Consumer Credit Index Quarter 1, 2019: Credit applications on the rise again, credit performance continues its increase and NPL 30 slightly increased
Summary of the Q4 report:
Consumer Credit Application:
– The number of applications increased overall by 11.44%
– The application amount increased overall by +31%
– Number of credit card applications decreased by -20%
Consumer Credit Performance:
– Total number of accounts grew by +5.30% to reach 1.14 million accounts
– Outstanding balance grew by +7.45% to reach $6.70 billion
Consumer Credit Quality:
– NPL 30 slightly increased to 1.24%
– The majority of credit customers remained committed to a single financial institute and held a single account
Consumer Credit Application: This metric represents an intention of customers to acquire credit in the form of personal finance, credit card, or mortgage.
After a decrease in the last quarter, the number of credit applications grew again, by +11.44% compared to the previous quarter. This increase was mainly led by personal finance applications (+12%) and mortgage applications (+8%). However, credit card applications decreased by -20% compared to the +19% surge in Q4, 2018, due to a drop of -23% in the plains region.
During this period, the amount of credit applications also increased to +31% compared to the previous quarter and was +10% higher than same period in 2018. This surge was driven by the amount of from personal finance (+37%) and mortgage (+7%), while credit card applications’ amount fell by -11%.
Personal finance applications saw a rise of more than +10% in all regions, except the plateau region, which fell by -5%. While credit card applications in the plains region dropped by -23%, the other regions were still on the rise. Mortgage applications saw a percentage increase in the plateau region (+16%), followed by the plains region (+11%) and Tonle Sap region (+6%); however, it dropped by -4% in the coastal region.
Consumer Credit Performance: This metric indicates the actual situation of consumer loans as of the reporting quarter.
This quarter saw the total number of accounts grow by +5.30%, slightly lower from the previous quarter, which rose by +6.30%. As of March 2019, the total number of consumer loan accounts had reached 1.14 million, accounting for roughly 36% of the total accounts in the industry. Of this number, 81.11% were personal finance loans, while a much smaller 11.52% were mortgage loans and about 7.37% were credit card loans. This ratio was not much different from the previous quarter. Similarly, this growth was seen across all geographic regions of the Kingdom, though the growth rate was slightly lower than from the previous quarter. The plains region continued to lead in growth with a +6.30% increase in loan accounts.
Consumer loan balance continued to rise in the first quarter, increasing by +7.45% – a slight decrease from 10.44% in Q4 of last year. Total consumer credit outstanding balance reached $6.70 billion, equal to almost 30% of the total outstanding balance of individual loans in the market. Personal finance loans continued to account for slightly more than half (51.26%) of all consumer credit outstanding loans, while mortgages accounted for 47.62%. Credit card loans continued to maintain the lowest portion (1.12%) of the total balance, slightly increased from 0.80% in last quarter. Overall, the Kingdom saw positive growth in loan balance across all regions, with the coastal and plateau regions leading at +8.90% and +8.60%, respectively, followed by the plains region at +7.40%. The Tonle Sap region grew by +7.20%.
Consumer Credit Quality: This metric is measured using the ratio of 30 days plus past due. It reflects the performance of loans as of reporting quarter.
As of March 2019, the non-performing loans after 30 days (NPL 30) slightly increased to 1.24% from 1.18% in Q4, 2018. However, this showed that the performance was still good and indicated that a slightly higher percentage of loans are being paid in a timely manner. Tonle Sap was the only region in which the amount of change in NPL 30 continued to decrease from the previous quarter (Q4, 2018: – 1.74% vs. Q1, 2019: -4%), while other regions saw an increase in the NPL 30’s change.
The number of customers who hold credit accounts with one singular financial institution remained high at 77.52% of all customers. The number of customers holding multiple accounts increased slightly to 35.11% from 33.72% in the quarter before. The number of customers holding one account stood at 64.89%; those holding two accounts made up 25.74%; those holding three accounts were only 7.25%; and those with more than three accounts consisted of only about 2.12% of the entire credit customer base.
“Starting the year, we saw credit applications grow again by almost +11.50%. However, since 2017 it is noticed that credit card applications saw a drop in the first quarter compared to the quarter before, which it normally indicates the less demand for credit card in first quarter of the year.” said Mr. Oeur Sothearoath, Chief Executive Officer of CBC. He continued, “credit growth is still on the right track. Though the NPL 30 saw a slight increase, it is still on a better level which implies good quality of loans and portfolio management from financial institutions.”
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About Credit Bureau Cambodia (CBC)
Credit Bureau Cambodia is the leading provider of credit information, analytical solutions, and credit reporting services to banks, microfinance institutions, leasing companies, credit operators and consumers in the Kingdom of Cambodia.
CBC has been operated since March 2012, with a strong support from the National Bank of Cambodia (NBC), the Association of Banks of Cambodia (ABC), the Cambodian Microfinance Association (CMA) and the International Finance Corporation (IFC). CBC promotes greater financial stability by providing accurate real time data to consumers and industry that helps them control the financial aspects of their businesses. It allows businesses to manage credit risk, prevent fraud and automate decision-making. CBC also helps individuals to check their credit report to ensure they have access to loans and finance 0and to protect themselves against identity theft.
CBC is a joint venture between Credit Bureau Holding Cambodia (represented by the ABC and CMA) and Equifax Cambodia Holding Pte Ltd (ECH) who has significant global footprint operating leading credit bureaus. ECH is a Singapore incorporated company established as a joint venture between Asia Credit Bureau Holdings Pte Ltd (ACB), a Singapore-based company and Equifax company (United States).