Consumer loans swell by 12%, reflecting banking industry growth
Consumer loans swell by 12%, reflecting banking industry growth
Consumer loans increased by 12 percent in the first half of 2024 compared to the previous year’s figure of 10.5 percent, said Association of Banks in Cambodia (ABC) Chairman and MayBank CEO Rath Sophoan at the Cambodia Banking Conference 2024, on Thursday.
Titled, ‘Uniting Finance: Strengthening Cooperation for a Resilient Financial Sector,’ this is the third year of the conference and the event saw the attendance of Em Kamnan, Deputy Director General of Banking Supervision of the National Bank of Cambodia (NBC).
“The NBC adopts a unified approach to finance,” said Kamnan, adding, “This means strengthening cooperation not only among banks and financial institutions but also between regulators, government bodies and international partners.”
The NBC Deputy Director General said that a fragmented approach would lead the country vulnerable to systemic risks and inefficiencies that can hinder economic progress. “When we work together, pooling our resources, expertise and ideas, we can create a financial ecosystem that is more resilient, inclusive and capable of fostering sustainable growth,” said Kamnan.
In his speech, the ABC Chairman talked about how the assets in the banking sector increased by around 14 percent and the Capital Adequacy Ratio (CAR) was more than 22 percent, showing that the system was well capitalised. “The liquidity ratio continues to be high, with the Liquidity Coverage Ratio (LCR) at 180 percent,” he added.
The ABC Chairman also talked about the loan default rate in the industry and said that it is manageable. “While the non-performing loan (NPL) rate was 6.8 percent, I want to emphasise the fact that it is manageable and under control,” said Sophoan.
He also cited a report from the World Bank stating that in the first half of 2024, Cambodia’s economic activity increased, led by a rebound in services and goods exports, despite sluggish domestic demand.
“Cambodia’s economic growth is predicted to rise moderately to 5.8 percent in 2024, up from 5.6 percent in 2023 as revivals in the garment, travel goods and footwear exports and tourism drive the continued recovery,” said the ABC Chairman.
ABC said that the banking industry in Cambodia is also impacted by larger events such as geopolitical tensions, the Russia-Ukraine war, inflation and the slowdown of China’s economy. “As the Cambodian economy is small and open, it also suffers negatively from all these challenges.
Cambodia’s banking sector is also affected by similar challenges. However, overall despite challenges the banking sector has maintained resilience and continued to make progress,” he said.
Another bright spot in 2024 is the ease in inflation. “The inflation rate has declined and the riel exchange rate against the dollar has stabilized,” he added.
NBC said that Cambodia’s banking sector has seen significant growth in recent years. “This expansion is a testament to the hard work of our banks and financial institutions, the adaptability of our businesses and the resilience of our economy,” said Kamnan.
The NBC also appreciated the ABC’s role in organising the event. “This third-year conference is organized to equip bankers and participants with knowledge of the dynamic shifts in the global economy, technological advancements, and changing customer behaviours,” said Sophoan. “It also revolves around digital transformation, disruptive technologies (such as AI, and FinTech), and their impact on banking operations, customer experiences and risk management,” he added.
