Access to Finance Still Low But Rapidly Increasing, World Bank Finds

Access to financial services in Cambodia is still limited when compared to many other countries, but the use of deposit accounts and bank loans grew faster in Cambodia than in the whole region last year, according to a new World Bank report.

Released yesterday, the Bank survey found that Cambodia recorded a 27 percent increase in the number of deposit accounts per 1,000 adults in 2009, while Mongolia and Indonesia reported an increase in accounts of 8 percent and 4 percent respectively.

Other countries in East Asia and the Pacific recorded no growth or a decrease in the number of deposit accounts due to the global economic crisis, the report said.

Cambodia and Indonesia also bucked the regional trend on loan accounts with a 9 percent increase in the number of bank loans per 1,000 adults, while the region saw no growth in loans, the report said.

Despite this sharp growth in financial services, access to formal finance in Cambodia remained relatively low in 2009, with 96 bank accounts and 27 bank loans per 1,000 adults, according to the report, which by comparison found that on average in developing countries there were 635 accounts and 245 loans per 1,000 adults.

The growth in loans in Cambodia has been driven by increased access in microfinance services, with three-quarters of the number of loans coming from microfinance institutions, the report said.

According to the Bank, developing a financial sector is key to economic development, while “access to basic financial services such as savings, payments and credit can make substantial positive difference in poor people’s lives.”

Bankers in Cambodia said the reported increase in deposit accounts and loans reflected the continued growth of the finance sector, which is still relatively small but expected to continue to expand well into the future.

Stephen Higgins, CEO of ANZ Royal Bank, said that as Cambodia’s middle class grew and its young population aged the demand for financial services would increase further.

“People are also developing more trust in the financial sector,” he said.

For these reasons, “there will be a long-term trend of growth, you will see deposits, loans grow faster than GDP,” Mr Higgins said.

In Channy, CEO of Acleda Bank, Cambodia’s largest microfinance lender, said the trends reported in the World Bank report had continued so far this year. He explained that in the first half of 2010 the number of deposit accounts and loans at Acleda grew 9.2 percent and 5 percent respectively.

Mr Channy said total deposits in the finance sector were currently valued at 32 percent of GDP, while loans were valued at 27 percent of GDP.

“We need to do more so that loans or deposits is at least 50 percent of GDP,” he said, adding, “Access to finance can create employment and generate income.”

Dieter Billmeier, technical adviser at Canadia Bank, said his bank had also seen “substantial growth,” as its loan portfolio grew with about 25 percent and deposits grew at around 30 percent so far in 2010.

Both he and Mr Higgins said however, that current growth in the volume of deposits was outstripping growth in the volume of loans the bank, putting pressure on profits.


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