 trillion riel ($45.7 billion), as indicated by preliminary data provided by the central bank in a report released at end-2021.
To date, the Kingdom’s “banking and financial institutions” had restructured 22.4 trillion riel in loans for 370,785 borrowers, to ease the burden on the public amid the Covid riptide of declining revenues and to manage pressure from non-performing loans, the NBC said.
For reference, the central bank earlier reported that, as of the end of the first half of 2021, the sector had restructured 22.2 trillion riel in loans for 367,239 borrowers. This miniscule change in numbers signals a strong improvement in the health of the economy in the second half.
The NBC said: “In the face of the crisis that has lasted for the past two years, the banking system has continued to play an important role in supporting economic activity, especially in the affected sectors.
“The National Bank of Cambodia has continued to maintain the relaxation of regulations and enable banks and financial institutions to have sufficient cash in hand to sustain the financing of the economy.”
Cambodia Microfinance Association (CMA) Communications Department director Kaing Tongngy estimated that the microfinance sector grew by over 10 per cent last year.
CMA’s 119 members, including four banks, had restructured $1.734 billion in loans for 36,000 borrowers as of end-2021, he said citing preliminary data.
And as of end-November, the “entire financial sector” had restructured $7.172 billion in loans for 618,820 borrowers, he added, quoting initial Credit Bureau (Cambodia) Co Ltd (CBC) figures.
Every segment of the financial industry plays a “very crucial role” in support of Cambodia’s economic growth, and injects the capital needed by other sectors, he emphasised, listing manufacturing, agriculture, trade, construction and real estate as notable examples.
Tongngy commented that the industry also actively supports government-led economic recovery initiatives such as Small and Medium Enterprise Bank of Cambodia Plc (SME Bank) and Credit Guarantee Corporation of Cambodia Plc (CGCC), which he said are on a mission to provide small- and medium-sized enterprises (SME) with better access to high quality credit.
“During the pandemic, the microfinance sector was very active in supporting other sectors and clients impacted by Covid-19. To ease their cash burden, the entire financial sector has provided loan restructuring to affected clients since March 2020.
“During the 2021 community outbreak, which led to a lockdown in April, the sector introduced additional interventions to support directly-impacted clients, such as those under quarantine or whose family members had died of Covid-19,” he said.
Cambodia Post Bank CEO Toch Chaochek told The Post on January 11 that the bank’s outstanding loans grew by more than 30 per cent year-on-year to about $810 million at end-2021.
“In 2021, we saw significant improvements compared to 2020, a year when we had to tighten credit supply due to the spread of Covid-19. We received a lot of favours from the National Bank of Cambodia in 2021, which allowed each banking and financial institution to have enough cash to issue loans,” he said.
He affirmed that the government’s effective control of Covid-19 has also contributed to maintaining economic activity, and predicted that his bank’s business operations would continue to grow in 2022, at around 20 per cent.
Meanwhile, the NBC underscored that trust in the banking system remains strong, which it said is reflected in the 15.4 per cent year-on-year growth in customer deposits at banking and financial institutions, to 157.1 trillion riel as of end-2021.
Financial inclusion was also on an upswing, as deposit and consumer credit accounts reached 12.1 million and 3.3 million, respectively, up by 40.7 per cent and 5.1 per cent year-on-year, the central bank said.
