Acleda Bank customers use ATM machines in December. The IMF predicts deposit growth will slow over the rest of 2010.
CAMBODIA’S banks could see lending growth climb as much as 20 percent in 2010, with a slower growth in deposits, marking a slight recovery in the sector, said the International Monetary Fund's chief representative in the Kingdom.
“Lending growth has picked up recently after a very substantial slowdown through most of 2009,” John Nelmes, IMF resident representative, wrote in an email Friday. “Lending growth of between 15 and 20 percent in 2010 would be in line with a modest recovery in economic activity and a reasonable increase in loan demand.”
Cambodian banks put restrictions on their lending in the fallout from the global economic crisis, but they have continued to compete for depositors.
Loan growth grew just 3.2 percent to US$2.42 billion in 2009, up from $2.34 billion the year before, according to National Bank of Cambodia figures. Deposits rose 32.7 percent to $3.28 billion in the same period.
Deposit growth is likely to slow as banks back away from competitive offers that have created too much cash and forced them to make large deposits in the National Bank at low interest rates, Nelmes said.
“This negative spread – the difference between what banks pay for deposits and what they earn on them – is undermining profits,” he said.
“That situation cannot continue indefinitely, so looking forward, I would expect to see deposit interest rates decline, and deposit growth slow,” he said. “At the same time, lending rates may not fall very much, as banks look to rebuild their profit margins.”
Yum Sui Sang, CEO of Union Commercial Bank, whose clients are mostly garment manufacturers from Hong Kong and Macau, said the bank has seen an increase in borrowing demand.
“Lending growth will definitely increase this year but I cannot predict the increase percentage,” he said, adding that demand for loans remains low.
Union Commercial was seeking to reduce its cash by dropping a percentage point on deposit rates, to 6.5 percent, he said, but the bank still wants to attract more depositors.
“Even though we are too liquid, we’re still willing to attract more deposits, as it is the blood of the bank for the long-term goal,” he said.
Dieter Billmeier, vice president of Canadia Bank, told the Post this month that the bank had $200 million in deposits at the National Bank at the end of 2009 and that borrowing demand had climbed from October 2009 into February 2010. Canadia Bank expects growth potential of 15 percent to 20 percent over 2009, he said.
National Bank Director General Tal Nay Im said Sunday that bank lending would depend on an economic recovery.
“We have seen gradual lending growth since the start of the year, but it’s still too early to predict,” she said. “If the economy recovers well, the capital demand for production will increase as well.”
At the end of 2009, commercial surplus liquidity reached $900 million. High liquidity can drive down loan rates, when banks want to turn their assets into profits, but it can also lower deposit rates as they seek to balance profit margins.
Tal Nay I’m predicted an increase in depositors in 2010, as more people realise the advantages of bank accounts./.