The microfinance sector’s nonperforming loan (NPL) ratio decreased from 2.56 percent in September to 2.27 percent in October after rising from 1.33 percent in January and peaking in May at 2.61 percent.
The NPL ratio for the overall sector, including banks and financial institutions, also decreased from 2.2 percent in September to 2.18 percent in October.
Cambodian Microfinance Association (CMA) Head of Communications Kaing Tongngy, said yesterday the decrease was expected because banks and financial institutions continue to work with their clients whose finances have been affected by the pandemic.
“As expected, the NPL of the microfinance sector decreased from 2.56 percent in September to 2.27 percent in October. This decrease is [the result of] a joint effort by CMA members to ensure that the needs of our clients are carefully addressed, especially during this difficult time,” Tongngy said.
“One of [those] needs is [the availability of ongoing] loan restructuring, which reduces the financial burden for clients who are affected by COVID-19. With the National Bank of Cambodia’s continued restructuring policy, financial institutions have [in place] the needed legal framework to support any affected clients,” Tongngy added.
A loan is labelled non-performing when a borrower has not made a scheduled repayment in more than 30 days. It is considered a key indicator in assessing risk appetite and portfolio quality in the microfinance sector.
For context, an NPL rate below 5 percent is considered “good” by global industry standards.
Last month the NBC informed banks and financial institutions they should continue loan restructuring until mid-2021.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.
