In 2020, COVID-19 severely impacted both the global and Cambodia economies. The banking system in Cambodia is also affected but at a moderate and manageable level.1 The National Bank of Cambodia (NBC), Cambodia Microfinance Association, and other relevant institutions pointed out the rate of the banking system in Cambodia collapse due to COVID-19 was low since the financial sector was still strong. H.E. Chea Chanto, the NBC’s governor, said that the pandemic had hit economic growth. Still, the banking sector remained strong and contributed to the economy.2 The banking system has continued to provide services to people and contributes to the economy. The total bank assets in 2020 were valued at 14.7%, with the main source of funds coming from customer deposits (KHR 121.3 trillion), shareholders’ equity (KHR 38.6 trillion) and borrowing funds (KHR 5.9 trillion).3
The main source of funds for economic activities, credit, can be seen to distribute to key industries and sectors such as retail trade (15.4%), mortgage (13.1%), personal consumption (9.8%) and other sectors.4
Top banks in Cambodia
- ACLEDA Bank Plc.
- Canadia Bank
- Foreign Trade Bank of Cambodia
- Union Commercial Bank Plc.
- J Trust Royal Bank
- Vattanac Bank
- Campu Bank
- Maybank Cambodia
- Bank of China Phnom Penh
- ABA Bank5
Legislation
The NBC has introduced legislation to govern the banking system collaborating with relevant ministries and national bodies.6
Response to protect financial customers
The NBC has taken actions to protect financial customers during the pandemic.7
- Regulator measurements:
- Prakas No. B7-020-230 Pro.Kor on the maintenance of reserve requirement against commercial banks’ deposits and borrowings
- Circular No. B7-020-001 Sor.Ror.Nor.Nor on restructured loans during the COVID-19 pandemic
- Letter No. B7-020-622 Chor.Tor dated April 13, 2020
- Letter No. B7-020-657 Chor.Tor dated April 20, 2020
- Additional Circular No. B7.020.002 Sor.Ror.Nor.Nor on further explanation of the implementation of Capital Conservation Butter
- Circular No. B7.020.003 Sor.Ror.Nor.Nor on further explanation of Appendix 2 of Prakas on liquidity coverage ratio
- Prakas No. B7.020.352 Prokor on credit reporting
- Letter No. B7-020-1748 Chhor.Tor on request to loosen some conditions related to restructuring loan during Covid-19
- Strengthening and monitoring banks and financial institutions’ performance:
- Additional data collection on the affected sectors and loans
- Comprehensive analysis of banks and financial institutions’ performance key indicators
- Simulation on reserve requirement, solvency, and liquidity, and lose some of the regulations
The Association of Banks in Cambodia
Screenshot of the Association of Banks in Cambodia website, dated on 4 February 2022. Licensed not specified.
The Association of Banks in Cambodia (ABC), an official organization formed in 1994 and recognized by the Royal Government to represent the country's private banking sector, promotes the development of the financial system in Cambodia and protects its members' legitimate interests.8 In 2020, to support the government to fight against COVID-19, the members of ABA have shared action plans, supported Cambodian people, donated substantial amounts of financing and physical goods. On April 07 and 11, 2021, the ABC and Cambodia Microfinance Association issued joint statements by sharing six debt relief measures to further support the government and borrowers.9
According to Dr. In Channy, Chairman of the ABC and President of ACLEDA Bank, the banking sector in Cambodia remained healthy and strong in the third quarter of 2021 despite the pandemic since there was a prediction of 2.2% growth for the economy at the end of 2021.10 He also added that the financial sector was stable due to the 20% growth in loans and deposits in 2021. There will be more competition for banks and financial institutions, which will benefit small businesses such as micro and small companies.11
Related to Major banks
References
- 1. National Bank of Cambodia, “Annual supervision report 2020,” p. 1 – 5, accessed December 2021.
- 2. Cambodia Constructors Association, “Will COVID-19 cause banks in Cambodia to go bankrupt?,” July 11, 2021, accessed January 2022.
- 3. National Bank of Cambodia, “Annual supervision report 2020,” p. 1 – 5, accessed December 2021.
- 4. Ibid
- 5. Corporate Finance Institute, “Overview of banks in Cambodia,” accessed January 2022.
- 6. National Bank of Cambodia, “Laws Applicable to Banks and Financial Institutions,” accessed January 2022.
- 7. National Bank of Cambodia, “Annual supervision report 2020,” p. 14, accessed December 2021.
- 8. The Association of Banks in Cambodia, “Our profile,” accessed December 2021.
- 9. May Kunmakara, “Financial sector taking more Covid relief steps,” Phnom Penh Post, May 24, 2021, accessed January 2022.
- 10. Sok Sithika, “Banking and financial institutions disbursed $44.9 billion in loans,” Khmer Times, December 22, 2021, accessed January 2022.
- 11. Michael Firn, “Digitalisation, training incentives and free trade offer opportunities in 2022,” Khmer Times, January 13, 2022, accessed January 2022.
