ABA Bank
The Cambodian banking industry is saturated with names, but only a few sit in the top ranks, commanding most of the market. ABA Bank is the best among this group, boasting a strong foreign backer, an expanding reach and a digital dominance unparalleled in the sector.
The bank’s financials are impressive, particularly a 65% year-on-year growth in total assets in 2018. After trebling its assets over the last three years, it is the country’s third-largest bank. It nearly doubled its deposits and loan portfolio and reported a $71.8 million net profit for 2018, up 55% year on year.
It was also able to achieve a 28% return on equity, the best among Cambodia’s 43 commercial banks.
At the time of writing, ABA had $4.1 billion in assets, deposits of $3.3 billion and a $2.5 billion loan book.
While ABA is a domestic bank, it has a strong foreign influence. Its senior managers are largely from Kazakhstan and Uzbekistan, including Kazakh chief executive Askhat Azhikhanov. This is a legacy from when a group of central Asian bankers took over in 2009. It was a one-branch bank at the time.
The bank has since been bought by the National Bank of Canada, which completed its full acquisition in October 2019.
ABA has pursued rapid expansion, opening 15 new branches in 2018. That takes its total to 70, with 24 in Phnom Penh and 46 in the provinces. It has also extended business hours at its branches in Phnom Penh. Its 4,200-plus staff served 426,000 customers, almost double the customer base in 2017.
When it comes to lending, the bank’s customer base reflects Cambodia’s SME and micro-business dominated economy.
ABA’s central Asian leadership eschewed consumer lending from the start. The bank has stuck to that, focusing instead on providing loans to businesses contributing to the real economy. As a result, its loan portfolio is more than 90% SMEs, covering a diverse mix of industries, from manufacturing to agriculture and trade to services.
By client segment, the loan book is mainly micro-businesses. It serves the micro sector with specific products including its ‘Simple Loan’, of between $1,000 and $30,000 or the equivalent in riel, which is aimed at owners taking out a loan for the first time or those looking to refinance debt from a different lender. Approvals are made within a day.
ABA embraces digitalization more than any of its local peers. Digital banking is a leading part of its business and is based on its ABA Mobile app. Its e-cash feature, which enables card-less ATM withdrawals, was used 370,000 times in 2018. Other features include ABA Pay, for QR code and cashless payments, and e-commerce payments service PayWay. The bank is also targeting small business owners, with new digital services for invoices.
ABA developed its mobile app in-house and builds products for the platform, but unlike many peers it has opened the app to other financial technology service providers.
ABA continues to add its own features, recently adding a service for international money transfers, as well as a mobile loan feature, while it is also partnering with global payments platforms AliPay and UnionPay to enhance its QR-based payments system.
It has also launched a new corporate internet banking platform for its large international clients such as Coca-Cola and Manulife.
ABA is looking next at monetizing the vast amount of data it collects. In the first nine months of 2019 alone, the bank’s mobile app recorded 30 million transactions amounting to $24 billion.
The bank’s leading position in digital and mobile banking and strong growth across its businesses won it a positive outlook this year from S&P Global Ratings, which gives the bank a single B credit rating.