Microfinance loans reach over $5 billion in Q1 2025

Microfinance loans reach over $5 billion in Q1 2025

Cambodia’s microfinance sector provided loans totalling $5.37 billion in the first quarter of 2025, marking a 4.1 percent increase compared to the previous quarter, according to data released by the Cambodia Microfinance Association (CMA) yesterday.

The total number of borrowers reached 1,503,172, up 1.7 percent quarter-on-quarter, highlighting continued demand for credit across the country.

On the deposit side, the sector received $2.78 billion in savings, representing a 9.6 percent increase from the previous quarter. However, the number of depositors dropped to 1,955,013, down 8.8 percent from the previous quarter.

The portfolio at risk over 30 days (PAR+30) rose to 9.5 percent, up 1.3 percentage points quarter-on-quarter.

Despite the uptick in overdue loans, the CMA noted that the sector remains broadly stable, with positive growth in both lending and deposits. The association stressed that the microfinance sector continues to play a vital role in supporting economic growth and improving livelihoods, particularly in rural communities.

According to the CMA, loans were disbursed across a range of key economic sectors: household consumption (32.8 percent), agriculture (20.8 percent), trade and commerce (20.1 percent), services (11.8 percent), construction (6.7 percent), transportation (2.7 percent), manufacturing (2.7 percent), and other sectors (2.4 percent).

Speaking to Khmer Times, Kaing Tongngy, spokesman for the Cambodia Microfinance Association (CMA), highlighted the critical role of the microfinance sector in Cambodia’s economic development, particularly in supporting the vast number of micro, small, and medium-sized enterprises (MSMEs) that dominate the country’s business landscape.

He noted that Cambodia has a notably high concentration of micro-enterprises, which are essential drivers of employment and local economic activity. In this context, the microfinance sector has become a vital source of financial inclusion and empowerment.

“Microfinance institutions (MFIs), which initially emerged from agricultural lending and grassroots microcredit initiatives, continue to be instrumental in meeting the financing needs of MSMEs across the country,” Tongngy said. Over the years, MFIs have evolved and diversified their services to respond to the changing demands of small business owners, offering more tailored and accessible credit options.

One of the key developments has been the participation of MFIs in national financing schemes such as the Credit Guarantee Corporation of Cambodia (CGCC). This initiative helps reduce the collateral burden for borrowers and has enabled many entrepreneurs—especially those without traditional forms of security—to access much-needed capital. MFIs have also partnered with institutions like SME Bank to further expand affordable financing options.

“We are working closely with partners to ensure that even the smallest enterprises have access to financial tools for growth and resilience,” Tongngy explained. He added that the sector is now focused on improving credit quality and customer protection to safeguard financial stability amid global economic uncertainty.

Cambodia’s banking sector continues to show strong performance in early 2025, playing a key role in supporting the country’s economic recovery, Rath Sovannorak, Deputy Governor of National Bank of Cambodia (NBC) said.

Speaking at the opening of Hattha Bank’s new head office, Sovannorak highlighted the sector’s robust fundamentals, with total assets reaching $94.6 billion by February 2025, up 7.7 percent year-on-year. Customer deposits surged by 16.2 percent to $58.6 billion, and loans to key sectors rose to $60.3 billion.

The sector’s strength is further demonstrated by solid capital and liquidity positions. Capital adequacy ratios stood at 22.3 percent for banks and 25.8 percent for microfinance institutions, while liquidity coverage ratios exceeded 188 percent. Despite a slight uptick in non-performing loans due to post-Covid adjustments, the overall environment remains positive.

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