Personal debt grows, credit quality drops slightly in Q1

Harrison White

The private credit information provider Credit Bureau Cambodia’s first-quarterly for report for 2021 has shown loan balances grew by 6.44% to reach $10.39 billion by end of the quarter. The total number of credit account also increased by 2.05% to 1.3 million. 

There was a drop in credit quality as the ratio of late repayments 30 days past their due date hit 2.24% from 1.91% in the last quarter of 2020. Credit cards had the highest 30+DPD with a ratio of 4.36%.

Customers who held credit accounts with only one financial institution remained at 73.63% of all customers. The remaining​ share of 26.37% represented those having relationship with multiple financial institutions.

The number of consumers attempting to acquire credit (credit application) in three different forms – personal finance, credit card, or mortgage increased by 11%. The largest increase was in mortgage applications which increased by 15%

“In the first quarter of 2021, the performance of consumer credit market was relatively strong with consistent quarter-on-quarter growth in credit applications and credit performance”, said Oeur Sothearoath, CEO of CBC said. He added that “However, the 30+ DPD ratio rose to 2.24% indicating a drop in credit quality”.

30+DPD have been kept low after the central bank issued a directive to all financial institutions to restructure loans of debtors facing major revenue declines who may find it difficult to repay loans during the ongoing COVID-19 outbreak. This policy was originally implemented until the end of 2020 but has now been renewed into mid this year.

Two of Cambodia’s largest microfinance institution’s LOLC (Cambodia) and PRASAC Microfinance both had an increase in Q1 lending reporting a gross loan portfolio of $889 million (5% increase) and $3.19 billion (6.3% increase) respectively compared to the end of 2020.

“High credit growth in the banking sector remains a key risk to Cambodia’s financial stability. More than half of households continued to experience income losses in December 2020 due to the COVID-19 pandemic though there are signs of recovery,” PRASAC Chairman Kwi Sang Jun stated.

“In addition, the proportion of households negatively affected by the COVID-19 outbreak are much higher than those currently supported by the government’s assistance program,” he added.

LOLC (Cambodia) CEO Sok Voeun stated, “LOLC has continued providing concessions to its customers whose income was seriously impacted by the Covid-19 outbreak mainly on tourism, construction, garment sectors, and other sectors. Despite the challenging operating environment for the global economy, LOLC was able to maintain good loan quality as of Q1 2021 as LOLC has conducted its operations with caution”.

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