Beyond Green Claims: How SuperBankRatings’ Sustainability Initiatives Assessment Measures Real ESG Performance in Cambodian Banking

Sustainability is becoming a banking issue, not simply an ESG issue

Sustainability in banking is sometimes reduced to a collection of visible activities:

planting trees, donating to communities, reducing paper, financing a solar project or publishing an ESG policy.

Those initiatives can be valuable. But they do not, by themselves, demonstrate that a bank is sustainable.

For a financial institution, sustainability reaches much further into the organisation.

It affects:

  • where capital is allocated;
  • how environmental and social risks are identified;
  • how customers are treated;
  • how climate-related risks enter lending decisions;
  • how the Board exercises oversight;
  • how employees and communities are affected;
  • how claims are substantiated; and,
  • ultimately, whether stated commitments are producing measurable outcomes.

That is the purpose behind the SuperBankRatings’ Sustainability Initiatives assessment and rating framework.

Sustainability Initiatives is one of the core parameters within SuperBankRatings’ wider Cambodian commercial-bank assessment methodology.

SuperBankRatings’ public methodology identifies six principal Sustainability Initiatives areas:

  • Green Financing;
  • ESG Integration;
  • Operational Environmental Impact;
  • Community Development and Social Impact;
  • Sustainable Partnerships and Stakeholder Engagement; and
  • Transparency Reporting.

The objective is not to reward the institution with the longest sustainability report, the greatest number of ESG statements or the strongest marketing campaign.

The underlying assessment asks a more demanding question:

Is sustainability actually embedded in the bank and can the bank demonstrate it?

The detailed SuperBankRatings’ methodology describes the purpose clearly:

To assess whether sustainability has become embedded in governance, risk, products, operations and social impact with measurable and credible outcomes rather than promotional claims. It looks to ESG policies and governance, green and social portfolios, taxonomy mapping, environmental and social due diligence, climate risk, operational footprint, financial inclusion and literacy programmes, sustainability reporting and assurance.

That distinction between policy and performance, intention and implementation, claim and evidence … sits at the centre of the assessment.

From ESG policy to ESG outcome

  • A bank can have an ESG policy and still have weak ESG integration.
  • It can establish a Sustainability Committee but provide little evidence that the committee influences lending decisions.
  • It can announce green lending without defining what qualifies as green.
  • It can finance renewable energy while failing to explain environmental and social due diligence.
  • It can publish carbon-reduction ambitions without reporting a baseline.
  • It can undertake substantial charitable activities without demonstrating whether they have produced lasting social outcomes.

And it can describe itself as sustainable without independently verifying the data supporting those claims.

SuperBankRatings’ therefore separates the existence of a framework from the outcomes that framework produces.

The methodology instructs assessors to begin with authoritative evidence, examine the current year together with at least two prior years wherever possible, establish whether a policy, process, governance arrangement or capability exists, and then determine whether it works in practice. Trends, breaches, incidents, concentrations, customer outcomes and management responses are considered alongside regulatory requirements, internal targets and like-for-like peers.

Individual controlled checks can be scored on a 1–5 scale, with ND — Not Disclosed/Not Determinable, and N/A, Not Applicable available where appropriate. Importantly, the methodology does not advocate simply averaging large numbers of weakly relevant observations. Assessors are directed to identify the small number of facts that genuinely drive the parameter and separately consider trend and evidence confidence.

This evidence-first philosophy is also reflected in the wider SuperESGRatings’ approach.

  • SuperESGRatings’ distinguishes:
  • ESG Risk and Resilience;
  • Sustainability Impact;
  • Transition Credibility;
  • ESG Disclosure Quality; and
  • Sustainable Instrument or Bond Alignment.

Its central proposition is that an ESG policy is not equivalent to an ESG outcome:

Measurable targets represent stronger evidence than policy statements, while demonstrated and independently verified progress should carry greater analytical weight.

For banks, this creates an important hierarchy:

  • Policy tells us what a bank intends to do;
  • Governance tells us who is responsible;
  • Data tells us what is happening;
  • Outcomes tell us whether it is working; and
  • Independent verification increases confidence that the outcomes are credible.

 

What exactly does SuperBankRatings’ assess?

The detailed Sustainability Initiatives methodology contains six primary banking modules and 34 controlled sub-parameters, supplemented by broader cross-cutting areas including climate-related risk management, human rights, diversity and inclusion and ethical business practices.

The accompanying broader ESG framework introduces an additional 11-dimension materiality framework, with differentiated weights for governance, climate, human capital, human rights, biodiversity, disclosure, ethics, resources, outcomes and controversies.

These two documents should be understood together rather than treated as interchangeable. The first provides the detailed bank-specific Sustainability Initiatives assessment structure. The second provides a broader ESG materiality and criticality lens that can deepen the analysis.

When arranged by analytical criticality, the combined assessment can be understood as follows:

  1. Climate Risk, Emissions and Transition — 14%. This is the largest individual weighting in the broader ESG framework. Assessment includes Scope 1 and Scope 2 emissions and material Scope 3 emissions where available, emissions intensity, target coverage, transition-related capital expenditure, scenario analysis, transition-plan credibility and whether business strategy and capital allocation are consistent with climate commitments. Within the banking methodology, this connects directly to renewable-energy financing, green infrastructure, climate-risk integration in lending and portfolio-level environmental risk.
  2. ESG Governance and Accountability — 12%. Sustainability cannot be institutionalised without ownership. Assessment therefore considers Board oversight, management responsibility, Board capability, escalation mechanisms, assurance coverage and, where relevant, whether remuneration or management objectives are linked to sustainability outcomes. This also connects directly with ESG policies, governance structures and ESG risk-management responsibilities within the banking Sustainability Initiatives parameter.
  3. Human Capital, Labour and Workplace Safety — 10%. The assessment considers workplace injuries and fatalities where relevant, employee turnover, training, gender representation, remuneration gaps, employee engagement, diversity and inclusion, labour rights and health-and-safety culture. For a bank, sustainability must therefore include how the institution treats and develops the people who operate it.
  4. Disclosure, Data Quality and Assurance — 9%. Reporting quantity is not enough. The assessment considers the proportion of metrics independently assured, reporting timeliness, restatements, coverage, methodological consistency, internal controls and transparency regarding data limitations. This dimension is critical to distinguishing evidence from unsupported ESG claims.
  5. Materiality and Stakeholder Relevance — 8%. The framework considers how many material sustainability topics have measurable targets, stakeholder participation and the quality of the materiality process, including double-materiality considerations where relevant. A sustainability programme should focus on matters that genuinely affect the bank and its stakeholders rather than simply those that are easiest to publicise.
  6. Energy and Resource Efficiency — 8%. Renewable-energy use, energy intensity, water intensity, waste, recycled materials and operational improvement programmes are considered alongside broader resource-management systems.
  7. Ethics, Conduct and Responsible Business — 8%. Corruption incidents, fines, whistleblowing, tax disputes and disclosure practices are considered together with anti-bribery culture, ethical decision-making and transparency. Sustainability loses credibility if environmental commitments sit alongside weak business conduct.
  8. Targets, Outcomes and Demonstrated Impact — 8%. Progress against targets, avoided emissions, beneficiaries reached and measurable environmental improvements are assessed together with additionality, attribution, durability and ambition. This is where sustainability moves from activity to measurable result.
  9. Controversies, Greenwashing and Regulatory Alignment — 4%. The framework considers the number and severity of controversies, regulatory action and unresolved complaints together with the accuracy of sustainability claims and consistency between marketing statements and actual performance. Although carrying a smaller standalone weighting in the broader framework, serious controversies or misleading claims can materially affect confidence in other sustainability evidence.

 

The Six Core SuperBankRatings’ Sustainability Initiatives modules

1. Green Financing

Green finance is not assessed simply by asking whether a bank has made a green loan.

The core question is whether the financing is genuinely eligible, measurable, governed and producing identifiable environmental benefits.

The methodology identifies six controlled areas: Renewable Energy Financing; Sustainable Agriculture and Forestry Financing; Green Building and Infrastructure Financing; Green Bonds and Sustainable Investments; Climate Risk Integration in Lending; and Sustainable Product Development.

 1.1 Renewable Energy Financing

Assessment can include lending to solar, wind, hydropower and other qualifying renewable-energy assets, together with the quality of eligibility rules, environmental and social due diligence, financing volumes, measurable impacts and project-performance information.

A bank that merely states that it “supports renewable energy” is analytically different from a bank that can disclose the amount financed, eligibility rules, sector allocation, environmental screening, avoided emissions or renewable capacity supported.

1.2 Sustainable Agriculture and Forestry

Agriculture is especially important in Cambodia, but sustainability requires differentiation between ordinary agricultural lending and financing that supports improved environmental, social or climate outcomes.

Relevant issues can include sustainable farming practices, efficient irrigation, climate resilience, forestry management, land-use controls, biodiversity impacts and responsible supply chains.

1.3 Green Buildings and Infrastructure

The assessment considers whether financed buildings and infrastructure satisfy credible environmental criteria, rather than receiving a green label simply because they are new.

Energy performance, water efficiency, materials, transport connectivity, environmental approvals, climate resilience and recognised green-building standards can all strengthen the evidence.

1.4 Green Bonds and Sustainable Investments

Where a bank issues, invests in or distributes green, social or sustainability instruments, assessment goes beyond the instrument’s title.

Relevant questions include use-of-proceeds eligibility, project-selection processes, management of proceeds, allocation reporting, impact reporting, external review and consistency with the bank’s broader sustainability practices.

1.5 Climate Risk Integration in Lending

This is particularly important.

A bank may finance environmentally positive projects while simultaneously failing to identify climate risks elsewhere in its portfolio.

SuperBankRatings’ therefore examines whether physical and transition risks are entering credit assessment, risk appetite, portfolio monitoring, stress testing, escalation and remediation. The detailed methodology specifically points assessors towards risk limits, key risk indicators, incidents, losses, stress tests and remediation evidence.

1.6 Sustainable Product Development

This considers whether sustainability is creating genuinely useful financial products. Ffor example financing structures that support clean energy, resource efficiency, responsible agriculture, climate adaptation, financial inclusion or other measurable sustainability objectives.

The National Bank of Cambodia’s Sustainable Finance Taxonomy for the Cambodian Banking Sector substantially increases the importance of credible classification. The first phase prioritises Energy, Transport, and Buildings and Construction and considers matters including greenhouse-gas contribution, economic significance, capacity to attract green investment, investment requirements and decarbonisation potential.

A green product should therefore increasingly answer a fundamental question:

Green according to what definition?

2. ESG Integration

Green financing concerns what a bank finances. ESG integration asks whether environmental, social and governance thinking has become part of how the bank operates and makes decisions.

Five areas are assessed: ESG Policies and Frameworks; ESG Due Diligence; ESG Risk Management; ESG Training and Awareness; and ESG Governance Structure.

2.1/ A strong ESG policy should define responsibilities, material risks, decision processes and escalation.

2.2/ Due diligence should influence actual customer and transaction assessment.

2.3/ ESG Risk management should translate environmental and social matters into risk identification, appetite, monitoring and controls.

2.4/ ESG Training should reach the employees who need to make sustainability-related decisions rather than being confined to the sustainability team.

2.5/ ESG Governance should establish clear Board and management accountability.

This is one reason SuperBankRatings’ does not treat sustainability as an isolated corporate-social-responsibility function.

The Board, CEO, Sustainability or ESG leadership, Chief Risk Officer, Credit, Finance, Operations, Human Resources and Corporate Affairs can all have responsibility for different components of sustainability performance.

3. Operational Environmental Impact

Banks may have a lighter direct environmental footprint than mining, manufacturing or heavy industry, but their own operations still matter.

The five areas assessed are Energy Consumption and Efficiency; Waste Management; Water Conservation; Carbon Footprint; and Paper and Resource Consumption.

This may include electricity consumption across branches and headquarters, renewable-energy adoption, building efficiency, waste reduction and recycling, water use, greenhouse-gas measurement, business travel, vehicle fleets, data centres, digitalisation and paper reduction.

Importantly, SuperBankRatings’ looks for trends.

A bank that measures electricity, paper and carbon usage over several years and demonstrates improvement provides stronger evidence than one that reports a one-off environmental initiative.

The same principle applies to targets. A stated target is more meaningful when the bank defines its baseline, timeframe, scope, responsible executives and actual progress.

4. Community Development and Social Impact

Sustainability in Cambodia cannot be assessed solely through carbon emissions.

Banks affect households, SMEs, rural communities, entrepreneurs and people entering the formal financial system for the first time.

SuperBankRatings’ therefore examines Financial Inclusion; Education and Financial Literacy; Philanthropy and Charitable Giving; Social Impact Investments; and Job Creation and Fair Labour Practices.

4.1/ Financial inclusion is not simply account growth. Assessment can consider whether underserved customers gain affordable, responsible and sustainable access to useful financial services.

4.2/ Financial-literacy initiatives can be considered in terms of reach, programme quality and outcomes rather than event numbers alone.

4.3/ Philanthropy is recognised, but community donations should not automatically receive the same analytical value as activities creating durable economic or social benefits.

4.4/ Social-impact investments should demonstrate who benefits, how the outcome is measured and whether the financing remains financially responsible.

4.5/ Employment practices can consider job creation, workforce development, fair labour practices, training and inclusion.

This approach reflects SuperBankRatings’ public position that Cambodian banks can use their influence to create environmental and social outcomes beyond purely financial outcomes. The Sustainability Initiatives award is specifically intended to recognise institutions demonstrating commitment to those outcomes.

5. Sustainable Partnerships and Stakeholder Engagement

No bank operates independently of its ecosystem.

SuperBankRatings’ assesses Partnerships with NGOs and Civil Society; Engagement with Regulatory Bodies; Customer Engagement; Supplier Engagement; Investor Engagement; and Industry Collaboration.

5.1/ The assessment is not simply interested in how many partnerships appear in an annual report.

It asks whether those relationships improve sustainability capability, expand access, support better customer outcomes or contribute to environmental and social progress without introducing excessive operational, legal, compliance, concentration or counterparty risk.

5.2/ Regulatory engagement is particularly important as Cambodia’s sustainable-finance framework develops.

5.3/ Customer engagement provides evidence about whether sustainability initiatives are understood and useful.

Supplier engagement can introduce sustainability criteria into procurement and third-party management.

5.4/ Investor communication helps reveal whether ESG performance and risks are being discussed transparently.

Industry collaboration can help accelerate common standards that no individual bank could establish alone.

6. Transparency Reporting

Transparency is where many sustainability claims are tested.

The methodology asks whether sustainability information is measurable, consistent, traceable and appropriately assured.

Seven controlled areas appear in the detailed framework: Sustainability Reports; ESG Data Disclosure; Website Transparency; Stakeholder Communication; Green Bonds and Sustainable Investments; Climate Risk Integration in Lending; and Sustainable Product Development.

The final three also appear elsewhere in the detailed methodology. Their appearance under Transparency Reporting reinforces an important analytical point: it is not enough to undertake an activity; the bank should also be capable of explaining, quantifying and substantiating it.

7.1/ For sustainability reports, assessors look beyond design and volume.

7.2/ For ESG data, they consider accuracy, consistency, comparability and source traceability.

7.3/ For websites, they consider whether policies, data and sustainability information are readily accessible and current.

7.4/ For stakeholder communications, the issue is whether important sustainability developments, risks and limitations are communicated clearly.

7.5/ For green products and sustainable investments, claims should be supported by eligibility data and credible impact information.

7.6/ For climate risk, disclosure should explain how risk actually enters banking decisions.

7.7/ And for sustainable products, the institution should provide enough evidence to distinguish genuine environmental or social value from marketing terminology.

The methodology specifically identifies greenwashing, absence of taxonomy or eligibility controls, ESG being absent from credit decisions, environmental and social breaches, weak data coverage, unassured claims and community activities without measurable outcomes as warning indicators. Stronger scores are supported by increasing verified taxonomy-aligned finance, better ESG data and assurance, quantified impact and mature anti-greenwashing governance.

49 Cambodian commercial banks have already been assessed

This framework is no longer theoretical.

SuperBankRatings’ has now undertaken Sustainability Initiatives assessments across 49 Cambodian commercial banks.

The work forms part of the wider SuperBankRatings’ bank-benchmarking programme and has involved assessment of each bank using its 2023, 2024 and 2025 annual reports, together with available bank financial information and data through 31 December 2025.

That institution-level evidence has been considered within a broader regulatory and sector context incorporating, among other sources:

NBC Annual Report 2025; Financial Stability Review 2025; Annual Supervision Report 2024; Data on Deposit-taking Banks and Financial Institutions; Data on Banking Sector; Financial Sector Development Strategy 2025–2030; Sustainable Finance Taxonomy for Cambodian Banking Sector Version 1; Payment System Annual Reports 2023–2024; and relevant NBC Prakas and Circulars issued during 2023–2026.

The breadth of those sources matters.

A bank’s annual reports show what the institution itself has disclosed.

  • NBC sector data allows those disclosures to be viewed against the structure and development of the wider banking market;
  • NBC’s deposit-taking-institution datasets include information across assets, deposits, lending, non-performing loans, staffing, offices and other financial-sector indicators;
  • The Financial Stability Review 2025 provides a sector-level perspective on financial-system conditions; while
  • The Financial Sector Development Strategy 2025–2030 sets a wider policy direction encompassing financial stability, broader access to finance, market infrastructure and technology-enabled financial inclusion.
  • The Sustainable Finance Taxonomy provides an increasingly important reference point for determining whether financing claimed as environmentally sustainable is supported by an identifiable classification framework.
  • Payment-system information adds another dimension because digital access, payment infrastructure and financial inclusion increasingly intersect with social sustainability. NBC reporting has highlighted the contribution of digital payments and payment infrastructure to financial inclusion and the continuing expansion of Cambodia’s digital financial ecosystem.
  • Regulatory publications, Prakas and Circulars provide the compliance baseline against which institutional practices can be evaluated.

The result is therefore not a sustainability assessment based solely on what appears in an ESG section of an annual report. It is a three-year, evidence-based, institution-by-institution analysis placed within Cambodia’s banking, regulatory, economic and sustainable-finance environment.

Why peer comparison matters

Sustainability assessments become considerably more useful when a bank can see not only its own score but also where it stands relative to comparable institutions.

SuperBankRatings’ methodology therefore explicitly distinguishes peer eligibility from ranking performance.

 Asset size determines which institutions form an appropriate peer comparison group; asset size itself does not determine the bank’s actual ranking score.

This distinction strengthens and disciplines the comparison.

A large bank may have greater resources with which to establish an ESG department, produce a large sustainability report or finance sizeable green projects. But that does not automatically mean its sustainability governance, climate-risk integration, data quality or measurable outcomes are superior.

Likewise, a smaller bank should not automatically be disadvantaged simply because its absolute green-finance portfolio is smaller.

Its assessment can instead consider factors such as the quality of governance, proportional commitment, product relevance, due-diligence processes, disclosure, demonstrated outcomes and progress relative to its own scale and appropriate peers.

In other words:

  • Size determines who should be compared.

  • Performance determines who ranks higher.

That separation is central to the integrity of the SuperBankRatings’ benchmarking approach.

Sustainability does not exist in isolation

One of the most important features of the SuperBankRatings’ framework is that Sustainability Initiatives does not sit apart from the other ten assessed parameters.

  • A weakness discovered in sustainability may also be relevant to Corporate Governance if Board oversight is inadequate;
  • Climate-risk integration can affect Risk Management;
  • Green lending can affect Market Position and Business Profile;
  • ESG-related regulatory obligations affect the Regulatory Environment assessment;
  • Sustainability data controls may say something about Management Quality;
  • Digital financial inclusion may intersect with Technology and Innovation; and
  • Climate-related credit concentrations can ultimately affect Financial Strength and Performance.

That is precisely why the forthcoming SuperBankRatings’ SuperPower Banking Index is potentially much more informative than a conventional overall banking league table.

SuperBankRatings’ public methodology already combines quantitative and qualitative assessments across financial strength, governance, risk, market position, funding, technology, management, external support, regulation, economic and industry risk and sustainability.

The question is therefore not simply:

Which is Cambodia’s best bank?

It becomes:

Which bank leads in which capability … and why?

prologue

 

Coming 5 October 2026: the first SuperBankRatings’ SuperPower Banking Index Report

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On 5 October 2026, SuperBankRatings’ plans to release its first SuperPower Banking Index Report, bringing together the results from 49 Cambodian commercial banks assessed through the full

11-parameter and 329-sub-criterion SuperBankRatings’ methodology.

*

The SuperPower Index is designed to go substantially deeper than an overall ranking.

The respective banks will not merely see where they rank overall.

Individual Banks will be able to see who has ranked better in Corporate Governance, Financial Strength & Performance, Funding & Liquidity, Risk Management, Sustainability Initiatives, Technology & Innovation, Management Quality, Market Position & Business Profile, External Support, Economic & Industry Risks and Regulatory Environment.

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That distinction matters … Why?

A bank can be strong financially but weaker in sustainability.

Another may demonstrate excellent governance but still have improvement opportunities in technology.

A smaller institution may emerge as a sustainability leader within its appropriate peer category.

A bank with a strong overall position may discover that competitors are progressing faster in climate-risk management, disclosure or green-finance capability.

And institutions presently outside the leading group will be able to identify the specific parameters that are preventing them from moving higher.

 *

SuperBankRatings’ methodology explicitly separates peer eligibility by asset size from the actual ranking score. This strengthens, enforces and highlights the comparisons.

*

Rather than creating one number and allowing that number to conceal the underlying story, the SuperPower Banking Index is intended to highlight the individual institutional strengths and areas to improve on that created the result.

That makes the rankings more useful not only for customers and the public, but potentially for Boards, management teams, regulators, investors and the Cambodian banking industry itself.

*

Sustainability Leadership will increasingly be demonstrated, not declared

*

The direction of sustainability travel is becoming clear.

Cambodian banks are operating in an environment where sustainable finance, climate resilience, responsible lending, financial inclusion, governance, transparency and measurable impact are moving closer to mainstream financial decision-making.

The National Bank of Cambodia’s work on sustainable finance and the Sustainable Finance Taxonomy reinforces this direction.

SuperBankRatings’ own Sustainability Initiatives award framework recognises banks undertaking practical initiatives designed to create better environmental and social outcomes and explicitly evaluates green financing, ESG integration, operational environmental impact, community and social impact, partnerships and transparency.

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The next challenge is implementation.

It will become increasingly difficult for institutions to rely on general statements such as:

“We are committed to sustainability”

“We support green finance”

“We care about the community”

“We are integrating ESG”

*

The questions that follow will be more demanding:

How much?

Under what eligibility criteria?

Who approved it?

What risks were identified?

What targets were established?

How has performance changed over three years?

What measurable outcomes were produced?

How does the institution compare with its peers?

What evidence supports the claim?

Has that evidence been independently verified?

*

Those are the questions that transform sustainability from marketing into analysis.

And that is ultimately what SuperBankRatings’ Sustainability Initiatives assessment is designed to achieve.

Not to identify which bank talks most about sustainability.

But to identify which banks are progressively building sustainability into their governance, lending, risk management, operations, products, communities, partnerships and disclosures, and which can demonstrate that progress through credible evidence and measurable outcomes.

That is the difference between ESG ambition and ESG performance.

And as Cambodia’s banking sector continues to develop, it may become one of the most important differences of all.

 

Disclaimer

This article is prepared for informational purposes only and reflects the independent analytical capabilities of Andersen Consulting Cambodia as a fully accredited credit rating agency and provider of financial services research and ratings under its SuperBankRatings product framework.

All ratings and assessments are based on information available at the time of analysis and are subject to ongoing surveillance and review.

Enquiries:

K H Wee-Oon

Chief Research & Rating Officer

Andersen Consulting Cambodia

E: wee-oon.kwanghwee@kh.Andersen.com

Telegram: @KHWeeOon

Five Bank in Seven Months: Cambodia Needs Foresight, Not Another Post-Mortem

The next phase of Cambodia’s banking development must focus not simply on responding to troubled institutions, but on:

  •  identifying vulnerabilities earlier;
  • intervening sooner; and
  • making responsible banking more measurable.

This Article Provides A Solution! 

Cambodia’s banking industry has spent more than two decades building something significant.

From a relatively small financial system, it has developed into a banking market with approximately US$100 billion in assets, increasingly sophisticated digital infrastructure, broadening financial access, stronger regulatory architecture and banks capable of supporting businesses, households and major investment across the Kingdom.

That achievement should not be underestimated.

Neither, should one ignore the warning signals, now appearing within parts of the system.

Within approximately seven months, five commercial banks; Prince Bank, Panda Commercial Bank, CCU Commercial Bank, Heng Feng (Cambodia) Bank and HH Bank (Cambodia), have been placed into liquidation or had their banking licences revoked. The latest three institutions were placed into liquidation in August 2026.

Importantly, the National Bank of Cambodia (NBC) has emphasised that these three institutions represented only around 0.5% of banking-sector assets and credit, while the broader group of recently closed institutions represented only a small fraction of the overall system.

That distinction matters!

Five bank closures do not automatically mean Cambodia has a banking crisis.

But five closures in such a short period should equally not be dismissed as irrelevant.

The correct response lies somewhere between complacency and alarm.

It requires perspective.

It requires transparency.

And, above all, it requires foresight.

The question Cambodia should be asking is therefore not simply:

“Why did these banks close?”

The more valuable question is:

“What can Cambodia learn from these events so that future weaknesses are identified, corrected and contained long before liquidation becomes necessary?”

That is where the next stage of Cambodia’s banking development should begin.

 

A Stronger System Can Still Contain Weaker Institutions

It is important to separate institution-specific weakness from system-wide weakness.

Cambodia’s banking system remains substantial. By June 2026, banking and financial-system assets stood at approximately US$99.8 billion. Outstanding loans were around US$64.2 billion, increasing 4.6% year-on-year, while customer deposits grew around 4.4% to approximately US$64.4 billion.

Those numbers do not describe a financial system in free fall. AMRO’s latest assessment similarly concludes that Cambodia’s banking system overall retains meaningful resilience and sufficient buffers, while identifying greater vulnerabilities among some smaller institutions because of weaker profitability, lower capital strength and higher NPLs.

That is another important distinction!

A mature banking system should be capable of allowing a weak or non-viable institution to exit without destabilising the entire market. In fact, a regulator prepared to revoke licences and place institutions into orderly liquidation, when necessary, should not automatically be interpreted as evidence of regulatory failure.

It demonstrates the opposite:

That minimum standards matter and that banking licences are conditional upon institutions continuing to meet acceptable financial, governance and regulatory requirements.

The objective should therefore never be to preserve every bank indefinitely.

The objective should be to preserve the integrity of the banking system.

At the same time, liquidation is the final stage of the process.

The real measure of financial-system maturity is increasingly what happens before that point is reached.

From Hindsight to Foresight

Post-mortems are useful.

They tell us what went wrong.

They identify poor lending decisions, insufficient capital, weak profitability, excessive concentration, ownership problems, governance deficiencies, liquidity pressures, compliance failures or other contributing factors.

But post-mortems occur after value has already been destroyed.

  • Depositors may already be anxious;
  • Employees may already have lost jobs;
  • Shareholders may already have lost capital; and
  • Borrowers may face disruption.

The regulator must then devote significant resources to liquidation, creditor claims, asset recovery and communication.

The institution’s reputation is already damaged. And, importantly, the reputation of the wider banking industry may suffer collateral damage even when the majority of institutions remain fundamentally sound.

Cambodia therefore needs to progressively move from a post-mortem banking culture to an early-warning banking culture.

The principle is simple:

 

The best banking crisis is the one that is identified and corrected before it becomes a crisis.

That means identifying deterioration when it is still manageable.

A bank rarely moves overnight from healthy to non-viable.

Usually there is a progression.

  • Credit quality deteriorates.
  • Provisioning increases.
  • Profitability weakens.
  • Capital generation slows.
  • Liquidity becomes tighter.
  • Deposits become more expensive.
  • Management becomes increasingly defensive.
  • Problems are restructured rather than resolved.
  • Senior employees leave.
  • Related-party exposures may become more significant.
  • Regulatory breaches increase.
  • Transparency can decline precisely when greater transparency is needed.
  • Individually, one indicator may not mean very much.

Together, however, they can tell an important story.

This is precisely where:

  • systematic benchmarking;
  • independent research;
  • stronger disclosure; and
  • regulatory early-warning mechanisms become increasingly valuable.

Cambodia’s Second Warning Sign: NPLs

Bank closures are not the only issue requiring attention.

Cambodia’s gross non-performing loan ratio reached approximately 9.6% by June 2026, compared with 8.4% a year earlier.

Again, perspective is essential.

A gross NPL ratio of 9.6% does not mean 9.6% of Cambodia’s banking assets will ultimately be lost.

Provisioning, collateral, recoveries, restructuring and borrower rehabilitation all matter.

Nor does a rising sector-wide NPL ratio explain the circumstances surrounding each of the five institutions that have closed. The cases should not be incorrectly bundled together as though every closure resulted from bad loans.

Nevertheless, a rising NPL ratio is one of banking’s most important warning indicators.

Bad loans affect more than accounting.

  • They consume management resources;
  • They absorb capital;
  • They require provisions;
  • They reduce earnings;
  • They can weaken appetite for new lending;
  • They constrain banks’ ability to finance otherwise healthy businesses.

And if unresolved for too long, they can turn a temporary asset-quality problem into a structural balance-sheet problem.

AMRO has therefore specifically recommended that Cambodia accelerate NPL resolution while reinforcing bank capital buffers, improving liquidity oversight and strengthening its bank-resolution framework.

Encouragingly, Cambodia has already begun constructing some of the tools necessary to address this.

In February 2026, the NBC established a regulatory framework for Asset Management Institutions capable of acquiring and managing NPLs and associated collateral. In March, it also issued regulations relating to emergency liquidity assistance for deposit-taking banks and financial institutions.

These are important building blocks.

The next priority is making the entire framework work together.

 

Build a Cambodian Banking Early-Warning System

What might that look like?

SuperBankRatings’ believes Cambodia would benefit from an integrated Banking Resilience Early-Warning Framework capable of complementing confidential regulatory supervision with greater use of publicly observable financial, governance and institutional indicators.

Such a framework should not attempt to publicly predict bank failures.

Nor should an independent assessment be confused with the confidential prudential supervision performed by the NBC.

Instead, its purpose should be to identify direction of travel.

  • Is a bank improving?;
  • Is it deteriorating?;
  • Are weaknesses temporary or becoming structural?;
  • Is management addressing the problem?; and
  • Does the institution have the financial strength and shareholder support necessary to absorb further stress?

SuperBankRatings’ existing methodology already examines banks across broader institutional factors including:

  • corporate governance;
  • external support;
  • economic and industry risk;
  • financial health and performance;
  • funding and liquidity;
  • management quality;
  • market position;
  • regulatory environment;
  • risk management;
  • sustainability; and
  • technology innovation.

Applied as an early-warning mechanism, these indicators can become much more than a ranking methodology.

They can become a bank-health diagnostic framework.

The key should be identifying not merely today’s number, but the three-year trend and the interaction between different numbers.

  • A bank reporting falling profitability may not necessarily present a problem.
  • A bank reporting falling profitability, deteriorating NPLs, weaker liquidity, declining deposits, increasing funding costs and reducing capital buffers at the same time deserves considerably more attention.

That is the difference between: analysing individual statistics and assessing institutional resilience.

Capital Must Be a Buffer, Not Merely a Minimum

Capital is banking’s principal shock absorber. Meeting a regulatory minimum is essential.

But resilience means having enough capacity to remain sound after something goes wrong.

Cambodia should therefore increasingly focus not simply on whether institutions meet required capital ratios today, but whether they would continue meeting them after credible stress.

  • What happens if property values fall another 20%?;
  • What happens if NPLs increase substantially?;
  • What happens if significant borrowers default simultaneously?;
  • What happens if deposits leave faster than expected?;
  • What happens if a major shareholder can no longer provide financial support?;
  • What happens if a bank becomes subject to an international sanction, cyber incident or reputational shock?

A strong bank should be able to answer those questions before the event occurs. The strongest boards should already be asking them.

For banks displaying higher risk characteristics, supervisory expectations could increasingly require larger buffers above minimum regulatory capital, more frequent stress testing and credible capital-restoration plans.

This is not punishment. It is prudent banking.

Liquidity: Confidence Can Move Faster Than Capital

A bank can report adequate capital and still experience severe problems if depositors suddenly demand their money.

That is why liquidity deserves equal prominence.

Modern banking operates at digital speed. Rumours once took days to spread. Today they can travel across Telegram, Facebook and messaging groups in minutes.

Mobile banking then allows customers to respond almost immediately. This changes liquidity management fundamentally.

Every Cambodian deposit-taking institution should therefore maintain rigorous contingency-funding plans capable of answering a simple question:

If confidence suddenly changes tomorrow morning, what happens next?

Banks should know the concentration of their largest depositors, understand how quickly funds could leave, maintain sufficient high-quality liquidity and establish clear escalation procedures before stress appears.

The NBC’s March 2026 emergency-liquidity framework is therefore another important part of Cambodia’s developing financial-stability architecture.

But emergency central-bank liquidity should remain an emergency mechanism. The first defence must always be the bank’s own prudent liquidity management.

  

The NPL Challenge Requires Resolution, Not Permanent Restructuring

Cambodia must also distinguish between helping viable borrowers through temporary difficulty and indefinitely postponing recognition of fundamentally impaired debt.

Restructuring has an important economic role.

A good business experiencing temporary cash-flow problems should not necessarily be forced into failure when a sensible restructuring could preserve jobs, productive capacity and the eventual repayment of the loan.

But restructuring must have an exit.

Otherwise, there is a danger that restructuring becomes postponement rather than recovery.

The development of regulated Asset Management Institutions offers Cambodia an opportunity to create specialist capability for purchasing, restructuring, managing and ultimately resolving distressed exposures. Over time, Cambodia could develop a deeper distressed-asset ecosystem involving banks, AMIs, investors, restructuring specialists, valuers, insolvency professionals and courts.

The goal should be straightforward:

  • Recognise the problem early.
  • Separate viable borrowers from non-viable exposures.
  • Restructure what can genuinely recover.
  • Resolve what cannot.

And then return capital to productive lending.

That is how an NPL problem stops becoming a permanent drag on the banking sector.

 

Governance Must Be Monitored Continuously

Financial numbers generally tell us what happened.

Governance often tells us why.

Banking institutions are unusual companies because they operate substantially with other people’s money.

That makes ownership, board quality, senior management, internal controls, risk culture and transparency central to financial stability.

Fit-and-proper assessment should therefore never be viewed as a one-time licensing exercise.

  • Ownership structures evolve;
  • Directors change;
  • Business relationships change;
  • Risk appetites change;
  • International sanctions change;
  • Reputational risks change;
  • Governance surveillance must consequently be continuous;
  • Boards should be able to demonstrate independence and appropriate expertise;
  • Risk committees should challenge management rather than merely endorse it;
  • Internal audit should be genuinely independent;
  • Related-party exposures require particular scrutiny;
  • Shareholders should demonstrate not only the financial capacity to support their institution, but the integrity and transparency expected of owners of deposit-taking institutions; and
  • The cost of weak governance in banking is rarely confined to shareholders.

 That is why governance must remain one of the strongest pillars of Cambodia’s next banking-development phase.

 

Transparency Builds Informed Confidence

There is another mechanism Cambodia should strengthen: public transparency.

Confidence should never depend on customers simply being told that everything is fine.

The strongest confidence is confidence supported by evidence.

Cambodian banks increasingly publish detailed annual reports, audited financial statements and regulatory disclosures.

But comparability remains difficult for ordinary customers:

  • Financial statements are complicated;
  • Capital ratios can be difficult to interpret;
  • NPL definitions require understanding;
  • Liquidity information may be spread across multiple pages;
  • Governance disclosures vary considerably; and
  • Most depositors understandably do not have the time or expertise to analyse hundreds of pages of bank reports.

This is where independent research and comparative benchmarking can assist.

The purpose should not be to replace regulators, auditors or credit rating agencies.

Each has a different role.

Independent bank benchmarking can instead convert complicated information into accessible comparative indicators highlighting strengths, weaknesses and trends so that customers, businesses, investors and other stakeholders can make more informed decisions.

That creates market discipline.

Banks demonstrating stronger governance, capital, liquidity, risk management and transparency should receive recognition for doing so.

Banks with weaker indicators should have an incentive to improve.

This is how benchmarking becomes part of the solution rather than simply another ranking exercise.

Responsible Banking Must Become Measurable

The phrase “responsible banking” is easy to support.

The challenge is determining what responsible banking looks like in practice.

It should be measurable through outcomes:

  • Did the bank maintain credit discipline during periods of rapid economic growth?;
  • Did its NPL ratio remain manageable across the cycle?;
  • Did it provision adequately?;
  • Did it maintain sufficient capital?;
  • Did it preserve liquidity?;
  • Did management react when warning indicators deteriorated?;
  • Did shareholders provide support when required?;
  • Did directors challenge excessive growth?;
  • Did the bank communicate transparently?;
  • Did it treat depositors fairly?; and
  • Did it strengthen its systems after identifying weaknesses?;

Those are not theoretical questions.

They distinguish genuinely resilient institutions from institutions that merely look strong during favourable economic conditions.

 

Responsible banking therefore requires measurable responsibility.

Deposit Protection Should Remain Part of the Roadmap

Cambodia should also continue progressing toward a formal deposit-protection framework.

AMRO has repeatedly identified deposit protection, bank resolution and crisis-management frameworks as important components of Cambodia’s evolving financial safety net.

A well-designed deposit-protection system does not eliminate banking risk. Nor should it encourage customers or institutions to ignore risk.

Instead, it can protect smaller depositors, reduce the incentive for panic withdrawals and provide greater clarity regarding what happens when a financial institution fails.

  • Design matters;
  • Coverage limits matter;
  • Funding matters;
  • Governance matters; and
  • Moral hazard must be controlled.

But as Cambodia’s financial system approaches US$100 billion in assets and digital banking enables deposits to move instantly, the case for strengthening the formal financial safety net becomes increasingly compelling.

Give Regulators Credit for Acting

There is another important perspective that should not be lost.

NBC should be applauded and given the highest credit by Cambodia for its swift and efficient actions against institutions no longer suitable for the regulated banking system

Closing a bank is rarely easy.

  • It creates operational complexity;
  • It creates public concern;
  • It creates legal and financial consequences;
  • It can attract criticism regardless of whether a regulator acts too quickly or too slowly;

Removing weaker institutions while they remain small strengthens protection rather than weaken financial stability.

The longer-term objective, however, should be even better:

Identify deterioration early enough that an institution can recapitalise, restructure, merge, change ownership or correct its deficiencies before liquidation becomes necessary.

Resolution should be available.

Prevention should be preferable.

Risk is inherent in banking.

The objective is therefore not zero risk, zero NPLs and zero bank failures.

The objective is:

  • fewer surprises;
  • earlier intervention;
  • stronger institutions;
  • faster NPL resolution;
  • better depositor protection; and
  • better-informed stakeholders.

That is a realistic definition of resilience.

  

From a US$100 Billion Banking System to a Better Banking System

Cambodia’s banking industry has already demonstrated that it can grow.

The next challenge is demonstrating that the institutional architecture surrounding that growth can become equally sophisticated.

The sector now has an opportunity to turn recent events into an important reform moment.

Five commercial-bank closures should not define Cambodian banking. They should help improve it.

Rising NPLs should not be treated as evidence that the country’s financial system is destined for crisis.

  • They should encourage faster recognition, stronger provisioning, better workouts and more disciplined future lending;
  • International scrutiny should not cause Cambodia to retreat from global financial integration;
  • It should accelerate improvements in governance, AML controls, ownership transparency and institutional credibility;
  • And increased depositor concern should not be answered simply with reassurance; and
  • It should be answered with evidence, transparency and stronger protection mechanisms.

Cambodia has spent decades building its banking system.

The next decade should be about strengthening its quality.

The transition therefore needs to be:

  • from growth to resilience;
  • from reaction to anticipation;
  • from restructuring to resolution;
  • from minimum capital to genuine capital buffers;
  • from confidence based on reassurance to confidence supported by evidence; and ultimately,
  • from hindsight to foresight.

That is how Cambodia can ensure that today’s warning signs become the foundations of tomorrow’s stronger banking system.

Because the most successful banking regulator is not simply the one capable of closing a troubled bank. The most successful banking system is one capable of identifying vulnerabilities early enough that fewer banks ever need to reach that point.

And the most credible banks will increasingly be those able to demonstrate not merely declare that they are financially strong, responsibly governed, adequately capitalised, liquid, transparent and prepared for the next shock.

 

Cambodia does not need another post-mortem.

It needs an early-warning culture.

Responsible banking must be measurable.

And the time to build that system is not after the next banking problem emerges.

It is now!

Disclaimer

This article is prepared for informational purposes only and reflects the independent analytical capabilities of Andersen Consulting Cambodia as a fully accredited credit rating agency and provider of financial services research and ratings under its SuperBankRatings’ product framework. All ratings and assessments are based on information available at the time of analysis and are subject to ongoing surveillance and review. This article represents a general analytical opinion prepared from publicly available information and is intended for discussion and financial-education purposes. It does not constitute a statutory credit rating, financial product advice, an audit, a guarantee of the financial condition of any institution, or a recommendation to deposit with, invest in, lend to or transact with any particular financial institution. Individual bank assessments require substantially more detailed prudential, financial, governance, liquidity, portfolio and supervisory information than is publicly available. This article applauds and supports the NBC for acting swiftly and positively, while recommending that the next evolution must be earlier detection and intervention. It also introduces SuperBankRatings’ naturally as part of the solution through measurable bank-health diagnostics.

Enquiries:

K H Wee-Oon

Chief Research & Rating Officer

Andersen Consulting Cambodia

E: wee-oon.kwanghwee@kh.Andersen.com

Telegram: @KHWeeOon