via Khmer NZ News Media
Monday, 28 June 2010 15:01 Nguon Sovan and Jeremy Mullins
PROFITS claimed by the Kingdom’s commercial banking sector declined nearly 50 percent last year, as Cambodia’s fourth largest bank ANZ Royal Bank fell into the red, according to a National Bank of Cambodia (NBC) report released Friday.
Domestic commercial banks saw profits total US$60.3 million for 2009, down 47.5 percent from $114.7 million generated during 2008, the annual banking supervision report stated.
Despite increasing deposits, the banking sector experienced falling returns due to a slowing expansion of credit and a slight growth in non-performing loans (NPL) during the financial crisis.
The cost of accumulating additional customer deposits also grew as Cambodia witnessed a rapid expansion in nationwide banking networks.
Total deposits in the Kingdom grew 32 percent to $3.3 billion last year, outpacing the 5 percent rise in lending to $2.51 billion. However, more of Cambodia’s loans fell into arrears last years, as banks reported an average NPL rate of 4.84 percent for 2009, up from 3.68 percent the year previous.
ANZ Royal, the Kingdom’s fourth-largest bank, reported a loss of $391,000 last year, falling from a $2.9 million profit a year earlier. However, CEO Stephen Higgins said Sunday he was pleased with the bank’s performance during the economic crisis.
“We’re pretty happy given the [banking] environment of 2009,” he said.
ANZ Royal reported a non-performing loan rate of 5.4 percent, representing $14 million of its $265 million portfolio, but Higgins said the bank is seeing its NPL rate recover so far this year.
“We’re a very conservative organisation. We’ve put money aside just in case customers can’t repay,” he said.
Cambodia’s most profitable bank proved to be Canadia Bank, which generated $23 million in profits for 2009, though the figure represents a 31.3 percent decline on the $33.5 million profits garnered during 2008.
“The Cambodian banking market was relatively less affected by the financial crisis; and we banked quite conservatively,” Deputy General Manager Charles Vann said, explaining Canadia’s success Sunday.
The Kingdom’s other two largest banks also claimed falling profits, but managed to stay in the black.
The NBC’s statistics showed Cambodian Public Bank’s profits declining 57 percent year on year to $12.6 million in 2009, while ACLEDA Bank’s total profit was $9.7 million, a 52.7 percent decline over 2008.
NPL rates jumped for several banks, with Cambodia Mekong Bank reporting 36.4 percent of its total loans as non-performing, totalling $7.1 million of its $19.4 million portfolio, after reporting a 0.2 percent rate for bad loans during 2008. Cambodia Mekong Bank president Khoy Boun Chhay did not respond to repeated requests for comment Sunday.
The Foreign Trade Bank of Cambodia had the second-highest NPL rate, with 11.2 percent of its $92.6 million in loans reported as non-performing by the NBC’s report.
However, the bank’s officials said its rate of bad loans was actually half that.
“The NBC’s figure are just an unaudited report, and we don’t know what formula they used to calculate the NPL rate,” Foreign Trade Bank general manager Gui Anvanith said Sunday.
“We still stick to our audited report by the PriceWaterhouse Coopers that showed our NPL rate at only 5.65 percent or $5.9 million at the end of last year from 32 percent or $27.6 million in 2008,” he said, and added that the bank’s NPL rate had declined to around 5 percent as of last week.
Foreign Trade Bank’s bad loans had been influenced by six large borrowers affected by the financial crisis last year, including players in agro-industry, construction, hotels, and a power plant, he said, but added that the borrowers had recommitted to paying their debts.
NBC spokesperson Tal Nay Im acknowledged that its report was unaudited, but said all information had been provided by the banks themselves. Roth Sovanorak, deputy chief of NBC’s supervision department, did not answer repeated calls Sunday.