BCEL Bank's half year profits larger than expected
BCEL Bank's half year profits larger than expected
BCEL, one of the largest commercial banks in Laos expects to see greater profits this year thanks to its rapid business expansion in the country.
According to a financial statement, BCEL was able to generate a net profit of about 121 billion kip (US$15 million) over the first six months of this year, which represented more than 50 percent of the annual profit target.
BCEL, one of the two companies which are listed on the Lao Securities Exchange expected to make a net profit of about US$23 million this year.
In 2011 BCEL, which holds about 40 percent of the financial market in Laos, made a net profit of about US$18 million.
One of the major incomes for BCEL bank is loan interest payments, according to BCEL KT, one of the stock broking firms in Laos.
In first quarter of this year, the bank's loan portfolio continued accelerating by 13 percent compared the previous quarter's 5,800 billion kip, which the stock analysts expect will enable the company to forward loan growth at around 40 percent year-on-year.
The brokers also expect BCEL's net profit to increase 24 percent year-on-year in 2012 and 44 percent year-on-year in 2013.
BCEL's loan quality improved favourably last year with a non-performing loan ratio of 0.93 percent. This decreased from 2.5 percent in 2010 and resulted in the non performing loan coverage ratio improving from 86 percent in 2010 to 158 percent in 2011.
This year, Lao PDR's central bank has started tightening the credit standard for its banking system by requiring commercial banks to increase provisioning for A grade loans from 0 percent to 1 percent and B grade loans from 0 percent to 3 percent, which should raise BCEL's specific provision by 67 percent in 2012.
This should help reduce the gap in terms of accounting practices, with BCEL needing to gradually tighten its provisioning and non-performing loan reclassification policies in order to comply with international financial standards, according to the broker.
The bank has recently upgraded it customer service capabilities, giving people greater access to banking services by rolling out more ATMs throughout the country. It has also begun issuing Union Cards, which allow card holders to withdraw money at Union Pay ATMs around the world.
The bank has also signed an agreement with Electricite du Laos, making it easier for bank customers to pay their electricity bills through both BCEL ATMs and BCEL's e-banking service.
The main shareholder of BCEL bank is the Lao government, which holds 70 percent of the shares, while Cofibred holds 10 percent, bank staff hold 5 percent and the rest belongs to stock investors.
vientiane times
