Cambodia Investment Review
Cambodia’s consumer credit market reached a new milestone in the second quarter of 2023, as total consumer credit peaked at $14.76 billion. Meanwhile, late payments beyond 30 days past the due date (30+ DPD) also saw a slight uptick, increasing to 3.96% from the previous quarter.
The numbers come from a recently released report by Credit Bureau of Cambodia detailing a complex landscape of lending in Cambodia, which has seen significant growth and shifts across different sectors of the consumer credit market.
Consumer Credit Applications: A Mixed Bag
The quarter witnessed an overall drop of 11% in consumer credit applications, attributed mainly to a decline in personal finance applications by 10% and a sharp contraction in mortgage applications by 22%. Interestingly, Credit Card Application rose by 19% quarter-on-quarter, indicating a dynamic and changing marketplace.
Regional variations were noticeable, with the Coastal region experiencing the largest decrease in personal finance applications of 15%, while credit card applications soared in various regions, including a 29% increase in Coastal, 25% in Tonle Sap, 24% in Plateau, and 17% in Plain regions. The quarter also observed a decrease in the loan amounts sought through credit applications by 1.0%, sharply contrasting with the previous quarter’s growth of 16%.
Despite the fluctuations in applications, consumer credit performance marked a positive trend. The total number of loan accounts rose by 3.96% to approximately 1.65 million accounts. The outstanding balance grew by 1.24%, reaching $14.76 billion by the end of Q2 2023.
The regional growth was seen across the Kingdom, with mortgage loans capturing more than half of the total outstanding loan balance at 55.27%. Personal Finance loans accounted for 43.81%, while credit card loans remained low at 0.91%. The growth was consistent in three regions—Tonle Sap, Coastal, and Plain—but saw a decrease of 0.8% in the Plateau region.
A Closer Look at Credit Quality
The credit quality metric, specifically the ratio of 30+ DPD, shed light on an increased risk of default within the reporting quarter. It grew to 3.96% from 3.28% in Q1, with personal finance having the highest 30+ DPD ratio of 5.54%.
The increase was recorded across all regions, with a staggering 99% increase in the Coastal region and substantial growth in other areas. Most customers (70.63%) remained committed to a single financial institution, and 58.48% of customers held only a single account.
Reflecting on the mixed findings, Mr. Oeur Sothearoath, CEO of Credit Bureau Cambodia (CBC), commented, “The demand for consumer credit decreased in terms of the number of applications; however, consumer credit performance was positive in both number of loan accounts and loan balance in this quarter.” He also observed that loan quality dropped with an increase in the 30+ DPD ratio.
This comprehensive report paints a complex picture of Cambodia’s consumer credit landscape, with growth and contraction happening simultaneously across different sectors. The record figure of $14.76 billion is an essential headline, but the detailed view reveals a multifaceted market that will continue to demand careful analysis and attention from both investors and policymakers in the future.