NBC states healthy sector despite global tensions

The Governor of the National Bank of Cambodia said yesterday that Cambodia’s banking sector is growing at a healthy rate and actively contributes to the financial development of the Cambodian people, improve living standards and reducing poverty.

Chea Chanto, governor of the National Bank of Cambodia, said at the bank’s stocktake meeting and goal setting conference that Cambodia’s economic growth has continued at 7.1 percent with strong macroeconomic and financial stability, despite some risks.

He added that the inflation rate is low (2.3 percent) and the exchange rate is relatively stable (4,065 KHR against the dollar), while the economy enjoys strong growth in capital flows, which stimulates trade and economic activity.

Chea added that international reserves have continued to grow at a high level, reaching $18 billion, equal to seven months of imports and services, contributing to maintaining confidence in the resilience of the Cambodian economy.

“In the last 40 years, the banking sector has passed through the critical stage which was born from point zero. However, after having full peace, the banking system has developed dramatically and has contributed to support and boost the development of the economy and society,” Chea added.

2019, he said was a tough year which because of global tensions around the world including Europe, Latin America, Asia, and the Middle East, which has caused uncertainty both in politics and the economy.

This is because trade tension between the United State of America and China are still prolonging, and the Brexit of England from the EU has not yet succeeded. These issues are impacting international trade activities and investment which bring the down the global economic growth to a lower level, Chea added.

“It is observed that the central bank play a significant role to support the growth and strengthen macroeconomic stability by the implementation of monetary policy through lowering of the benchmark interest rate, the injection of the capital into the market while continuing for inflation to remain low in Cambodia,” he added.

NBC’s macroeconomic and banking sector update for 2019 and outlook for 2020 said that deposits and outstanding loans have increased dramatically by 25 and 26 per cent respectively compared with 2018. It said loan portfolios reached $19.6 billion and deposits with Cambodia’s seven microfinance deposit-taking institutions (MDI) reached $22 billion in 2019.

Khou Vuthy, NBC deputy director-general for central banking, said at the event that the banking system development continues at solid growth while banking and finance are in good health and other risks have been managed effectively.

He also said that there are around 7.5 million deposit accounts and 3 million credit accounts from banks and micro finances. Khou added that the local currency deposit increased 37 percent, currency circulation in the economy increased 33 percent, and foreign currency deposit rose 16 percent in 2019.

“The financial stability in Cambodia will remain good as well as the strength of the nation’s economic growth which is supported by the growth of imports and exports. These indicators show the stability of the financial sector. This has been contributed by enough capital, liquidity, lower non-performance loan (NPL) and better revenue,” Khou added.

The NBC’s report showed that at present 43 commercial banks are operating in the Kingdom (15 locally incorporated, 15 subsidiaries, and 13 foreign bank branches), 14 specialised banks (one state-owned and 13 private) and seven MDIs.(This news came from Khmertimes.com)