Loans Across Banking Industry Jump to $9.5M

A recent surge in lending among Cambodia’s 35 commercial banks has received a mixed response from some of the industry’s leading financial companies.

According to figures from the National Bank of Cambodia, outstanding loans increased sharply by 28 per cent over the first six months of the year, reaching close to $9.5 billion. That compares to $7.4 billion in December last year, while total deposits increased by 15 per cent to $8.7 billion, compared to $7.56 billion at the end of 2013.

Grant Knuckey, chief executive officer of ANZ Royal Bank, said yesterday that an expanding loan-to-deposit ratio was stretching the industry thin.

“Given that the Cambodia system loan-to-deposit ratio was already about 100 per cent at the end of 2013, then the fact that commercial bank loans are growing at twice the rate of deposits is actually quite concerning,” Knuckey said in an email.

“There will always be more and more demand for borrowing, but that does not mean all this demand should be met. Some lending is imprudent. Better to slow things a little now than to create future risks,” he went on to say.

Knuckey called for a loan-to-deposit ratio cap for individual banks, as well as for the imposition of a 12.5 per cent limit on lending from offshore providers.

However, In Channy, Acleda Bank president and group CEO, was less concerned about the rising rate of lending.

Acleda’s outstanding loans rose about 11 per cent in the first six months of the year, reaching $1.6 billion, with deposits up by 20 per cent to $1.9 billion.

“I don’t see any potential risk, as it responds to the surge of the need for business expansion,” he said.

“We have three types of funding [for loans]: from our own capital, deposits and international financial institutions, which provide long-term loans.

“In addition, our commercial banks mostly offer types of productive loans [for businesses], not consumer loans, which are more risky. So, productive loans are, of course, beneficial to the economy,” Channy said.

Charles Van, president of the Association of Banks in Cambodia, said yesterday that while individually each bank needed to keep a close watch on its loan-to-deposit ratio, the overall figures were in line with industry growth and did not represent any immediate cause for concern.

“Cambodian banks are very conservative in terms of lending; banking laws and regulations are very tough,” he said.

The National Bank of Cambodia could not be reached for comment yesterday.

Source: Phnom Penh Post | August 7, 2014 | By: May Kunmakara

Loans at MFIs Grow to Surpass US$1 Billion

The pool of outstanding loans held by Cambodia’s microfinance institutions grew to more than $1.17 billion in 2013, marking a 44 per cent industry-wide increase from 2012, when the figure stood at $813 million, according to new data from the National Bank of Cambodia.

The industry statistics, which take into account the books of all 38 microfinance providers in the country, were detailed in the bank’s annual report for 2013.

Consumer deposits grew more than 61 per cent to reach $364 million last year, up from $226 million in 2012. Non-performing loans – loans that are either in or close to being in default – remained steady, accounting for less than one per cent.

Bun Mony, president of the Cambodia Microfinance Association, said the results were not surprising, reflecting an average year-on-year growth range of 40 to 50 per cent for the industry.

“Increasing loan size for existing customers and access to microfinance products in rural areas would be some reasons for the year-on-year growth.”

The CMA president added that while customers engaged in agricultural businesses remained the main market for microfinance companies, small shops and street vendors are also emerging as a larger market.

Source: Phnom Penh Post | February 10, 2014 | By: Eddie Morton & Hor Kimsay

Oil Refinery to Receive 1.67b Loan

Construction on Cambodia’s landmark oil refinery will break ground in December with funding from a $1.67 billion loan from the Export-Import Bank of China (Exim Bank), a deal that should go through today, according to a representative of local project partner Cambodian Petrochemical Company (CPC).

“After the signing for the money tomorrow [Wednesday], the groundbreaking ceremony for the construction will be held in early December,” CPC co-owner Hann Khieng said yesterday.

The development comes just a day after Cai Xiyou, the senior vice president of China-based oil giant Sinopec, met with Prime Minister Hun Sen in Phnom Penh at the Peace Palace. At the meeting, the premier asked the world’s fourth-largest oil producer to speed up the refinery’s construction, Hun Sen’s spokesman said.

“The PM encouraged the company to work on the project and asked for construction to finish as soon as possible,” Eang Sophalleth told reporters on Monday after the meeting.

Khieng, of CPC, added that Sinopec’s share in the partnership was still being negotiated, but he confirmed that the oil giant would be the major stakeholder.

Khieng added that discussions between CPC and Sinopec had been occurring prior to the meeting with Hun Sen.

The prime minister has called for refined oil – which would hypothetically first enter the country in crude oil imports or through off-shore extraction – to be flowing by 2018.

First announced in December, the $2.3 billion refinery is slated to be constructed on 80 hectares of land between the provinces of Preah Sihanouk and Kampot.

The venture is among CPC, Chinese Sinomach China Perfect Machinery Industry Corp and Sinopec.

Under the proposed arrangement, Sinopec would import crude oil to be processed at the plant.

The oil giant would also manage the export and domestic supply of the oil once refined.

After Exim Bank provides the $1.67 billion, the remaining funds will come from shareholders, according to Khieng.

Construction was initially targeted to begin earlier this year, but work was delayed due to lack of funds and so an environmental impact assessment could finish.

“The environment is very important, our earth is our earth,” Men Den, a spokesman for the Cambodia National Petroleum Authority, said last week when questioned about the delay.

But a refinery at this stage of oil industry development may be slightly premature, according to Danish oil and gas expert Tommy Christensen, chief executive officer of Go4 Bunker Cambodia.

“Before you consider a refinery, you have to consolidate your off-shore first, otherwise your economy will never work,” Christensen said in an August interview.

With offshore oil extraction still at least two years away, Christensen also said that the size of the planned refinery project was too much too soon.

Source: Phnom Penh Post | October 16, 2013 | By: May Kunmakara