Logo of Phnom Penh Post newspaper Phnom Penh Post - Election to have little impact on banks: MSP

Election to have little impact on banks: MSP

Election to have little impact on banks: MSP

Next year’s national election is unlikely to slow the rapid pace of bank lending growth but could put a temporary crimp in deposits, though the sector is expected to have sufficient liquidity to absorb the impact, according to a report released yesterday.

Reflecting on Cambodia’s last general election in 2013, investment firm Mekong Strategic Partners (MSP) projected that the impact of the upcoming 2018 election on the banking sector would be minimal.

“Lending volumes for both MFIs and banks are unlikely to see a significant impact from the election, but may moderate slightly,” it said in a banking sector performance review. “Deposits will be impacted, however we expect the banks will be holding additional liquidity in the lead up to help absorb this.”

The report noted that the central bank’s move to raise minimum capital levels at all banks and MFIs by March 2018 would help ensure that financial institutions have a stronger capital base ahead of the election, which is scheduled for July 2018.

According to MSP, bank loans and deposits fell during the months surrounding the 2013 national election though quickly recovered.

It noted that while bank loans grew 23 percent during 2013, there was a sharp decline in July immediately preceding the polling. Bank deposits, meanwhile, experienced sudden outflows during the election period, ending the year at 12 percent growth.

“In the first six months of the year, bank deposits were up 10 percent, and were on track to exceed 20 percent for the year,” it said. “However, in July and August, balances fell 10 percent, back to where they were at the start of the year before recovering by December.”

The report said MFI lending growth remained strong in 2013, finishing the year up 48 percent, but anecdotal evidence suggests microfinance deposit-taking institutions saw an outflow of deposits during the election period.

MOST VIEWED

  • Over 100 Chinese nationals to be deported for online scam

    The Ministry of Interior is planning to deport 128 Chinese nationals after they were arrested in Preah Sihanouk province on Wednesday for their alleged involvement in an online money extortion scam. Y Sokhy, the head of the Department of Counter-terrorism and Transnational Crime, told The Post

  • LPG gas explosion injures 13 people, including foreigners, in Siem Reap

    An explosion on Wednesday at a liquid petroleum gas (LPG) car and tuk-tuk refuelling station in Siem Reap city has left 13 people, including an American and a Briton, suffering burns. The seven most severely burned, including a provincial police officer, were sent to a Thai

  • The French mother navigating the capital in her own personal tuk-tuk

    French woman Cecile Dahome gracefully manoeuvres her tuk-tuk through the manic streets of Phnom Penh with the precision of a Japanese katana before a herd of motorcyclists, attempting to perform illegal U-turns, cuts her off. The riders, like baby ducklings following their mother’s tracks,

  • More than 800 people test positive for HIV in 2018

    The National Aids Authority (NAA) said more than 800 people tested positive for human immunodeficiency virus (HIV) last year, joining over 76,000 others aged between 15 and 49 in the Kingdom already infected with the virus. The spread of HIV/AIDS in the Kingdom is showing few signs of