The National Bank of Cambodia's (NBC) 2008 annual banking supervision report, published on its Web site, showed that non-performing loans rose from 3.4 percent of total loans at the end of 2007 to 3.7 percent as of the end of last year. The absolute value of NPLs climbed from US$52.95 million to $87.44 million over the period as the total value of loans soared 54.7 percent from $1.51 billion to $2.35 billion.
In the report, the NBC described the level as "considerably low" given that the banking system "experienced rapid credit growth" in 2008.
NBC Director General Tal Nay Im said the rise in NPLs was concentrated among a few banks - the report shows these are Canadia Bank, the Foreign Trade Bank of Cambodia (FTB) and ANZ Royal - but said the sector performed strongly.
"It's customary for NPLs to rise when the economy slows down," she said. "[But] it is not serious. The repayments were just late, it does not mean they are in default."
Around 32 percent of the FTB's $86.1 million loan book was non-performing at the end of last year, slightly up from 30.7 percent a year earlier when it had $64.1 million in outstanding loans, according to the report.
Canadia Bank, which owns 46 percent of FTB, reported 11.1 percent of its $409.5 million in loans as non-performing, up from 6.8 percent of a $338.1 million loan book at the end of 2007.
Advanced Bank of Asia was the other poor performer in terms of NPLs, but its NPL ratio of 12.8 percent was an improvement on the 26 percent recorded a year earlier as its loan book doubled to $24.45 million.
Bad loans at Singapore Banking Corp dropped from 12.3 percent to 3.9 percent.
ANZ Royal also suffered, with NPLs rising from 0.4 percent to 2.6 percent over the course of 2008.
FTB General Manager Gui Anvanith said the NBC based its report on unaudited figures. The bank's 2008 financial statement, which he said was audited by PricewaterhouseCoopers, put the bank's NPLs at 28 percent, up from 13 percent a year earlier, he said.
Anvanith said the increase in NPLs was mostly attributable to six large companies that were each three months in arrears on loan repayments. He refused to name the customers but said they were in the agricultural, construction, hotel and power sectors.
"We are not concerned that we will lose money because all the loans we offered have been secured by collateral, and the collateral value is always 100 percent higher than the amount of the loan."
He said NPLs had dropped to about 17 percent by July and anticipated the level to fall further to between 7 percent and 10 percent by the end of the year.
ANZ Royal CEO Stephen Higgins said it was natural NPLs would rise as a result of the financial crisis, as they have in almost every country.
"In that context, a 2.6 percent NPL ratio is fairly modest, and as much as anything, reflects ANZ's conservative approach to provisioning," he wrote in an email Friday. "For these NPLs, we don't actually expect to lose any money on them."
He said they involved a small number of loans written several years ago with a high level of security. A common characteristic was that they were property-related clients experiencing cash-flow issues, he said.
Canadia Bank financial controller Ou Sophanarith said Friday that he expected that NPLs would drop to 7 or 8 percent this year.
"We are quite stable and have no concern because all loans have been secured by collateral," he added.
The report said most credit was channelled to the wholesale and retail trading sectors, followed by the services sector - mainly hotels and restaurants - telecoms and media, and other non-financial services.
Manufacturing also obtained significant bank financing, as did the commercial real estate, residential real estate and construction sectors.
However, while growing credit to the real estate sector was seen as a "major concern for supervisors" as the bursting of the real estate bubble presented a "genuine risk" to the banking system, the annual report added that central bank guidelines limiting bank lending to the real estate sector to 15 percent of lending portfolios, and the doubling of reserve requirements last year to 16 percent, had limited the sector's exposure.
Tal Nay Im said the bad loans were due to producers and manufacturers struggling with cash flow as a result of decreased trading activity, and said the real estate sector was not a major problem.
Despite the rise in NPLs, the report showed 2008 was still a profitable year for the sector. Net profits at Canadia were $34.5 million, making it the country's most profitable bank ahead of Cambodian Public Bank.