NBC Coffers Swell as Money Goes Unspent

As the economy experienced negative growth last year, bank deposits swelled and Cambodia’s foreign reserve capital climbed by 25.5 percent to $2.6 billion, National Bank of Cambodia Governor Chea Chanto announced Tuesday at the NBC’s annual meeting.

Mr Chanto noted that commercial banks also saw customers’ savings rise in addition to the amount of foreign currency the NBC holds, according to a copy of his prepared remarks. Currently, commercial banks must deposit 12 percent of their foreign currency holdings with the NBC.

In 2009, “the assets of banks rose 20.52 percent and the entire amount of deposits rose 32.57 percent,” Mr Chanto said, noting the difficult year in 2009. “For the Cambodian economy, the world economic downturn has affected the real estate sector, as well garment exports, tourism, construction and direct foreign investments as agriculture has remained strong,” he continued.

Bankers say that while deposits increased steadily last year and liquidity improved, customers obtaining loans remained scarce.

In Channy, CEO of Acleda bank, said that deposits tend to increase in a slowing or contracting economy.

“For depositors, they have two choices: To invest when the economy is good or to deposit when the economy is bad,” he said. He predicted that this year deposits will not increase at the same rate as they did in 2009 but that lending and investment will rise.

“If you have more deposits but they are just sitting around, it doesn’t matter. There wasn’t much consumer demand.”

According to Stephen Higgins, ANZ Royal CEO, his bank saw its loan portfolio increase only by 6 percent in 2009 to about $270 million, while it has $250 million in liquid assets.

“We are seeing some encouraging signs in that some of our better clients are increasing their stock and inventories again,” he said, adding that this could precede more investment and more credit.

Dieter Billmeier, vice president of Canadia Bank, said that most of the loans last year occurred in the fourth quarter. With current liquidity, loans should increase in 2010 if confidence in the economy continues to grow, he said.

“People will have confidence and they will also reinvest, which they did not do in 2009,” he said. “The loan requests are coming back by at least in the region of 10 percent.”

(Additional reporting by Hul Reaksmey)


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