Consumer loan for small businesses touches $35B
Consumer loan for small businesses touches $35B
As of December 2024, the total outstanding consumer loan balance for small business purposes in Cambodia reached $35.14 billion, continuing its upward trend, according to a report by Credit Bureau Cambodia (CBC) released yesterday.
However, the report states that despite the increase in loan balances, small business credit performance saw a decline in the number of loan accounts during the fourth quarter, although the loan balance itself showed positive growth.
The number of small business credit applications dropped across most sectors, with some areas showing a slight increase in the amount sought, it added.
Small business credit applications saw a decline of 13.2 percent in the fourth quarter, with the most significant drops in Agriculture (24.8 percent) and asset finance (22.0 percent).
Regions such as the coastal and plateau saw the largest reductions in applications, with agriculture applications in the coastal region dropping by 25.8 percent, and asset finance applications in the Plateau region falling by 24.5 percent.
Despite this decrease in applications, the amount sought through these loans rose by 8.9 percent, driven mainly by a significant 40.2 percent increase in construction loan applications.
By the end of the fourth quarter, the total number of small business loan accounts decreased by 1.1 percent compared to the previous quarter, reaching 1.83 million. Working capital loans made up 52.8 percent of these accounts, while agriculture loans accounted for 30.8 percent. construction, asset finance, and other loan types represented smaller shares. Regionally, loan accounts decreased across all regions, with the largest drop seen in the plateau (1.5 percent) and coastal (1.4 percent) regions.
“Consumer loan balance continued to rise, increasing at 1.3 percent as of December 2024. By the end of the quarter, there was a total of $35.14 billion outstanding consumer loan balance,” the report stated.
In terms of loan quality, the share of loans with repayments 30 days past due (30+ DPD) improved from 9.0 percent in the third quarter to 8.3 percent in the fourth quarter. Despite the overall improvement, construction loans had the highest 30+ DPD ratio at 12.7 percent. In terms of regional performance, the Tonle Sap and Coastal regions saw the most significant increases in 30+ DPD, with 9.7 percent and 9.4 percent, respectively.
“The demand for small business credit decreased in terms of number of applications; however, we see the amount of applications increased compared to the previous quarter of 2024,” said Oeur Sothearoath, CEO of CBC.
“Small business credit performance was negative at 1.1 percent in terms of numbers of loan accounts, while loan balance grew 1.3 percent in this quarter.”
“In this quarter, loan quality performed better with an increase in 30+ DPD ratio of 8.3 percent lower than 9.0 percent in the third quarter of 2024,” he added.
In terms of customer behaviour, 65 percent of customers held credit accounts with only one financial institution, while the remaining 35 percent had relationships with multiple institutions. The majority of customers (49.4 percent) held a single loan account, while 32.7 percent had two accounts, and 13.1 percent held three. Only 4.8 percent had more than three loan accounts.
The rise in consumer loan balances and the mixed performance of small business credit suggest a complex financial landscape in Cambodia, with demand for credit shifting across sectors and regions.
The increase in loan amounts, particularly in construction and working capital, highlights the continued expansion of credit in key areas of the economy, while the decline in applications suggests caution among borrowers in certain industries. Despite regional variations in loan performance, the overall outlook remains positive, with improvements in loan quality and continued growth in loan balances.
