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President & Group Managing Director's Report


Dr. In Channy, President & Group Managing Director of ACLEDA Bank Plc.

Enriching customer experience and strengthening cyber security are at the heart of ACLEDA Bank Plc's focus at present. To achieve solid progress in pursuing these objectives, we will continue to enhance our robust information technology infrastructure by investing in advanced technologies, fortify the Bank's human resource capacities, and expand and improve business processes. Strategically, we are developing a platform to enable licensed partners of all sizes, locally as well as internationally, to join forces in servicing our customers mutually and beyond borders. I believe this will not only benefit our valued customers directly but their own business partners as well, recognizing that they are an important link for extending the Bank's outreach.

Performance in 2019

Competitive Environment

Banks and financial institutions reach out to their customers by means of a substantial branch and office network, while expanding to electronic infrastructure such as ATMs, POSs, and Internet banking facilities. Gradually infrastructure is digitalized with the launch of FinTech products via mobile applications so that businesses can reach their customers more robustly 24 hours a day and from anywhere. ACLEDA Bank has successfully continued to pursue this model aggressively. To remain competitive, it is worth noting that the Bank continues to support its customers' ability to grow together beyond Cambodia via QR Code Cross border payments.

Operational Highlights in 2019

  • Total loans outstanding in 2019 were US$3,881.10 million of which US$735.23 million or 18.94% was lent to agriculture, among many other sectors. In 2018 loans to agricultural were pegged at US$ 646.66 million. By the end of December 2019, the Bank had 438,650 small business loans.
  • Non-performing loans were 1.11%.
  • Savings and deposits were US$4,332.87 million with total accounts numbering 2,620,778.
  • ACLEDA Bank posted a Net Profit after Tax of US$130.86 million.
  • The Bank continued its cost minimizing and risk control efforts to maximize income.
  • FinTech Products integrated ACLEDA Bank Plc.'s electronic banking infrastructure, offering the Bank's customers a range of choices to manage their financial resources.

Retail, Small Business

Small Loans increased by 15.47% over the previous year, with the portfolio expanding by US$269.27 million. Personal Loans increased by 21.93%, or by US$19.90 million. Housing Loans were US$184.10 million of total loans outstanding. This was a decrease of 9.98%, reflecting the long-term loan tenure of up to 10 years, and the Bank's shift in focus to SMEs. Total loans outstanding were US$3,881.10 million at year end.

Deposits grew by 12.96%, an increase of US$497.04 million from the previous year. The retail sector was by far the largest segment of the growth in total deposits, with a significant amount deriving from first time depositors such as employees paid through the Bank's Payroll Service and customers in rural areas where they used ACLEDA Unity ToanChet. Financial products and Services via FinTech solutions contributed to this strong growth. It is encouraging to note that retail savings and deposits totally cover loans outstanding. The total balance of retail savings and deposits is US$4,049.69 million of the total balance of savings and deposits.

The Bank maintains a diversified infrastructure of choices with 313 traditional branches and offices gradually transforming to self-service centers, 683 ATMs and 4,289 POS terminals. Moreover, the digitized ACLEDA Unity ToanChet proved very popular, registering more than 1.3 million active users. ACLEDA Bank savings and deposits balance was US$ 4,332.87 million with total accounts over 2.6 million, and with around 1.3 million debit cards in circulation.

Medium and Corporate Business

In 2019 the amount of loans outstanding in this sector grew by 1.34%, and accounted for 30.92% of total loans outstanding. Cash Management performance has increased strongly through our arrangement with the public sector, in particular the Social Security Fund, government payroll direct deposits, and vehicle stamp tax collections in addition to private sector business entities, especially garment factories. As the custodian of the Social Security Fund, ACLEDA Bank now receives deposits from all provinces and towns. In addition, several new accounts were acquired, the most significant of which were from the expansion of the Bank's ATM network and the ACLEDA Unity ToanChet bill payments for public utilities, as well as via ACLEDA Internet Banking Service. This has had a positive impact on the Bank's local currency cash flow and has enabled ACLEDA Bank to entirely fund its local Khmer Riel currency loan portfolio from deposits. Demand for Payroll Service was particularly strong in 2019 with a number of public sector organizations, and a number of local and international companies and official institutions signing up, which provided excellent opportunities for cross selling of other products.

ACLEDA Bank and its subsidiaries continued to collaborate with long term experienced strategic partners including SMBC, Prudential, and Forte. Representing hundreds of years of combined experience in banking and financial services, these companies assist our mutual customers to manage their financial resources effectively and efficiently, while at the same time these collaborations helped boost revenues and enhance a long-term source of funding for the Bank. These partnerships contributed significantly to the Bank's long term funding, and these joint efforts also provided a useful source of off-balance sheet revenues. Moreover, shared international expertise well serves the Bank's management and staff human resource capacity development.

International Exchange and Partners

Foreign exchange earnings continued to grow and made a valuable contribution to our non-interest income. Based on the Bank's risk management policy, ACLEDA does not trade speculatively or take positions as our FX business is to support our customers' businesses only. This is a low risk and stable source of income, which has grown consistently over time, produced good margins, and built up longstanding relationships with customers.

The Bank's balance sheet has been further strengthened by robust inflows of customer deposits resulting in a healthy loan-to-deposit ratio, which provides a solid platform to support our business growth in selected market operations.

The Bank has contributed to the promotion of the use of Khmer Riel (KHR) by providing local currency loans to customers amounting to more than 13% of its total loan portfolio, exceeding the regulatory requirement of 10%. The Bank has also actively participated in the Liquidity Providing Collateralized Operation (LPCO) to seek further funding support in the local currency.

To support its long-term sources of funding, the Bank has diversified its funding options by maintaining and gradually expanding good relationships with its strategic partners globally, especially in Europe, USA, and Asia.

The Bank has continued to strengthen its relationships with other Financial Institutions, and reviewed its substantial international correspondent's network during the year. At the end of 2019, the Bank had 292 correspondents covering 45 countries. In addition, the Bank has a dominant share in the market for local banks' and microfinance institutions' domestic accounts and provides fund transfer services for them throughout the country.

The Bank has managed to comply with all its internal risk policies, regulatory requirements and other lenders' covenants.

Strategic Priorities for 2020

  1. Continue to develop financial technology (FinTech), Digital Banking-Mobile App to cover regional financial services network to enrich customer self-service.
  2. Develop banking self-service areas infrastructure to serve the public and customers 24/7.
  3. Enhance the capacity of both local and foreign subsidiaries by providing them with a competitive edge.
  4. Digitalize administrative processes and documentation to support digital banking.
  5. Enrich IT System and Security for robust digital functions.
  6. Partner with additional reputable institutions for business growth.
  7. Act as a Custodian and diversify funding from the Cambodia Securities Exchange (CSX).
  8. Center ACLEDA Unity ToanChet as the common means of broader payment in all markets.

The Challenges for 2020

ACLEDA Bank will become a listed company on the Cambodia Securities Exchange. As such, it needs to deal with more regulators and the public at large. However, The Bank's management team, which has an in-depth and established track record, combined with the Banks's long-standing commitment to a culture of transparency, means that these challenges will be dealt with successfully.

Competition is no longer limited to service quality and pricing, but also to more advanced FinTech technology, which has a short-term life cycle requiring individual banks and financial institutions to make regular upgrades and investments. The financial industry is involved with the PSIs since they are licensed by the NBC, and they are actively providing payment services to the banks' as well as MFIs' customers.

The spread of the COVID-19 virus and related fears globally will impact economic growth. While the exact impact on the economy is difficult to predict, this will no doubt prove to be an on-going challenge for the economy over the short term.

The Financial report required to comply with CIFRS effectively applies to the 2019 audited financial report onward. This is the first time that the Bank has not included this in the annual report.

I would like to highlight that ACLEDA Unity ToanChet broadly expands business connections via its module of Public Access Interface to the Bank, licensed MFIs, and Payment service Providers licensed by National Bank of Cambodia. These will directly serve our corporate and individual customers. This concurrently helps the Bank best serve its mutual customers 24-hours a day, 7-days a week. With ToanChet, all application users can manage their businesses efficiently and execute banking transactions from anywhere at any time with reliable built-in security.

To all our customers, my colleagues on the Board of Directors, management and staff, and not least the Royal Government and the National Bank of Cambodia, I offer my sincerest thanks — both for your support in 2019 and in anticipation of a happy and prosperous 2020.


Dr. In Channy
President & Group Managing Director
ACLEDA Bank Plc.
February 28, 2020.

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