End of COVID Measures: Cambodian Banks Face Rising NPLs

• NBC Decision. The National Bank of Cambodia rejected the request from banks and microfinance institutions to extend the temporary loan restructuring framework until the end of 2026.
• Impact on NPLs. The banking sector's gross non-performing loan (NPL) ratio reached 9.6% in the first half of 2026, up from 8.3% at the end of 2025.
• Bank Profitability. Banks will need to set aside additional provisions, which will reduce their profits, and some may even incur losses.
• Transparency Goal. The end of regulatory forbearance aims to restore confidence in the financial system, in line with IMF and World Bank recommendations.
• Restructuring Still Possible. Borrowers in difficulty can still negotiate restructuring arrangements with their bank, but without preferential treatment.

The NBC's decision is part of a gradual exit from the easing measures related to the COVID-19 pandemic.

1. 2020: Introduction of preferential loan restructuring measures during the COVID-19 crisis.
2. 2021-2025: Repeated extensions due to slow economic recovery, the real estate sector slowdown, and external shocks.
3. 2025: The IMF repeatedly calls for the gradual removal of regulatory forbearance.
4. First half of 2026: The gross NPL ratio reaches 9.6%, up from 8.3% at the end of 2025.
5. September 2026: The NBC rejects the request for an extension until the end of 2026, ending the preferential measures.
6. Coming quarters: Expected rise in the reported NPL ratio and increase in provisions, impacting bank profits.
7. Medium term: Recognition of problem loans to strengthen the sector and encourage better lending practices.

The end of forbearance affects different players in Cambodia's financial sector differently. Here is a breakdown by segment.

• Expats with real estate or personal loans may find restructuring requests scrutinized more strictly, without preferential treatment.
• Banks may tighten lending criteria, making new loans harder to obtain.
• Interest rates could rise to compensate for increased risks and additional provisions.
• Expats with bank deposits should monitor their bank's financial health, but increased transparency is positive in the long run.
• Negotiating restructuring remains possible, but banks will demand stronger evidence of financial hardship.

1. Step 1: Review your loan contracts to understand restructuring clauses and repayment terms.
2. Step 2: If you face difficulties, contact your bank promptly to discuss options before the situation worsens.
3. Step 3: Prepare solid financial documents to prove your situation if you request restructuring.
4. Step 4: Diversify your investments to reduce risks tied to a single bank.
5. Step 5: Follow NBC announcements and your bank's financial reports to anticipate changes.
6. Step 6: Consult a local financial advisor to assess the impact on your personal situation.