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Rise in Consumer Loan Applications Marks Economic Activity in Cambodia

by Surya Narayan
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In the final quarter of 2023, Cambodia witnessed a notable increase in consumer loan applications, with a 5% rise compared to the third quarter of the same year. This uptick reflects a burgeoning demand for credit among Cambodian consumers, culminating in a total consumer loan volume of $15.01 billion by year’s end, marking a 0.51% increase from the previous quarter.

Data from the Credit Bureau of Cambodia (CBC) indicates a vibrant consumer credit market, with the number of loan accounts escalating by 4.49%. This growth in consumer credit, encompassing personal finance, credit cards, and mortgages, underscores a growing confidence in personal financial prospects among Cambodians.

By the close of 2023, the total count of consumer loan accounts reached 1.76 million. A significant majority of these, 80.27%, were personal finance loans, with mortgages and credit card loans accounting for 11.53% and 8.20%, respectively. The surge in consumer loan accounts over the last quarter is noteworthy, being the most substantial increase observed over the past five quarters.

However, the quality of consumer credit, as gauged by the 30+ DPD (days past due) ratio, experienced a slight decline, with a 5.14% increase in the ratio indicating a marginal downturn in creditworthiness and a heightened risk of default among borrowers.

The analysis of loan categories revealed divergent trends; personal finance applications saw a 7% increase, contrasting with a 14% decrease in credit card applications and a 7% decline in mortgage applications in the fourth quarter.

The distribution of the total consumer loans at the end of 2023 showed that mortgages constituted the largest share at 54.42%, followed closely by personal finance loans at 44.44%, with credit card loans making up the smallest segment at 1.14%.

Most consumers (70.07%) maintained single accounts with financial institutions, while the remainder held multiple account relationships, highlighting a diverse borrowing landscape.

The CBC, established in March 2012, plays a pivotal role in bolstering Cambodia’s financial stability by providing critical credit information and analytical solutions to the financial sector. This initiative, supported by the National Bank of Cambodia, the Association of Banks of Cambodia, the Cambodian Microfinance Association, and the International Finance Corporation, aids in risk management, fraud prevention, and decision-making processes for businesses and individuals alike.

The National Bank of Cambodia’s Annual Report for 2023 and its Action Plan for 2024 reflect the continued growth of the country’s banking sector, with total assets, loans, and deposits all showing significant increases from the previous year, despite a rise in non-performing loans for banks and microfinance institutions. This data underscores the dynamic nature of Cambodia’s financial landscape and the critical role of credit in fueling economic activities and growth.

Source: Khmer Times

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