Private Credit Rises as Economy Picks Up

rivate debt or private credit in the banking and financial system reached 237.2 trillion riel or $57.6 billion by 2023, up 4.8 percent on 2022. Photo by Xinhua

PHNOM PENH – Private debt or private credit in the banking and financial system reached 237.2 trillion riel or $57.6 billion by 2023, up 4.8 percent on 2022.

The National Bank of Cambodia (NBC) annual report 2023, released on Jan. 30, says $51.8 billion private debt was in banks, up 18.2 percent. However, the amount of private debt in the microfinance sector dropped to $5.4 billion, down 42.6 percent on 2022. 

“The increase in private debt resulting from the economic recovery and the need of finance for consumers,” the report said. 

Private debt in those banking systems is subdivided based on the key sectors of the economy. Debt for house ownership accounted for 13.5 percent, real estate for 9.8 percent, construction for 9.5 percent, retail for 17.6 percent, wholesale for 9 percent, agriculture accounted for 9 percent, individual lending for 9.8 percent, manufacturing for 4.4 percent, and hotels and restaurants accounted for 4 percent. 

Along with the rise in private debt, non-performing loans (NPL) also increased. 

In 2023, NPL increased to 5.4 percent for the banking sector and 6.7 percent for the microfinance sector. 

“The increase in NBL was due to the completion of credit restructuring measures and the slowdown in credit growth,” the NBC said. 

Despite the rise in private debt and non-performing loans, the NBC reaffirms that the banking system will continue to be resilient and progressive, ensuring the sustainability of finance and financial services contributing to national growth. ​

NBC governor Chea Serey said credit growth continues to play a crucial role in boosting the production sector including manufacturing and agriculture. In the meantime, the increase in non-performing loans requires much attention and active inspection. 

“The banks will conduct regular stress tests, in-depth monitoring for complications and risks. Banking and finance institutions should be more cautious,” Serey said during the opening ceremony of the NBC’s 2023 annual conference on Jan. 26. 

Serey said the NBC had adjusted credit risk assessment by lowering the risk of lending to key sectors including agriculture, education, and small and medium enterprises. To cut risk, the NBC had loosened some tight regulations to provide greater liquidity to banking and financial institutions.  

By the end of 2023, the assets of banking and financial institutions reached 346.7 trillion riel or $84.3 billion, an increase of 8.6 percent compared to 2022. The banking sector accounted for 91.8 percent, the microfinance sector for 7.6 percent and the financial leasing market for 0.6 percent. 

Credits to key sectors increased 4.8 percent, which accounts for 237.2 trillion riel or $57.6 billion and customer deposits increased 13.1 percent, which accounts for 197.2 trillion riel or $47.9 billion. 

Overall, the banking and financial institutions have contributed to the growth  of finance, which is reflected in the increase in the number of customer deposit accounts, totaling 18.9 million accounts and 3.9 million of consumer credit accounts. 


Originally written in Khmer for ThmeyThmey, this story was translated by Rin Ousa for Cambodianess.

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