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ACLEDA Bank Plc.

 »  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.

Maximizing service quality by means of digitalizing financial services reaching customers in all corners of the country while focusing on risk mitigation is the Bank's top priority. ACLEDA Bank has seen that household income levels continue to increase benefiting from sustained Cambodian economic growth, and stimulated strong demand for cash management services from both public and private sectors, including individual accounts. To support its valued customers with long term and sustainable business growth, ACLEDA Bank centralized its focus on servicing its core business by means of customer friendly FinTech products and by promoting self-services as an integral part of the banking platform. These have established secure and convenient options for the Bank's valued customers so that they can both mitigate risks and maximize their return on investment.

Performance in 2018

Competitive Environment

Cambodia is a small country among many other small countries in the world, but it's different from others as it has attracted many investors in banking and financial services. They invested in commercial and specialized banks, deposit taking licensed microfinance, and licensed micro-financial institutions. There has been increasing competition in both price and service quality. Furthermore, with new bank technologies available, banking and financial institutions innovatively invested in FinTech, which can increase competition both in service quality and outreach. Thanks to this innovative know-how, our mutual customers benefitted since ACLEDA Bank always supports its customers ability to grow together with the Bank.

Operational Highlights in 2018

  • Total loans outstanding in 2018 were US$3,627.56 million of which US$646.66 million or 17.83% was lent to agriculture, among many other sectors. In 2017 loans to agriculture were pegged at US$580.80 million. By the end of December 2018, the Bank had 406,666 small business loans.
  • Non performing loans were 1.73%.
  • Savings and deposits were US$3,835.83 million with total accounts of 2,347,272.
  • ACLEDA Bank posted a Net Profit After Tax of US$84 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 30.98% and Personal Loans increased by 26.83%. Housing Loans reached 5.64% of total loans outstanding.

Deposits grew by 15.20% to US$3,835.83 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 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 of US$3,627.56 million.

The Bank maintains a diversified infrastructure of choices with 262 traditional branches and offices, 527 ATMs and 4,222 POS terminals. Moreover, the digitized ACLEDA Unity ToanChet proved very popular, registering nearly one million active users. ACLEDA Bank savings and deposits balance was US$ 3,753.40 million with total accounts over 2 million, and with 1.12 million debit cards issued.

Medium and Corporate Business

In 2018 the amount of loans outstanding in this sector grew by 1.09%, and loans outstanding in this sector accounted for 32.64% 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 introduction of a new application, which is 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 2018 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 while enhancing a long-term source of funding for the Bank. These partnerships significantly contributed to the Bank's long term funding, and the joint efforts also provided a useful source of off-balance sheet revenues.

Treasury and International

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 by actively participating in the Liquidity Providing Collateralized Operation (LPCO), and to support its funding needs in local currency.

Furthermore, to support its long-term sources of funding, the Bank has diversified its funding options by maintaining good relationships with its strategic partners globally.

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 2018 we had 315 correspondents covering 45 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 2019

  1. Continue Digital Bank Development to improve customers' experiences for self-service and satisfaction.
  2. Enhance human resource talent, multi-skills upgrading, and promote a culture for digital banking.
  3. Remodel physical branches and offices to fit with digital banking requirements.
  4. Formulation of digital files/documentation including a digital platform for financial products and services.
  5. Enhance information technology, and the security systems for digital banking for customers and the Bank's protection.
  6. Continuous enhancement of FinTech development for consumer friendly use, gradually replacing traditional banking in the long run.
  7. Partnership with respected institutions for business growth.
  8. Custodian and corporate bond issuance.
  9. Emphasize ACLEDA Unity ToanChet as the common means of broader payment via API platform for mutual benefits nationwide and in the region.
  10. Ensure ACLEDA Bank Plc.'s subsidiaries form an integral part of digital banking and its services.

The Outlook for 2019

Certain regulations on credit risk grading and impairment provisioning, and a determination on capital buffers for banks and financial institutions will strengthen the industry's financial health this year and for those that follow. These will help risk mitigation for banks and financial institutions, and they will help improve loan asset quality. They could also 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, they will help in establishing a disciplined lending environment, while paving the way for healthy growth in the business of the Bank in general.

I would like to highlight ACLEDA Unity ToanChet that broadly expands business connections via its module of Public Access Interface to all those payment solution companies approved by our regulator, the National Bank of Cambodia, while directly serving our corporate and individual customers. This helps the Bank best serve our mutual customers 24-hours a day, 7-days a week. With ToanChet, everyone 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 2018 and in anticipation of a happy and prosperous 2019.

Dr. In Channy
President & Group Managing Director
ACLEDA Bank Plc.
February 28, 2019.

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