MFIs' outstanding loans grow in second quarter

via Khmer NZ

Friday, 09 July 2010 15:01 Nguon Sovan

CAMBODIA’S biggest micro-finance institutions (MFIs) reported more outstanding loans in the latest quarter over the first three months of the year, though many said profits were shrinking due to operational expansions and declining interest rates.

Prasac, the largest domestic microfinance institution, recorded 12 percent growth in outstanding loans to US$72.9 million at the end of the second quarter, up from $65.2 million for the first quarter of 2010.

Prasac General Manager Sim Senacheert said economic recovery was translating to growth, particularly in the agricultural sector, which constituted 30 to 40 percent of the company’s portfolio.

“With economic recovery, we have fewer non-performing loans, so we can concentrate on growing our portfolio instead of solving delinquent loans,” he said. Prasac reported a non-performing loan rate of 1.44 percent at the end of the second quarter, a decline from 1.63 percent outstanding at the end of March.

However, the firm saw a 27 percent decline in before-tax profits to $457,055 for the latest quarter, down from $627,046.

“We’ve increased our staff by 15 percent, lowering our second-quarter profits to expand our business,” he said.

Cambodia’s third-largest micro-lender, Sathapana Limited, saw outstanding loans grow 4 percent to $44.28 million in the second quarter, up from $42.6 million in the first.

“The economic situation is getting better. We should distribute even more loans, but it’s only a slight growth on the first quarter because many people are on holiday,” chairman Bun Mony said yesterday.

Profits stood at 20 percent below expectations, he said, and blamed the figure on lower interests rates left over from last year adversely affecting the company portfolio.

Hout Ieng Tong, general manager of Hattha Kaksekar Limited, said its outstanding loan rate increased by 4 percent in the second quarter over the first because of growing demand from clients.

“The day-to-day business of most clients is getting better in all sectors,” he said.