ABA report robust performance
ABA report robust performance
Advanced Bank of Asia Ltd (ABA Bank), one of Cambodia’s most prominent financial institutions, reported a robust business performance last year despite a slowdown in the industry caused by economic turmoil affecting the macroeconomy.
The bank’s financial audit, released on March 26, showed that its outstanding loans reached $7.772 billion by the end of 2023, a 17% increase from $6.448 billion at the end 2022. Total deposits rose to $9.232 billion, up 25.5% from $7.353 billion in 2022.
Khim Samborothana, public relations manager at ABA, told The Post that despite the slowdown in business activities, the bank has continued to disburse loans to support the sustainability of businesses, particularly micro, small and medium enterprises (MSMEs).
“ABA Bank has always focused on supporting customers across all sectors, from small business loans to commercial and corporate loans. We have dedicated teams managing each segment. The major contribution to our growth comes from MSMEs, the backbone of the Cambodian economy,” he explained.
Samborothana emphasised the bank’s commitment to providing competitive interest rates, stating that their MSME portfolio accounts for about 80% of its total loan book.
“Our credit assessment criteria and policies are always upheld. In challenging times, we are more vigilant in granting loans while offering suitable credit solutions to support the economy,” he noted.
“Beyond lending to new customers for business expansion and diversification, we also provide favourable refinancing terms, including competitive interest rates. This strategy helps us grow our loan book,” he added.
The bank also reported a total comprehensive income for the year of over $276 million, up 5% from over $262 million in 2022. Total fixed assets reached $11.5 billion in 2023, an increase from $9 billion in 2022.
Anthony Galliano, group CEO of Cambodian Investment Management Holding, told The Post that consumers are reducing their spending due to higher inflation and resulting higher interest rates.
“This is reflected in decreased spending on large, long-term purchases such as properties, cars and major durable goods. Business investment is also declining due to tighter and more expensive credit,” he stated.
Gilliano said the real estate market in Cambodia experienced a significant decline in 2023, with prices falling by 20-30% or more. The downturn coincided with a considerable decrease in new car imports and a reduction in retail sales.
“Lowering interest rates will reduce borrowing costs, providing relief to stressed borrowers and helping to alleviate non-performing loans [NPLs]. Credit policy at financial institutions is expected to soften, which should spur investment and spending,” he explained.
He also mentioned that the current issue with NPLs is under control, thanks to the National Bank of Cambodia (NBC) and the banking sector’s prudent management through the peak of the US interest rate hike cycle.
Gilliano anticipates interest rate reductions by mid-year, assuming no geopolitical crises arise.
“This is an election year in the US. Historically, over the last 17 election years, rates fell less than 30% of the time [5 out of 17], but it is expected they will fall this year,” he added.
According to the NBC, as of December 2023 Cambodia had 58 commercial and nine specialised banks and 87 microfinance institutions (MFIs). Credit growth reached $57.6 billion in 2023, marking a modest increase of 4.8% from the previous year.
Loan distribution showed variable growth across sectors: the hotel and restaurant sector saw a slight increase of 0.6%, wholesale sector loans grew by 4.8%, home purchase loans increased by 6.4%, real estate surged by 16.9% and construction lending rose by 13.9%.
The central bank also noted that the NPL rate in the banking and microfinance sectors stood at 5.4% and 6.7%, respectively. Outstanding deposits increased by 13.1% to $47.9 billion last year, with assets in the banking system reaching $84.3 billion, representing a year-on-year growth of 8.6%.
