FTB reduces NPL rate

Photo by: Heng Chivoan

Customers use ANZ Royal cash machines in Phnom Penh in November. ANZ Royal saw its NPL rate double last year.

via CAAI News Media

Thursday, 08 April 2010 15:01 Nguon Sovan and May Kunmakara

ANZ, however, sees bad loans in 2009 increase to ‘around 5pc’

RATES of non-performing loans (NPLs) at the Foreign Trade Bank of Cambodia (FTB) fell to 5.65 percent last year from 32 percent in 2008, an audited report showed Tuesday.

In 2009, the report stated, FTB recorded US$5.9 million in non-performing loans compared to $27.6 million for the previous year.

NPLs are defined as loans where the borrower has defaulted on payments for three months. In 2008, FTB had the highest rate of NPLs nationally, according to a banking supervision report from the National Bank of Cambodia (NBC).

The drop in NPL rates over the last year has been welcomed by FTB officials.

“It went down beyond our expectations,” said general manager Gui Anvanith, who forecast in August that the NPL rate would end up between 7 percent and 10 percent for 2009.

He said the sharp fall in bad loans was due to large companies – dealing in sectors such as agro-industry, construction, hotels, and power plants – recovering from the economic crisis and repaying debts.

He added that those still defaulting on payments would face the consequences.

“Some are unlikely to be able to afford to repay. We will sue them to get back the money, because we have their collaterals in hand. We will lose nothing,” he said.

In 2009, FTB’s lending rose 7 percent to $105 million. Deposits were up nearly 4 percent to $226 million. Profits, however, were down.

“We saw our net profit down 28.8 percent to $5.2 million last year from $7.3 million a year earlier,” Gui Anvanith said, adding that NBC held $168 million of the bank’s liquidity at the end of 2009. Though numbers of FTB bad loans have plummeted, results at other banks have been varied. Canadia Bank had the second-highest NPL rate in 2008, at 11.1 percent or $45.5 million.

Dieter Billmeier, vice president of Canadia, told the Post last week its rate declined to 4.8 percent in 2009.

ANZ Royal Bank had the third-highest NPL rate two years ago, at 2.6 percent or $6.4 million. Though the bank’s annual report has yet to be released, executives say NPLs have risen, along with the bank’s earnings before provisions, which are now estimated to be almost 20 percent above 2008 levels.

CEO Stephen Higgins wrote in an email Wednesday: “NPLs at the end of 2009 were around 5 percent. “We have taken a very conservative level of provisions on these loans, which will reduce our bottom line earnings for 2009.”

He said that the NPLs were property-related loans that were written early on in ANZ Royal’s life. “Based on our experience during the early 90s recession in Australia, we made a conscious decision to support these clients through the downturn,” he said. “We expect to be fully repaid on these over the course of 2010 as the market improves, and we are already starting to see that happen.”