Bad loans rising, says NBC

Nonperforming loans reached 5.2pc by June and could rise close to 10pc in the coming months, National Bank of Cambodia Director General Tal Nay Im warns.

NONPERFORMING loans at commercial banks rose to 5.2 percent by the end of May, up 1.8 percentage points from the beginning of the year, National Bank of Cambodia Director General Tal Nay Im told the Cambodian Club of Journalists on Wednesday.

The increase came as borrowers struggled with repayments amid declining cashflow in the wake of the global financial crisis, she said, adding that the central bank was not overly worried by the defaults.

"This is the only major concern for the National Bank of Cambodia at the moment regarding Cambodia's banking industry," Tal Nay Im said.

"But the NPL ratio is quite low, and it is acceptable for banks in Cambodia."

She projected that NPLs would fall again as the global economy regained health. In the meantime, the central bank anticipated that NPLs could close in on 10 percent but would not pass this benchmark this year or next.

Her comments come a week after the NBC released its 2008 annual banking supervision report, which showed NPLs at 3.7 percent of total outstanding loans at the end of last year, up from 3.4 percent a year earlier.

The absolute value of NPLs climbed to US$87.44 million at the end of 2008 from $52.95 million a year earlier. The total value of loans soared 54.7 percent from $1.51 billion to $2.35 billion.
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