BCEL Bank, Laos’s financial heartbeat
Since its creation as a commercial lender in 1989, BCEL has been Laos’s foremost lender, owned by the state but a financial and technological innovator, with more retail and corporate customers than any onshore rival.
General managing director Phoukhong Chanthachack
For the past three decades, Banque Pour le Commerce Exterieur Lao (BCEL) has been the financial heartbeat of Laos’s economy. Founded in 1975, the same year as the formation of the Lao People’s Democratic Republic, BCEL officially became a fully fledged commercial lender in 1989. Today, 30 years on, it is the southeast Asian nation’s best-run lender.
BCEL leads in every conceivable metric. It is by some distance the largest onshore lender in Laos, boasting 20 full-service branches, 93 service units, 15 exchange offices, and relationships with more than 100 correspondent banks in Asia and around the world. The country’s leading lender is also its standout innovator. It installed the country’s first ATM, issued the first credit and debit cards, and pioneered internet and mobile banking. In 2018, it rolled out the country’s first cross-border QR payment service, in alliance with Bangkok-based Thanachart Bank.
The bank continues to be a change-maker. General managing director Phoukhong Chanthachack points to the manifold ways in which it supports retail customers, by offering cashless settlement and flexible deposit terms. Onshore businesses, from large state-run enterprises to small, privately owned SMEs, instinctively turn to BCEL for flexible loans disbursed at rates that, more often than not, beat the competition.
BCEL is typically the first port of call for foreign investors keen to put their money to work in an economy that, while small, is growing fast: in its World Economic Outlook, published April 2019, the IMF tipped GDP to expand by 6.7% in 2019 and 6.8% in 2020. With inflation under control, the current account deficit narrowing, and investment pouring in from east Asia, Europe and the US into sectors ranging from power production to consumer goods, output seems set to continue to rise.
Trusted by its business partners around the world, where BCEL goes, others follow. It has blazed a trail onshore, establishing branches in the cities and building BCEL Community Money Express agents in smaller towns to serve the aspirational but financially excluded. In 2010, it became the first domestic firm to sell shares on the Lao Securities Exchange. Despite being 70% owned by the finance ministry, it has slowly opened up to private capital: 20% of BCEL is owned by domestic and foreign investors and 10% owned by COFIBRED (BRED Group in France), the strategic partner bank.
As befits a financial institution that serves shareholders in the private and public realms, BCEL is a complex system of moving parts. It offers invaluable banking services, including simple loans and savings accounts, while providing letters of credit guarantees and foreign exchange services to corporates. It is also a key strategic partner to a government keen to tap new sources of revenue, and to move forward in its quest to become a strong, stable and rated frontier state.
Over the past 20 years, the Vientiane-based lender has worked hard to help boost cross-border commerce between Laos and the wider region. In 1999, it collaborated with Vietnam’s BIDV to form LaoVietBank, with the aim of boosting two-way Lao-Vietnamese trade. Later, in 2010, it joined forces with France’s BRED Bank to create Banque Franco-Lao, with its focus on supporting SMEs and female entrepreneurs, via its joint Banking on Women initiative. Two more new cross-border financial outfits followed: BCEL-KT Securities, in alliance with Thai brokerage KT ZMICO, in 2011; and Lao-China Bank, in concord with Fudian Bank, in 2014.
Its finances, as you would expect from Laos’s leading lender, are in good shape. BCEL posted net interest income of 498 billion Lao kip ($56 million) in the first six months of 2019, up 10.7% year-on-year, with net profit rising 14.8% on annualized basis over the same period, to 232 billion Lao kip ($26.6 million).
Going forward, BCEL’s management knows there is more good work to be done. The lack of a nationwide credit bureau makes the bank’s knowledge of customers, and its wealth of data on them, an invaluable resource. The bank’s social credentials are on display in the valuable work its Community Money Express agent banking system does with the German development agency GIZ. They work together to extend financial products and disburse micro loans to customers via the country’s ‘village banks’, which number in the thousands and are the only link to basic banking services for poorer, rural citizens.
BCEL continues to be the country’s premier financial pioneer and innovator. Future plans, notes general managing director Chanthachack, include providing “online credit requests via our mobile banking applications” – making it easier for customers to ask for and get a loan from BCEL.
Clearly, 30 years in, the bank is just getting started.