NBC: Financial sector thrives in 2020, beats Covid-19 blues
WHILE Covid-19 crippled many linchpins of economic development over 2020, the Cambodian financial sector posted sound growth in terms of loans and deposits.
The financial industry’s total assets grew to $59.4 billion at the end of last year, increasing 15.7 per cent from the end of 2019, the National Bank of Cambodia (NBC) said in its 2020 annual report.
The NBC said outstanding loans in the Kingdom’s financial industry – a combination of banks and microfinance institutions (MFIs) – grew by 14.8 per cent to $37.3 billion by the end of last year, while deposits increased by 15.4 per cent to $33.8 billion.
NBC governor Chea Chanto told an annual meeting on January 20 that Cambodia’s economy in 2020 saw its first contraction in more than two decades, mainly driven by declining tourism and garment exports and uninspiring performance in the construction sector.
Still, the Kingdom managed to ensure low and stable inflation, preserve exchange rate flexibility and steadily accumulate international reserves – “more than three times” the level that developing countries should have, he said.
“Despite the Covid-19 crisis, the banking sector has been stable and actively involved in supporting economic activities and reducing the impact of the crisis on businesses and the poor in line with government policies.
“Modernisation of payment systems and the use of new financial technologies also contribute to supporting the Royal Government in developing the economy into a digital one,” Chanto said.
In Channy, president of the Association of Banks in Cambodia (ABC) and president and group managing director of ACLEDA Bank Plc, said overall outstanding credit had surged by 8.21 per cent year-on-year as at September 30 – indicating a slowdown in the market.
He said: “We know that the real credit crunch happened during March-June. For example, from January to April, new loan disbursement per month decreased by around 60 per cent, while from April to September, the end of the third quarter, loan disbursement rebounded by more than 90 per cent.
“Overall, Cambodia’s financial market and banking system have held up very well in light of the Covid-19 pandemic and the ensuing economic fallout.”
PRASAC Microfinance Institution Plc executive vicepresident Say Sony said his MFI’s loan portfolio grew 21.17 per cent from $2.501 billion at the end of 2019 to close 2020 at $3.030 billion.
He said deposits gained 15.25 per cent over the period from $1.788 billion to $2.061 billion, while total assets climbed 16.95 per cent from $3.110 billion to $3.637 billion.
“Looking on at the NBC’s [report of other] banks’ operations, we are proud of our finest performance, which is due to our professionalism, extensive expertise and ability to cope during these hard times.
“We were able to attain this great performance on the back of strong support from regulators especially from NBC, a strong management team, the borrowers with the highest credit discipline and great depositor trust,” Sony said.
The NBC report breaks down the types of loans from commercial banks in 2020 as retail (15.5 per cent), individual housing loans (12.8 per cent), wholesale (9.7 per cent), personal loans (9.8 per cent), construction (9.2 per cent), real estate (8.4 per cent), agriculture, forestry and fisheries (7.7 per cent) and other (26.9 per cent).
Similarly, loans from MFIs went to household accounts (31.2 per cent), trading and commerce (20.9 per cent), agriculture (18.9 per cent), services (16.2 per cent), construction (3.8 per cent) and other (three per cent), NBC said.