In the first half of 2024, retail trade loans were up 17 percent indicating banks were seeing more growth in their retail trade portfolio than in other sectors such as manufacturing, as per data with the National Bank of Cambodia (NBC) shared exclusively with Khmer Times. Home loans and real estate loans also posted decent growth year-over-year.

Since the real estate slump in 2023, banks have been cautious and scaled back their lending in this sector.

Loans to real estate saw slower growth of 11.3 percent compared to 25.1 percent for the comparable period last year. When it came to year-over-year growth, retail trade was up 17.4 percent almost on par with its growth in 2023 of 18.5 percent. And this seemed to be among the better-performing sectors after home loans, real estate, personal loans and construction. Seeing more tepid growth were sectors like manufacturing, hotels and restaurants.

The demand for home loans saw a revival. From a decline of 4.5 percent last year, the purchase of homes was up 12.6 percent for the first half of 2024. However, banks are slowly scaling back the rate at which they are giving out personal loans this year. Market participants say there are concerns over the default rate in the personal loan category as it’s more risky given the lack of collateral.

Personal loans saw a growth of 10 percent in the first half of 2024, compared to a growth of 37.8 percent for the comparable period last year.

Construction also saw some amount of scaleback, as banks lending for construction grew 9.7 percent in the first half of 2024, compared to 14.8 percent for the comparable period the previous year.

Sectors that saw some revival were wholesale trade and lending to hotels and restaurants as wholesale trade lending was at 8.8 percent in H1 2024, compared to 2.6 percent in the year ago and hotels and restaurant loans saw 3.8 percent growth compared to a decline 2.5 percent in the year-ago.

Muted growth was seen in loans given to agriculture, forestry and fisheries, which grew only 8.9 percent in H1 2024, compared to 22.9 percent the year ago. In total, this saw consumer loans grow only 2.6 percent to 238.1 trillion riel ($58.9 billion) in the first half of 2024.

Meanwhile, liquidity in banks was high as customer deposits increased 13.4 percent to 209.9 trillion riels ($51.9 billion) and capital increased by 9.7 percent to 40.1 trillion riels ($9.9 billion).

“Banking and financial institutions have continued to contribute to improving the financial inclusive, which is reflected in the increase in the number of customer deposit accounts to 21.3 million and consumer credit accounts to 4 million,” said NBC in its report.

“The banking system continues to be resilient in both capital and liquidity, although credit quality and profitability have declined as fund costs have risen and credit growth has slowed due to the weak recovery of some sectors of the economy combined with prudent lending of banking and financial institutions.”

Banking assets increased 14.4 percent compared to last year (9.8 percent) to 328.5 trillion riels ($81.3 billion).

Source Khmer Time