Cambodia’s banking system remains relatively high-risk: S&P
PNOMH PENH - Ratings agency Standard and Poors expects economic risk in Cambodia's banking sector to remain high by global standards, reflecting the country's low income level, underdeveloped economy, and constrained monetary and fiscal flexibility.
"We expect credit risk in the economy to remain extremely high owing to sizable private sector debt, concentrated economic activities, relaxed underwriting standards, and a very weak payment culture," S&P says in an update.
"Risks are high given strong credit growth, elevated property prices, and declining asset quality.
"However, Cambodia's stable GDP growth and pre-election credit slowdown temper economic risks for the banking system, in our opinion.
"We assess Cambodia's banking regulatory framework as weak and supervision as passive and subject to financial and political constraints. In our view,
regulatory initiatives in the country yield only incremental improvements over time and do not keep pace with the rapid expansion of the banking system.
"An oversupply of banks and financial institutions constrains the industry's risk-adjusted returns. In our view, bank failures have undermined depositor confidence and the stability of deposits.
"In our view, the average creditworthiness of banks operating only in Cambodia is 'b+'." www.ssandardandpoors.com (ATI).