The Banking sector of Cambodia is highly competitive with around 60 banks and other major financial institutions jockeying for position and competing for market share in a country of 16 million people.
There are currently 39 commercial banks, 15 specialized banks, and 6 foreign banks representative offices in the country. The biggest players in the sector include Canadia Bank, ACLEDA Bank, ANZ Royal Bank, and Vattanac Bank.
Nearly $4 billion was loaned out to the construction and real estate sectors last year, but the money came from a just few banks. Latest figures from the National Bank of Cambodia (NBC) show that in 2017 $3.91 billion were loaned out to the construction and real estate sectors, representing 24.28 percent of the $16.10 billion total loan portfolio for 2017.
Loans for construction projects reached $1.52 billion, personal home loans $1.48 billion, and loans for real estate trade were valued at $917 million.
It was noted, however, that most banks stayed away from direct lending to real estate. The few banks offering loans to the sector include: Canadia Bank, ABA Bank, Cambodia Public Bank, First Commercial Bank, FTB, Cambodia Post Bank, Vattanac Bank, SHB, UCB, PPCB, Bank of China, RHB, BIDC, CIMB, Kookmin Bank, BRED Bank, and ACLEDA Bank.
But the amount these banks lend to real estate is much smaller compared to other sectors or industries. Risks apparently dissuade these banks from getting more involved with the sector.
The risks that banks often think about when dealing with the real estate sector include Market (oversupply results in inability to sell properties), Financial (lack/run out of funds to complete the project), Developer (unmet completion schedules, sub-standard projects) and Legal (title/contract disputes, failure/difficulties in getting necessary permits on time).
ACLEDA Bank, for one, offers home loans, but it’s not their priority. According to So Phonnary, ACLEDA Bank Executive Vice President, they use only 7 percent of the bank’s total loan for real estate, and another 1 percent for home improvement loans. ACLEDA’s home loans were worth about $208 million and home improvement loans were about $70.3 million in 2017.
Guillaume Perdon, CEO of BRED Bank, said their bank works closely with a few developers and with end-customers to make their projects come true, but do so with caution.
“So far, we have been mainly providing financing solutions to home buyers but we also started to partner directly with developers to create specific offers for their buyers. As regards direct financing to developers, the Bank has a careful approach but we welcome them to come and meet our team so we can discuss of their project,” he said.
Since its launching last year, BRED Bank, the only European bank in Cambodia, has disbursed a large number of home loans thanks to its special home loan promotion with very low interest rates.
