Banks with excess exposure to Cambodian real estate segment facing crisis

Stravaiger · Post by **Stravaiger** » Mon Jan 29, 2024 10:57 am

Banks with excess exposure to Cambodian real estate segment facing crisis

Many commercial banks in the Kingdom, which have excess exposure to the real estate segment are facing crises, according to industry insiders.

They say many banks exercised “indiscipline” when it came to lending for realty projects, increasing their Non-Performing Loan (NPL) ratios to levels that are beyond the set standards.

Speaking to Khmer Times, a senior manager of one of the leading banks in the Kingdom, said: “The NPLs are currently somewhere in the neighbourhood of five percent, which is going to be a record in the country.

“A crisis definitely looms large. The NPL stood at around 2 percent between 2010 and 2020, providing the much-required safety net for the banking sector.

“But the real estate boom during the last decade lured many commercial banks in the country towards giving up discipline and lending in excess. Many in the industry started foreseeing the crisis two years ago itself when the NPL rose to 3.1 percent.”

He said the crisis can be averted if the real estate sector swings back into growth, which industry experts are sceptical of owing to an economic slowdown in China and prevailing global economic uncertainties.

“I must emphasise that not all banks are in trouble....

https://www.khmertimeskh.com/501430448/ ... ng-crisis/

In other news

Kammekor · Post by **Kammekor** » Mon Jan 29, 2024 11:15 am

Stravaiger wrote: ↑Mon Jan 29, 2024 10:57 am Banks with excess exposure to Cambodian real estate segment facing crisis

Speaking to Khmer Times, a senior manager of one of the leading banks in the Kingdom, said: “The NPLs are currently somewhere in the neighbourhood of five percent, which is going to be a record in the country.

“A crisis definitely looms large. The NPL stood at around 2 percent between 2010 and 2020, providing the much-required safety net for the banking sector.

Would be interesting to know which bank he works for, and what their exposure is.

Spigzy · Post by **Spigzy** » Mon Jan 29, 2024 12:41 pm

You can see the non-performing loans on the NBC annual inspection reports, or the bank annual reports.

For the former, you can read it here for 2022 - page 49 for the money shot: https://www.nbc.gov.kh/download_files/s ... 022_KH.pdf

So the worst bank NPLs seem to be in the "Specialized Bank" category, and some of those numbers - 71% non performing loan, ouch.

Of the big boys with commercial bank licenses Saigon Thuong Tin Bank (Cambodia) Plc with 15.6% top the list (improved 1% from 2021), with about 15 of the 58 banks back then over the 3% mark, even ABA at 3.1% as that's the one I guess most folks care about here. 2023 report will probably be even more ugly when it comes out, but at least all is transparent in the sector.

YaTingPom · Post by **YaTingPom** » Mon Jan 29, 2024 1:14 pm

Stravaiger wrote: ↑Mon Jan 29, 2024 10:57 am
In other news

It's a nice clickbait headline but in reality it means very little.

That will have very little impact on China's economy or overall monetary woes as the mess, shock and cost (shares etc)bwas felt when Evergrande defaulted in 2021. The reason why companies get forced into liquidation is because they (management) are doing a bad job at restructuring and paying back creditors. This way a separate non related insolvency company will come in and sort it out, will probably take years.

newkidontheblock · Post by **newkidontheblock** » Mon Jan 29, 2024 5:25 pm

YaTingPom wrote:
Stravaiger wrote: ↑Mon Jan 29, 2024 10:57 am
In other news

It's a nice clickbait headline but in reality it means very little.

That will have very little impact on China's economy or overall monetary woes as the mess, shock and cost (shares etc)bwas felt when Evergrande defaulted in 2021. The reason why companies get forced into liquidation is because they (management) are doing a bad job at restructuring and paying back creditors. This way a separate non related insolvency company will come in and sort it out, will probably take years.

Cambodia being half westernized is in a little better position than China. Chinese Banks loaned all of their money (aided by government officials) in violation of Chinese banking laws into companies like Evergrande. Lack of transparency and reporting means no one knows anything was wrong (and still don’t). Now ordinary customers who want to get their money is either faced with excessive red tape (some required to show their grand parents marriage document) in order to withdraw. Those who protest are marked by the police, forced to confess they are criminals, and their accounts forfeited.

Stravaiger · Post by **Stravaiger** » Mon Jan 29, 2024 5:57 pm

Spigzy wrote: ↑Mon Jan 29, 2024 12:41 pm You can see the non-performing loans on the NBC annual inspection reports, or the bank annual reports.

For the former, you can read it here for 2022 - page 49 for the money shot: https://www.nbc.gov.kh/download_files/s ... 022_KH.pdf

So the worst bank NPLs seem to be in the "Specialized Bank" category, and some of those numbers - 71% non performing loan, ouch.

Of the big boys with commercial bank licenses Saigon Thuong Tin Bank (Cambodia) Plc with 15.6% top the list (improved 1% from 2021), with about 15 of the 58 banks back then over the 3% mark, even ABA at 3.1% as that's the one I guess most folks care about here. 2023 report will probably be even more ugly when it comes out, but at least all is transparent in the sector.

I see Woori Bank was at 1.9%, Canadia at 4.1%, BRED at 6.8%, Saigon Thuong Tin (sounds like tontine) 15.6%.

But that's banks. What about the MFIs: LOLC 2.0%, AMK 3.6%, Prasac 1.2%.

There's going to be some Spring cleaning.

Bluenose · Post by **Bluenose** » Mon Jan 29, 2024 7:28 pm

What does my head in is the idea that even if Evergrande started paying off its debt at $100 million a day, every day, 7 days a week, 365 days a year, it would still take about 10 years to clear it.

Doc67 · Post by **Doc67** » Tue Jan 30, 2024 8:29 am

Stravaiger wrote: ↑Mon Jan 29, 2024 5:57 pm
Spigzy wrote: ↑Mon Jan 29, 2024 12:41 pm You can see the non-performing loans on the NBC annual inspection reports, or the bank annual reports.

For the former, you can read it here for 2022 - page 49 for the money shot: https://www.nbc.gov.kh/download_files/s ... 022_KH.pdf

So the worst bank NPLs seem to be in the "Specialized Bank" category, and some of those numbers - 71% non performing loan, ouch.

Of the big boys with commercial bank licenses Saigon Thuong Tin Bank (Cambodia) Plc with 15.6% top the list (improved 1% from 2021), with about 15 of the 58 banks back then over the 3% mark, even ABA at 3.1% as that's the one I guess most folks care about here. 2023 report will probably be even more ugly when it comes out, but at least all is transparent in the sector.
I see Woori Bank was at 1.9%, Canadia at 4.1%, BRED at 6.8%, Saigon Thuong Tin (sounds like tontine) 15.6%.

But that's banks. What about the MFIs: LOLC 2.0%, AMK 3.6%, Prasac 1.2%.

There's going to be some Spring cleaning.

The report this article cites is the ASEAN Macro Economic Research Office.
https://amro-asia.org/wp-content/upload ... cation.pdf

On page 3, after the acknowledgments and table of contents, they open with this line:

1. Cambodia’s economy is expected to continue its gradual recovery path in 2023 on the back
of a robust tourism recovery and domestic activity. A robust tourism recovery alongside pent-up domestic consumption will sustain the ongoing improvement in the service sectors.

Robust tourism recovery? That hasn't happened.

And then there is this:

4. The Khmer riel has depreciated slightly since May 2023, prompting the resumption of the
National Bank of Cambodia’s (NBC’s) forex interventions from September 2023. The riel
remained broadly stable against the US dollar in 2022 and early 2023. However, since May
2023, the riel has been under depreciation pressure against the US dollar, which led to the
NBC’s forex interventions of USD50 million in September for the first time in 2023, and another
USD40 million in October.

How long will they continue to throw this kind of money propping up a currency that nobody outside the country needs or wants in their reserves? If that peg breaks we'll get a wave of inflation that will hurt the domestic economy - see #1 above, so there goes the second limb of the recovery. Even a cheaper KHR won't help tourism as every vendor will want USD so all tourists will dodge the KHR and opt for USD as their currency of choice.

YaTingPom · Post by **YaTingPom** » Tue Jan 30, 2024 8:33 am

newkidontheblock wrote: ↑Mon Jan 29, 2024 5:25 pm
YaTingPom wrote:
Stravaiger wrote: ↑Mon Jan 29, 2024 10:57 am
In other news

It's a nice clickbait headline but in reality it means very little.

That will have very little impact on China's economy or overall monetary woes as the mess, shock and cost (shares etc)bwas felt when Evergrande defaulted in 2021. The reason why companies get forced into liquidation is because they (management) are doing a bad job at restructuring and paying back creditors. This way a separate non related insolvency company will come in and sort it out, will probably take years.
Cambodia being half westernized is in a little better position than China. Chinese Banks loaned all of their money (aided by government officials) in violation of Chinese banking laws into companies like Evergrande. Lack of transparency and reporting means no one knows anything was wrong (and still don’t). Now ordinary customers who want to get their money is either faced with excessive red tape (some required to show their grand parents marriage document) in order to withdraw. Those who protest are marked by the police, forced to confess they are criminals, and their accounts forfeited.

There's a lot of misinformation and misunderstanding with regard to how China does business. It's not like western governments and businesses.
The vast majority of big corporates are government owned and they control them. It's the same with the citizens; only the small minority of liberals complain about it, everyone else excepts it.

The Chinese have a Leninist-Marxist way of doing business. (Not the other way round)
I don't know about Taiwan but I would imagine it is the same as Japan and the west in the way it conducts business.

The western media have been saying for at least 5 years that China will collapse financially but then they have been saying that there will be a big reset in the western world. Waiting...

With reagard to Cambodia. I am sure I saw an article saying they have $2 billion in Forex or something?

newkidontheblock · Post by **newkidontheblock** » Tue Jan 30, 2024 7:09 pm

Xi has now ordered everyone to sing a ‘bright note’ on China’s economy.

Don’t expect any further official information on Evergrande or anything else, under threat of security act.

Cambodia still follows (somewhat) western standards. Losing the peg to the dollar will force monetary constraint in Riel printing and borrowing or more inflation. The economy will then re-dollarize.

The pain is still there, but can be fixed. Nations burying their heads in the sand makes corrections more painful.

My conspiracy theories, of course.

Banks with excess exposure to Cambodian real estate segment facing crisis

Banks with excess exposure to Cambodian real estate segment facing crisis

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Re: Banks with excess exposure to Cambodian real estate segment facing crisis

Re: Banks with excess exposure to Cambodian real estate segment facing crisis

Re: Banks with excess exposure to Cambodian real estate segment facing crisis

Re: Banks with excess exposure to Cambodian real estate segment facing crisis

Re: Banks with excess exposure to Cambodian real estate segment facing crisis

Re: Banks with excess exposure to Cambodian real estate segment facing crisis

Re: Banks with excess exposure to Cambodian real estate segment facing crisis

Re: Banks with excess exposure to Cambodian real estate segment facing crisis

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