Cambodian Investment Review
The Cambodian banking sector has demonstrated varied performances by two of its most well-known institutions during the well documented banking slowdown of 2023, with ABA Bank achieving a record after-tax profit of $276.4 million in 2023, up from $262.2 million the previous year. Conversely, Hattha Bank has encountered serious challenges, reporting a net loss of $43.6 million after tax, marking a significant downturn from the prior year’s profit of $73.8 million – in terms of lending, Hattha bank is the fifth-largest lender in the Kingdom.
ABA Bank, known for its robust support of micro, small, and medium enterprises (MSMEs), attributes its success to its continued efforts in loan disbursement aimed at sustaining business operations across various sectors. An ABA spokesperson highlighted the bank’s focus on fostering the growth of MSMEs, which are considered the backbone of the Cambodian economy. The dedicated teams across all sectors, from small business loans to commercial and corporate loans, have contributed significantly to our growth, a spokesperson said.
Importance Of Competitive Interest Rates
Emphasizing the importance of competitive interest rates, the ABA spokesperson noted that the MSME portfolio represents 74%% of ABA Bank’s total loan book. During these challenging times, our vigilant credit assessment criteria and policies ensure that we continue to provide suitable credit solutions to support the economy, they added.
Read More: Leader Talks – Stephen Higgins On Cambodia’s Post-COVID Financial Sector Outlook
In addition to business expansion and diversification loans, ABA Bank offers refinancing terms with competitive interest rates, a strategy that has been beneficial in growing its loan book. The bank also reported a 5% increase in total comprehensive income for the year, reaching over $276 million, with total fixed assets climbing to $11.5 billion from $9 billion in 2022.
On the other hand, Hattha Bank, a subsidiary of the Bank of Ayudhya Public Company Limited and its group companies (Krungsri), the fifth-largest financial group in Thailand, faced a stark contrast in its fiscal outcomes. The net loss is attributed to several factors – mainly a very large write down in non-performing loans, marking a dramatic shift from its previous year’s performance.
NPL Rates in Cambodia Hit Record High in 2023
The National Bank of Cambodia (NBC) has provided an overview of the country’s banking landscape, revealing that as of December 2023, Cambodia housed 58 commercial banks, nine specialized banks, and 87 microfinance institutions (MFIs). Total credit reached $57.6 billion in 2023, a modest increase of 4.8% from the previous year. The report also detailed loan distribution across various sectors, noting marginal and significant increases in different areas of the economy.
Non-performing loan (NPL) rates stood at 5.4% in the banking sector and 6.7% among MFIs, reflecting the financial challenges some borrowers face. Meanwhile, the country saw a 13.1% rise in outstanding deposits, totaling $47.9 billion, with current assets in the banking system increasing by 8.6% to $84.3 billion.
