TL;DR: According to AMRO's 2025 reverse stress test, Cambodia's banking sector can absorb non-performing loans (NPLs) up to 24% before average capital adequacy falls below the National Bank of Cambodia's regulatory minimum. However, NPLs have already reached 8.3%, and real estate remains the primary source of credit risk. Smaller banks face growing pressure.

Data current as of July 2025. Source: AMRO (ASEAN+3 Macroeconomic Research Office).

What Did the AMRO Stress Test Actually Find?

AMRO conducted a reverse stress test — rather than modelling a specific crisis scenario, analysts asked how far asset quality could deteriorate before the system breached regulatory capital thresholds. The headline numbers look reassuring. The detail is more nuanced.

Key thresholds:

Scenario NPL Threshold Capital Adequacy
Regulatory minimum 24% 15% (NBC minimum)
Conservative (with buffer) 18.6% (~USD 6.3bn) 17.5%

At current NPL levels of 8.3%, there appears to be meaningful headroom. But the trajectory matters: NPLs rose from 5.1% in 2023 to 7.1% in 2024 and 8.3% in 2025. The acceleration changes the picture considerably.

Why Real Estate Remains Cambodia's Biggest Credit Risk

Among all economic sectors, real estate, construction and mortgage lending account for the largest share of non-performing loans in Cambodia's banking system. Key drivers include:

  • Prolonged market weakness. Post-pandemic price correction has extended, with transaction volumes subdued and developers delaying project timelines.
  • Expiry of COVID-era regulatory forbearance. Restructured loans introduced during the pandemic are now reclassifying as non-performing.
  • Shadow NPLs: Approximately 9% of the total loan portfolio consists of restructured loans — potential future NPLs if conditions deteriorate further.

The result: banks are applying significantly tighter lending standards for real estate — even as broader economic indicators show gradual recovery.

Smaller Banks vs. Larger Institutions: What Investors Need to Know

AMRO explicitly flags that system-level resilience does not mean uniform resilience across all participants. Smaller deposit-taking institutions face pressure on three fronts simultaneously:

  1. Thinner capital buffers — operating close to regulatory minimums.
  2. Lower profitability — limited capacity to absorb losses through operating income.
  3. Higher NPL concentrations — particularly from real estate exposure.

The number of banks operating near the regulatory floor increased between 2024 and 2025. AMRO projects that pressure will intensify through 2026 if NPL growth continues.

Practical implication for investors: relying on the headline stability of Cambodia's banking system when selecting a mortgage partner or deposit institution is insufficient. Individual bank-level due diligence matters — particularly for smaller institutions.

Is There a Systemic Contagion Risk?

AMRO's assessment of interbank risk is relatively reassuring. Cambodia's financial system has limited interconnectedness, which constrains the likelihood of cascading failures if a single institution encounters difficulty.

However, a small number of large banks dominate the interbank market. These are classified as systemically important and will remain under enhanced supervisory scrutiny. For the real estate market, this is material: major banks account for the bulk of mortgage lending and project finance for developers.

What Does This Mean for Real Estate Investors in 2025–2026?

Positive signals: No systemic banking collapse is anticipated. The macroeconomic environment is challenging but manageable at the aggregate level.

Caution signals:

  • Mortgage financing has become more expensive and harder to access as banks tighten underwriting criteria.
  • Developers with high leverage face refinancing on less favourable terms.
  • Properties targeting domestic retail demand carry elevated credit risk in the near term.
  • 2026 may bring a new wave of non-performing assets as restructured loans reach maturity.

Strategic recommendations for investors: - Prioritise assets with transparent financing structures and developers banking with systemically significant institutions. - Assess the capital position of any bank partner before entering mortgage transactions. - Treat 2025–2026 as a potential window for acquiring quality assets at discount — but with rigorous due diligence on both asset and financing structure.

FAQ

Q: How serious is Cambodia's current 8.3% NPL rate for the property market? A: In isolation, 8.3% remains well below AMRO's 24% stress threshold. The concern is the rate of increase — and the concentration in real estate. Banks are responding with tighter lending standards, which directly suppresses demand and places downward pressure on prices.

Q: Is it safe to take a mortgage with a smaller Cambodian bank? A: AMRO specifically flags that smaller banks face the most pressure. Before committing, investors should review the institution's capital adequacy ratio and its standing in NBC regulatory disclosures. Larger, systemically important banks offer more certainty in the current environment.

Q: When might Cambodia's real estate market begin recovering? A: AMRO notes early signs of gradual economic recovery but describes real estate weakness as 'protracted'. Meaningful lending recovery is tied to NPL normalisation and improved bank profitability — a process the report expects to extend into 2026 at minimum.

Q: Which property segments carry the least credit risk in Cambodia right now? A: NPL concentration is highest in segments dependent on domestic retail demand. Properties with international buyer exposure, stable long-term rental income and financing through major banks have historically shown lower volatility and are better positioned in the current cycle.

Find your property → nextoasis.io 🌐 Каталог объектов NextOasis