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Cambodian Banking Sector Expected to Continue Growing
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Despite fluctuations in the global economy, the Cambodian banking sector is expected to continue growing, driven by increasing credit penetration and appreciation of domestic assets.
Credit Growth Driven by Domestic Wealth
According to a recent report, credit growth has been almost fully financed by deposits, with over 80% of deposits coming from non-financial residents. This suggests that credit offered by banks and microfinance institutions (MFIs) is largely backed by domestic wealth.
Property Values Appreciating
Property values in Cambodia are also expected to continue appreciating, serving as an important part of domestic wealth that supports increasing credit penetration. In fact, land prices per square meter in Phnom Penh’s major districts have been rising steadily over the past few years.
Double-Digit Growth Expected
The report forecasts a double-digit growth in credit over the next five years, followed by a gradual recovery to over 6% real GDP growth rate from 2024 onwards. This is expected to be driven by the tourism and service sectors, which are likely to recover post-COVID.
Credit-to-GDP Ratio
Cambodia’s private sector debt is currently around 133% of adjusted GDP, compared to Thailand’s 140%, Singapore’s 218%, and Malaysia’s 131%. However, the country may maintain its credit-to-GDP ratio at around 142% while achieving a double-digit credit growth over the next five years, followed by 7% growth from 2029 onwards.
Economic Recovery Expected
The report also highlights that despite the global economic slowdown, Cambodia’s economy is expected to recover in 2023, driven by the tourism and service sectors. Real GDP growth is forecasted to return to 6.0% from 2024 onwards, with nominal GDP growth expected to continue rising steadily.
Conclusion
Overall, the Cambodian banking sector is expected to remain strong, driven by increasing credit penetration and appreciation of domestic assets. The country’s economy is also expected to recover post-COVID, driven by the tourism and service sectors.
Contact Information:
Yuan Ta Cambodia 4th Fl, Emerald Building, No 64 (Corner St 178) Preah Norodom Blvd, Phnom Penh, Cambodia www.yuantacambodia.com.kh cf@yuantacambodia.com.kh +855 (0)23 860 80 0 / 804