In this article we give an overview of the banking system in Cambodia 2023, including structure, currencies in circulation, challenges and opportunities for businesses and investors. You can view more expert market information right here, on our dedicated platform, or get in touch with one of our team for more information.

What is the structure of the banking system in Cambodia in 2023?

The Cambodian banking system is a two-tier system comprising the public sector (represented by the National Bank of Cambodia, or NBC) and the private sector. The NBC is the central bank of Cambodia and is responsible for issuing currency, regulating the banking system, and promoting financial stability.

The NBC has the authority to inter alia license banks and issue permits for e-wallet providers, regulate money transfers and remittances, manage and conduct foreign exchange transactions, provide credit, and establish credit ceilings and interest rate guidelines. (source)

What does the banking system in Cambodia consist of?

The private sector of the banking system in Cambodia consists of commercial banks, specialized banks, microfinance institutions, and rural credit institutions.

Specialized banks focus on a specific sector of the economy, such as agriculture or development. They are allowed to collect deposits from the public, but they are not allowed to offer the full range of services that commercial banks offer.

Commercial banks are the largest and most important type of bank in Cambodia. They offer a wide range of services to individuals and businesses, including checking and savings accounts, loans, and credit cards.

Microfinance institutions (MFIs) provide small loans to low-income borrowers. They are a major source of financial services for people who are unable to get loans from commercial banks.

In addition to banks, the Cambodian banking system also includes rural credit operators, leasing companies, and payment service providers.

  • Rural credit operator: Provides loans to farmers and other rural residents.
  • Leasing company: Provides leasing services to businesses.
  • Payment service provider: Provides payment services, such as money transfers and bill payments.

Commercial banks are the largest and most important players in the banking system, and they offer a wide range of financial products and services, such as savings accounts, loans, and credit cards. Specialized banks focus on specific sectors of the economy, such as agriculture or development. Microfinance institutions provide small loans to low-income borrowers, and rural credit institutions provide loans to farmers and other rural residents.

What is the state of the banking system in Cambodia?

According to an end of year report in 2022, the NBC confirmed their were 58 commercial and nine specialized banks managed total assets to 272.732 trillion riel ($68.183 billion), or 5.87 times as much as the 46.424 trillion for the more than 300 microfinance institutions (MFI) and rural credit institutions (RCI) formally operating in the Kingdom. The total 319.2 trillion riel marks a 12.6 percent increase from 2021. (source)

The report also said that the top seven lenders managed more than 50 per cent of that total, it indicated, which is broken down into the following:

  • Advanced Bank of Asia Ltd, or ABA (13.6%), 
  • ACLEDA Bank Plc (13.4%)
  • Canadia Bank Plc (11.6%)
  • Sathapana Bank Plc (4.1%)
  • Hattha Bank Plc (3.6%)
  • Cambodian Public Bank Plc, or Campu Bank (3.4%)
  • and Foreign Trade Bank of Cambodia, or FTB (2.8%)

The next few on the list were Bank of China (Hong Kong) Ltd Phnom Penh Branch (2.7%), Woori Bank (Cambodia) Plc (2.2%), ICBC Bank Ltd Phnom Penh Branch (2.2%), and J Trust Royal Bank Plc (2.0%). The NBC has set the reserve requirement ratio (RRR) – the minimum amount of cash that financial institutions must hold in reserve – for foreign and domestic currency deposits at 12.5 per cent and eight per cent, respectively, according to the central bank’s website. 

The NBC also maintains minimum registered capital requirements for lenders as follows: commercial banks and foreign bank subsidiaries ($75 million), foreign investment bank branches ($50 million), specialized banks ($15 million), microfinance deposit-taking institutions – or MDI ($30 million), and non-deposit-taking MFIs ($1.5 million). This is a positive for the banking system in Cambodia. 

What are the currencies in use in the banking system in Cambodia?

The main currencies in Cambodia are the Cambodian riel (KHR) and the US dollar (USD). The KHR is the official currency of Cambodia, but the USD is also widely accepted. Most businesses and banks in Cambodia accept both currencies.

In recent years, NBC has proactively promoted the use of the Khmer Riel to mitigate the risks inherent in a highly dollarized economy; as Cambodia aspires towards middle-income status, high dollarization could leave the country vulnerable to external shocks and can threaten its hard-earned economic gains. (source)

This switch to Riel aims to bolster its role as the country’s central bank as a more effective monetary policy will be one of the policy instruments it needs to promote price stability and sustainable economic development for the Kingdom.  For example, all taxes and utilities are to be paid in the local currency, and the value of the Khmer Riel is maintained through a stable exchange rate.

What are the top banks in Cambodia?

Aquarii’s preferred banker of choice, Phillip Bank is one of the largest commercial banks in Cambodia in terms of branch network, with more than 70 branches throughout the country. Phillip Bank offers a wide range of financial services and products catering to Corporate, SME and Retail customers and remains the only Singaporean-owned commercial bank in the Kingdom.

Mr. Ong Teong Hoon, Director and Shareholder Representative of Phillip Bank, said, “Phillip Bank is striving towards being a high-tech and high-touch bank, and focus on staff development, with our corporate ethos emphasis on developing people to their fullest capacity.” “Our vision to delight customers, grow people and benefit communities reflects the Singapore way of doing business”.

“Phillip Bank has always been a close partner with the Singaporean community in Cambodia. In addition to supporting the activities of the Singaporean community, we also work closely with them to introduce products and services that help grow their business,” he added.

The bank also expressed that it is committed to continuously introducing products and services that help support and grow communities in Cambodia.

Find out more about Phillip Bank services here.

What are some of the top incentives in the banking system in Cambodia?

Fixed Deposit Rates in the Kingdom are one of the most attractive in the region at an average of 5.5% to 8% depending on the tenure and currency (in line with NBC’s efforts to encourage the use of the Khmer Riel, Fixed Deposits in Khmer Riel attract a higher FDR than USD), in the banking system in Cambodia.

Accordingly, local loans are not cheap and are typically for the short term; interest rates are in fact relatively high compared to those found in developed countries, and security or collateral is often a necessity. In spite of the higher cost of lending, lending activities have increased in the past decade, keeping pace with the Kingdom’s rapid rate of economic development, especially in the infrastructure, construction and tourism activities. 

What have been the major achievements in the banking sector in Cambodia?

In recent years, the Cambodian banking sector has undergone a significant transformation. The banking system in Cambodia has become more stable and efficient, and there has been a significant increase in financial inclusion. This has been driven by a number of factors, including the following:

  • The strengthening of the regulatory framework by the NBC
  • The entry of new foreign banks into the market
  • The growth of microfinance institutions
  • The increasing use of digital banking

The digitalization of the banking sector is one of the most important trends in Cambodia’s banking industry. The use of mobile banking and other digital banking services is growing rapidly, and this is making it easier for people to access financial services.

Cambodia has witnessed a significant rise in mobile payments as more people moved from cash-based transactions to digital options, the National Bank of Cambodia (NBC) said.

The number of registered e-wallet accounts increased to 20.2 million as of June this year, the report said. The total number of transactions jumped 333.7 million from 211.2 million in 2022 with a total amount of $58.2 billion, an increase of 98.3 percent, the report stated, regarding the banking system in Cambodia. (source)

What are the challenges and opportunities in the banking system in Cambodia?

For businesses and investors, the Cambodian banking system offers a number of opportunities. The banking system in Cambodia is well-regulated and stable, and there is a growing demand for financial services. However, there are also some challenges that businesses and investors should be aware of, such as the lack of a credit bureau and the high level of informality in the economy.

Multinational banks are increasingly encouraging wealthy Cambodians to invest in more liquid financial assets, such as stocks and bonds. This is in contrast to the traditional practice of investing in land. 

Cambodia’s securities market, while still in its infancy, holds great growth potential. While investors during initial public offerings (IPOs) hold great advantages over those on the secondary market, some stocks may of course see a decline after an IPO.

However, the majority of the listed companies on the Cambodia Securities Exchange (CSX) have seen gains, with some such as Phnom Penh Autonomous Port (PPAP), Sihanoukville Autonomous Port (PAS) and the newly listed JS Land Plc (JSL) having gone up to three time their IPO valuations. (source)

As the financial markets in Cambodia continue to grow, banks and financial consultants need to provide more education to help people understand the risks and rewards of investing. 

With the rise of ASEAN, more and more banks are offering regional services. This means that businesses can access banking tools and funds across a number of ASEAN countries. This trend is also helping to standardize banking codes of practice and ethics across the region, which is beneficial to the banking system in Cambodia.

In 2023, the banking system in Cambodia is a vibrant and growing sector that offers a number of opportunities for businesses and investors. If you are considering doing business in Cambodia, it is important to understand the banking system and the challenges and opportunities that it presents. Find out more about the banking system in Cambodia, or other key information, by contacting our team.

What are the key facts to know about the banking system in Cambodia?

For the banking system in Cambodia, these are as follows:

The National Bank of Cambodia (NBC) is the sole regulator of all banks in Cambodia, whether they are specialized, commercial, or microfinance institutions (MFIs). The NBC registers, licenses, and regulates all banks in Cambodia.

  1. The Ministry of Economy and Finance (MEF) plays a role in regulating banks and banking services in Cambodia. The MEF is responsible for setting the overall financial policy framework for Cambodia, and it works closely with the NBC to ensure that banks are operating in a safe and sound manner.
  2. The Association of Banks in Cambodia (ABC) represents the banking sector to the Royal Government of Cambodia and the ASEAN Bankers Association. The ABC provides a forum for banks to discuss common issues and to work together to promote the development of the banking sector in Cambodia.
  3. The International Monetary Fund (IMF) and the World Bank also operate in Cambodia. These organizations provide technical assistance and financial support to the Cambodian government, including in the area of banking regulation.
  4. The Law on Banking and Financial Institutions (LBFI) is the primary legislation governing banking in Cambodia. The LBFI sets out the rules and regulations that banks must comply with, including requirements for capital adequacy, liquidity, and risk management.

If you are looking for a more nuanced insight or advice for the banking system in Cambodia, in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii.