Cambodia’s financial sector has the second-highest capital adequacy and the best returns on assets among major developing countries in East Asia, according to the World Bank.
In its April update on East Asia and the Pacific, the bank meanwhile said that asset quality in Cambodia was around average for the region but that the country’s financial sector was the least solvent.
CAPITAL ADEQUACY HIGHEST IN INDONESIA AND CAMBODIA
Among nine countries for which figures were available, the latest quarterly data showed that regulatory capital amounted to 22 percent of the sector’s risk-weighted assets in Cambodia — second only to Indonesia at 24 percent.
Thailand’s capital adequacy ratio ranked third (19 percent) followed by Laos and Malaysia (18 percent), China and the Philippines (15 percent), Myanmar (13 percent) and Vietnam (11 percent).
Non-performing loans ranged from 2-3 percent in eight countries excluding Myanmar — at the higher end for Cambodia, the Philippines and Thailand, and at the lower end for the rest.
NON-PERFORMING LOANS ‘STABLE’ IN MOST COUNTRIES
The update — released in Washington Thursday — said non-performing loans had been “stable” in most countries in East Asia and the Pacific.
“Financial sector health is so far sound,” it said.
But average numbers showing adequate capital and low non-performing loans for most countries may “mask idiosyncratic vulnerabilities.”
“There is a risk of overestimated asset quality and understatement of the vulnerabilities accumulating in some of East Asia’s bank-dominated financial systems.
“A correction on this front will constrain the banking sector’s balance sheet headroom and impact credit growth,” the bank warned.
HIGHEST RETURNS ON ASSETS IN CAMBODIA AND INDONESIA …
Among ten economies including Mongolia, the bank said the financial sectors in Cambodia and Indonesia were the most profitable with both enjoying returns on assets of 2.4 percent.
The next most profitable was the Philippines with returns of 1.6 percent followed by Malaysia and Vietnam (1.5 percent), Laos (1.4 percent), Thailand (1.2 percent), China (0.4 percent) and Myanmar (0.3 percent). Returns were negative in Mongolia, with losses of 0.2 percent of assets.
… BUT LOWEST DEPOSIT-TO-LOAN RATIOS IN CAMBODIA, THAILAND AND VIETNAM
In terms of deposit-to-loan ratios, however, Cambodia had the lowest of nine countries at 79 percent.
Other countries with relatively low solvency rankings were Thailand (92 percent) and Vietnam (97 percent) along with Indonesia (106 percent), China (110 percent) and Malaysia (119 percent).
Myanmar had the highest ratio of deposits to loans (195 percent) followed by the Philippines (133 percent) and Mongolia (130 percent).
Source: Agence Kampuchea Presse (AKP)