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 »  Financial Information  »  President & Group Managing Director's Report

President & Group Managing Director's Report

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

"Improving cost efficiency, maximizing benefits and risk mitigation have been the norm within ACLEDA Bank Plc. and these efforts have meshed well with the Bank's overall strategy. They are the nucleus of the sustained development and the strengths of ACLEDA Bank Plc. This has not been a one time effort. The Bank has continuously, and increasingly, year after year addressed unforeseen risks, whether they are systemic, operational, regulatory, or credit-related, amongst many others. We have invested significant and substantial resources into staff capacity building, physical infrastructure and the most modern banking technology, including a state-of-the-art Data Center, so that the Bank is capable to respond to all our stakeholder's needs, especially our valued customers."

Performance in 2017

Competitive Environment

Even with a tightened regulatory environment, Cambodia remained a market of significant interest for investors in banking and financial services, including commercial and specialized banks, deposit taking licensed microfinance, and licensed micro-financial institutions. There was increasing competition in both price and service quality in the FinTech arena due to increased innovation. However ACLEDA Bank Plc. with a multi-optioned financial infrastructure including the largest network of physical branches and offices, our Point of Sales system, an expansive network of ATMs, and the newly developed ACLEDA Unity ToanChet, remains well positioned as the market leader, while additional FinTech developments expand throughout Cambodia.

Operational Highlights in 2017

  • Total loans outstanding in 2017 were US$3,171.99 million of which US$580 million or 18.31% was lent to agriculture, among many other sectors. In 2016 loans to agricultural were pegged at US$ 562.12 million.
  • In 2017 ACLEDA Bank posted a Net Profit after Tax of US$91.68* million. By the end of December 2017, the Bank had 408,766 small business loans.
  • The Bank continued its cost reduction 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 effectively from anywhere/anytime as needed to conduct business transactions with a high level of security.

Retail, Small Business

Small Loans increased by 41.89% and Personal Loans increased by 8.22%. Housing Loans reached 6.58% of total loans outstanding. Deposits grew by 6.51% to US$3,329.66 million. 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 we have opened new offices. The expansion of our mobile phone and Internet banking services contributed to this growth as well. It is encouraging to note that retail savings and deposits cover total loans outstanding of US$3,171.99 million.

It is interesting to note that because of the Bank's diversified electronic infrastructure combined with sophisticated FinTech products and our automated delivery system network, which at the end of 2017 comprised 444 ATMs and 3,691 POS terminals throughout the country with 961,450 debit cards issued, savings and deposits reached US$3,249.95 million.

Medium and Corporate Business

In 2017 the amount of loans outstanding in this sector grew by 19.12%, while the number of medium enterprise customers increased by 6.76%.

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 the private sector business entities. 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 since 2014, the most significant of which were from the extension of ATMs and ACLEDA Unity, and ACLEDA Unity ToanChet bill payments for public utilities, as well as via the ACLEDA Internet Banking Service. This has had a positive impact on our local currency cash flow and has enabled us to fund our Riel loan portfolio entirely from deposits. Demand for Payroll Service was particularly strong in 2017 with a number of public sector organizations, and a number of large local and international companies and official organizations signing up which provided excellent opportunities for cross selling of other products.

Our life insurance distribution agreement with Prudential Assurance contributed significantly to our long term funding, and the scheme itself provided a useful source of off-balance sheet revenues.

Collaboration with Forte for general insurance assisted our mutual customers to manage their financial resources effectively and efficiently, while at the same time this collaboration helped boost revenues as well as enhance a long-term source of funding for the Bank.

Treasury and International

Foreign exchange earnings continued to grow and made a valuable contribution to our Net Fee and Commission Income. As our F/X business is to support our customers' businesses only — the Bank does not trade speculatively or take positions — this is a low risk and stable source of income, which has grown consistently over time, produced good margins, and built up long-standing relationships with moneychangers and currency dealers.

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 growth in selected market operations.

We continued to strengthen and deepen our Financial Institutions relationships and added some substantial new international correspondents to our network during the year. At the end of 2017 we had 357 correspondents covering 51 countries. In addition we have a dominant share in the market for local banks' and microfinance institutions' domestic accounts and provide funds transfer services for them throughout the country.

Strategic Priorities for 2018

  1. Growth with digital services and fee-based income focused on creating best customer experience by becoming simpler and more efficient and delivering sustainable growth.
  2. Maintain a strong capital base with Capital Adequacy Ratios comfortably exceeding regulatory requirements.
  3. Concentrate on developing our "service culture" personal accessibility for our customers, and grow our services as the market expands.
  4. Follow our customers' needs by providing a comprehensive range of financial innovations as they move up the wealth ladder.
  5. To grow, with selected major customers, options for partnering with best specialized/expertise partner(s) to provide syndicate finance.
  6. Focus on expanding value added fee-based services to diversify the income stream and reduce dependence on capital, which includes the government financial services delivery fees.
  7. Continue to invest heavily in R&D to maintain our lead in core banking and financial products/services.
  8. To invest in multi-channel systems.
  9. Build strategic partnerships with reputable counterparts, domestically and internationally, in areas where they are synergistic with the Bank's core business to develop new capabilities and financial services.
  10. Continue to develop all ACLEDA Bank Plc.'s subsidiaries to have a firmer position with a competitive advantage in all markets where they are positioned, and investigate and develop opportunities for further regional expansion when opportunities arise.
  11. Establish a leading position in payments and settlement for the expanding capital market.
  12. Create and develop Syndicated Loan and Project Finance with the objective to grow with selected major customers, with the potential for cooperation, with best specialized/expertise partner(s) to these products served with higher income.
  13. Develop and upgrade Electronic Banking Services (EBS) with Financial Technology Solutions (FinTech) and Branchless in order to expand outreach, increase income efficiency, create cross-selling opportunities, be competitive, and conveniently serve a broader customer base.
  14. Develop and upgrade Digital Banking-Mobile App, ACLEDA Unity ToanChet, allowing two way global access, and enhance the Bank's Biometric, CRM plus new financial products/services to support self-service, applying modern technology, to generate cost efficiency, expand global businesses and customer base, and support subsidiaries, as well as to allow cross-selling opportunities and conveniently serve more customers competitively.

The Challenges for 2018

The regulations on an interest rate cap, the credit risk grading and impairment provisioning, and determination of capital buffer of banks and financial institutions bring both opportunities and challenges for this year and those that follow. They will help expand the loan portfolios in Khmer Riel and have some impact on the relevant revenues, and help risk mitigation for banks and financial institutions. They could help strengthen the capital base to settle any losses which may arise from risks to Institutions; prevent the decrease of capital to that lower than minimum capital reserve requirements; and reduce risk deriving from the relationship between the financial sector and pro-cyclicality, as well as help establish a disciplined lending environment, while paving the way for healthy growth in the business of the Bank in general.

In celebration of the positive year 2017, I would like to introduce our new and most advanced mobile phone banking App, named ACLEDA Unity ToanChet. ToanChet was developed with the purpose to conveniently serve you, your friends and family — 24-hours a day, seven days a week. With ToanChet, you can now manage your business efficiently and execute your banking transactions from anywhere at anytime 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 2017 and in anticipation of a happy and prosperous 2018.


Dr. IN Channy
President & Group Managing Director
ACLEDA Bank Plc
February 28, 2018.

* The NPAT of the Group in 2017 was $92.53M of which attributable NPAT to the shareholders of ACLEDA Bank Plc. was $91.68M and attributable NPAT to minority interest was $0.84M.

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