In 2025, Cambodia’s economy faced two major headwinds, including: imposition of reciprocal tariff by the United States, and the escalating border tensions with Thailand, which resulted in two consecutive armed clashes.

Despite these pressures, the U.S. reciprocal tariff did not significantly harm Cambodia’s economic performance. In contrast, Thailand’s unilateral closure of land border crossings, coupled with ongoing tensions, had a substantial impact on economic activity. These effects were particularly evident in ‘Thailand+1’ manufacturing, cross-border tourism, agricultural exports, private remittances, transportation, and the financial sector.

Concurrently, several notable trends emerged, including stronger support for and increased consumption of domestic products, improvements in local production capacity, shifts in transportation routes and modes, and greater diversification of value chains away from reliance on the Thai market.

Meanwhile, the financial and banking sectors remained relatively strong and resilient, despite persistently low credit growth and a gradual increase in non-performing loans (NPL). In 2025, credit provided by the banking system expanded by only 5.4%, while NPL ratios remained elevated at 8.3% for deposit-taking banking and financial institutions and 13.5% for non-deposit-taking institutions.

Nevertheless, capital adequacy and liquidity positions remained robust. The capital adequacy ratio stood at 22% for deposit-taking institutions and 31.2% for non-deposit-taking institutions, both well above the regulatory minimum of 15%. Liquidity levels were also strong, with a liquidity coverage ratio of 179.3% for deposit-taking institutions, significantly exceeding the regulatory requirement of 100%.

Amid these less favorable and uncertain economic and financial conditions, the Small and Medium Enterprise Bank of Cambodia (SME Bank), as a policy bank, continued to play an active role in providing credit to small and medium enterprises (SMEs), particularly in priority sectors aligned with key national policies. These include the Pentagonal Strategy Phase I, Program to Promote Competitiveness, Enhance Diversification, and Strengthen Resilience for Economic Growth in a Highly Uncertain Global Environment of the Royal government of the 7th Legislature of the National Assembly; as well as the Program to Promote and Improve the Business and Investment Climate in Cambodia (2025–2028) and other related policy frameworks.

As of end-2025, the SME Bank’s total outstanding loan portfolio reached USD 230 million, of which approximately USD 165 million comprised direct lending. These loans supported a total of 2,850 enterprises, with women entrepreneurs accounting for 29% of beneficiaries.

On behalf of the Board of Directors, I am pleased to observe the continued growth of SMEs, particularly in priority sectors, supported by the SME Bank’s financing in recent years. This progress reflects the sound and effective policy direction of the Royal Government, as well as the collective efforts of all stakeholders—especially SMEs—in strengthening the resilience and inclusiveness of Cambodia’s economy.

Finally, on behalf of the Board of Directors, management, and staff of the SME Bank, we reaffirm our commitment to further enhancing our efforts to meet the evolving needs and expectations of our customers. We will continue to improve the effectiveness of credit provision and expand access to finance for SMEs across Cambodia.