Cambodia’s underperforming banks providing little joy for shareholders

Outside of the big four, the average return on investment for the Kingdom’s banks is only 6 per cent – with some not even able to cover their operating costs – and analysts warn small players could become irrelevant

The majority of Cambodian banks are underperforming, providing poor returns on their shareholder investment, a new analysis has revealed.

Outside of Cambodia’s big four banks – Acleda, Canadia, Cambodia Public Bank and ANZ Royal – the average return on equity (ROE) last year for the remaining 39 banks was just 6 per cent, according to a report by investment firm Mekong Strategic Partners (MSP). Some banks who have been in the market for 20 years are not earning enough revenue to cover their costs.

“If these banks do not improve their ROE, they will not be able to fund the level of credit growth we expect in Cambodia going forward – 15 per cent to 20 per cent pa – without asking shareholders for additional capital,” the MSP report says.

“This will either lock them into a downward spiral in market share, becoming increasingly irrelevant, or will increase the pain for shareholders who have to come up with ever increasing amounts of capital.”

Read more at: http://phnompenhpost.com/post-weekend/cambodia%E2%80%99s-underperforming-banks-providing-little-joy-shareholders