Asiamoney best bank awards 2019: Cambodia
Best Domestic Bank: ABA Bank
Best Digital Bank: ABA Bank
Best Bank for Microfinance: ABA Bank
|Askhat Azhikhanov, 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.
Best Corporate and Investment Bank: SBI Royal Securities
|Shuzo Shikata, SBRI Royal Securities|
In its time, SBI Royal Securities has done more for Cambodia’s capital markets than any other bank or firm. It has introduced both equities and corporate bonds to the local market.
The Cambodia Securities Exchange is one of the quietest bourses in southeast Asia, with just five stocks listed. Three of those were sponsored by SBI Royal. The last and largest public offering was Sihanoukville Autonomous Port’s CR108.1 billion ($26.7 million) deal in June 2017, which was sole sponsored by the Japanese-owned securities firm.
Bringing bonds into the fold under the guidance of chief executive Shuzo Shikata, the firm opened Cambodia’s corporate bond market in November 2018 with a CR120 billion, 8.5% three-year issue by microfinance lender Hattha Kaksekar – a trade it spent a year developing.
In August, local lender ABA Bank listed the third bond on the CSX, a CR128 billion, three-year issue, also underwritten by SBI Royal. ABA’s bond pays a 7.75% coupon.
Shikata is a driving force behind the development of Cambodia’s corporate bond market, working with his team on diverse ideas for 2020 including the country’s first social bond. At the same time, the firm continues to work on bringing public offerings to the CSX.
While SBI Royal is a securities firm, it is not like others in the country, which are either small or focus primarily on brokerage. There are six firms with an underwriting licence, but only SBI Royal, Yuanta Securities and Phnom Penh Securities have experience, and SBI Royal has the most by far. Cambodia is still in need of a genuine investment bank, but in the meantime SBI Royal covers most of the services an investment bank would offer.
Best International Bank: CIMB
|Bun Yin, CIMB|
Cambodia has many foreign banks and most of them have just one or two noteworthy qualities. CIMB Cambodia has the whole spectrum.
Overseen by Cambodian chief executive Bun Yin, the bank’s total assets rose 28% to $1.09 billion in 2019 and deposits increased 12% to $785 million. Pre-tax profit climbed 67% to $24 million.
At the same time it has kept a close eye on its $700 million loan book, with a non-performing loan ratio of just 0.18%, minuscule compared with the industry average of 2.2%.
CIMB has begun to embrace financial technology and digitalization. Last year, it launched a number of technological initiatives, including setting up customer-facing touchscreens to collect real-time digital feedback from users, and is working on four technology projects to improve customer convenience. They cover faster payments, data back-up encryption, automated inward cheque clearing and a host of new riel-denominated loan and deposit products introduced in 2018.
CIMB’s all-encompassing business means it has customers from across consumer, commercial, corporate and transaction banking. Its ability to grow in all of these divisions and turn a profit while embracing technology makes CIMB worthy of the best international bank in Cambodia award.
Best bank for SMEs: Campu Bank
|Teh Hong Piow, Campu Bank|
Campu Bank has an important characteristic that small or medium-sized enterprises look for in a bank: reliability. Its reputation as a trustworthy partner is one that its peers can only envy. It earned it partly by choosing its clients carefully. It is more conservative than other financial institutions in Cambodia because it takes its cue from its Malaysian parent, Public Bank.
In nearly 27 years of operations, Campu has continuously reported profits, while keeping a below-average non-performing loan ratio and one of the country’s highest NPL coverage ratios, this year at 0.9% and 194%, respectively.
Under the guidance of chairman Teh Hong Piow, Campu is both conservative and accommodating. Among its products is a ‘special financing package’, which allows SME borrowers to collateralize a loan with a soft title, such as a right to possess land but not own it.
To capture market share the bank uses methods that capitalize on and advance its reputation for reliability. One such approach is its ‘my neighbour, my customer’ campaign, which promotes financial inclusion, financial literacy and word-of-mouth marketing to strengthen its connection to Cambodia’s tens of thousands of neighbourhood micros and SMEs.
Its overarching approach is to generate an additional loan for every loan granted. And following a drive by the country’s central bank it lends in US dollars and riel.
The National Bank of Cambodia’s directive is for all banks to have 10% of their loan portfolio denominated in riel by the end of 2019. Campu was at 12% by September after various promotional campaigns to SMEs and individual business owners, ahead of many of the country’s top banks.
Campu has gone from a one-branch bank in 1992 to 31 branches covering every province and large city. With a $1 billion-plus loan book based on its core SME and retail lending business, the bank reported a $68.6 million pre-tax profit in the last year, its highest ever, which it says is driven by loans growth, low-cost deposits and prudent cost management.
Best bank for CSR: Acleda Bank
While many of the country’s domestic financial institutions are making efforts to be sustainable and develop corporate social responsibility programmes, Acleda Bank, Cambodia’s largest bank, is championing a CSR approach to business on an unparalleled scale and efficiency.
Acleda’s environmental and social sustainability mission measures its impacts in detail; the bank subscribes to international conventions on sustainability and human rights.
Being green is part of its business: from waste-paper usage, energy use and carbon emissions to water consumption, the bank has made improvements since at least 2016, while still growing its operations.
The bank employs a team of five environmental officers to drive and coordinate its green efforts, and it has targeted lending to biogas and solar energy-related businesses.
Acleda also contributes to Cambodian society; it has made gender neutrality a primary goal in hiring and lending. Among its sponsorships is the Women Entrepreneurship Day. And the bank makes regular charitable donations, including to the Kantha Bopha Children’s Hospital in Phnom Penh and to the local