Industry Predictions and Forecasts for 2014

The challenges facing the mobile operators in Cambodia are numerous. The market still needs to consolidate further. There are still too many mobile operators for the size of the market, and the confusion surrounding investment and pricing issues, which affect both customers and the mobile companies, needs to be addressed.

The telecommunications regulator will be key to ensure future growth and that the competitive nature of the market remains. It needs to lead and direct the market in a way which stimulates demand, whilst at the same time creating a fair and open market for both end users in terms of clarity of pricing, and as a result, give the mobile networks the confidence in terms of commitment to future investment.
The biggest growth will be from the rise in consumers utilising data. More and more people continue to access data through their mobile device and transact through their phone.

Song Saran, AMRU Rice (Cambodia) CEO. PHOTOSUPPLIED

Song Saran, AMRU Rice (Cambodia) CEO
WE EXPECT that the quantity of Cambodia’s rice exports will reach around 650,000 tonnes in 2014, closer to the government’s goal of 1 million tonnes in 2015.
Cambodia still has potential to expand the market in Europe, but exporters are also trying to go to emerging markets in Asia and West Africa to maintain sustainable growth.
We foresee that in 2014, the government of Cambodia will be more responsible for reducing unofficial payments than past years. The government is providing easier export procedures and facilitating the lower costs of transporting goods, which is a significant improvement to better compete with neighboring countries.

World Bank on loans, polls, ASEAN

The World Bank announced recently that it was preparing a new two-year interim strategy for Cambodia. What does this mean?

We have begun a process of engagement. The next step is that we will launch consultations with all stakeholders in Cambodia – all key stakeholders – in government as well as in civil society, development, the private sector and academia. We hope this is going to start early next year, and after that we will look at what comes out of these consultations. We will incorporate them into an interim strategy note, which is a tool that the World Bank uses for engagement with countries such as Cambodia. That will be put forward to the board of executive directors for consideration in due course when it is ready.

Banking most transparent industry in the Kingdom

The Deputy Director General for banking supervision at the National Bank of Cambodia says the banking industry is the most transparent of all the industries in Cambodia.

The NBC’s Chea Serey, who has participated in the evolution of Cambodia’s banking system since 1999, says she’s proud of that transparency because the stewardship of the monetary system is part of the public trust.

“This is the money of the general public and it is our money, yours and mine” Chea Serey in an interview on Wednesday at NBC headquarters on Norodom Boulevard.

 “All of our families and friends deposit money in the banks. It is our strong interest to make sure the banks are playing safe. And banks have the obligation to be transparent to the general public.

In fact you can walk into any bank and even if you don’t have an account there, they are required to provide you with their annual audited report,” she said.

The transparency required of all banks operating in Cambodia as mandated by the NBC means it is difficult for illegal activity to take place.

“When all your numbers are audited, you can’t embezzle. NBC is also audited by an external auditor as well. All banks have to justify where this money’s coming from and where it is going to,” she said.

Born in Phnom Penh in 1981, she attended Batuk School until the sixth grade and then carried on her education in France for middle and high school and finally Singapore at the French International School.

 Chea Serey joined the NBC in 1999 following her graduation from Victoria University in Wellington, New Zealand. In 2002, she joined the NBC’s banking supervision department and has risen through the ranks since then.

Chea Serey’s banking supervision department employs more than 100 people.

NBC is an independent regulatory and supervisory organisation, not under any ministry.

She remembers back in 2000 when she first joined, NBC ordered the liquidation of 17 banks that were unable to meet the minimum requirement of $13 million in paid-up capital.

“We closed them down,” she said. “We can close down banks if they don’t comply with our regulations and it is also in our power to change the management of a bank if they are not doing their job.

We have the right to approve or disapprove their members of the board,” she said.

Today, the minimum requirement is $37 million in paid up capital, but even with that amount of money, being a bank in Cambodia is regarded as a privilege.

“Banking is not like any other business. That’s why they are strictly regulated.”

More than 1,200 people are employed by NBC and many of them women, a unique and arguably beneficial feature of Cambodia’s financial landscape.

 She says it is amusing when all-male delegations arrive from the World Bank or IMF and they are met with colourfully dressed Cambodian women on the opposite side of the room.

When she started work at the NBC, there were 16 banks and now there are 38, seven or which are specialised banks and 32 commercial banks.

“Those are mostly foreign banks, and I think it is a good sign. When a country is able to attract more banks says something about the country’s potential.”

Chea Serey is acutely aware that political stability of paramount importance for any financial system.

“You can talk about any other factor, but if you don’t have political stability nobody will come. You have to have predictability if not certainty when you do business by investing in a country.

Therefore when you see investors coming in, it is a good sign that they trust in us and that they would also bring along a lot of capital. If you consider one bank bringing in $50 million, you do the math, that’s a lot of money,” she said.

She cited a study by the World Bank that showed a strong correlation between access to finance and economic growth. That’s why she’s happy so many banks are coming to Cambodia. Yet, she is watchful of competition in the marketplace and what that means for the financial system, which can be good and bad at the same time.

“Banks coming in provide finance and create competition which lowers interest rates. Interest rates on loans have come down if you read our annual reports from 16 per cent to 10 to 12 per cent.

Yet at the same time, if too much competition is injected into the marketplace, it can be detrimental for the whole financial system,” she said.

“Banks need to make a profit. If the competition is too fast and too stiff it can also be bad. If your profit is compromised, you may curtail development.NBC is making sure that competition is fair and doesn’t dampen the development and compromise the stability.

Another issue for the NBC is the dollarization of the economy, which Chea Serey explains was a consequence of Cambodia coming out of post-conflict poverty and the UNTAC period.

“People tended to not trust the local currency and we saw the greenback coming in when the laws and regulations were not so strict, so it just happened and we’re stuck there, and it is difficult to reverse the trend.”

Generally people use another currency is because they don’t trust domestic currency because inflation rates are too high – and today in Cambodia, the inflation rate is very low compared to other parts of the world.

“Our inflation rate is very low, this year only 1 per cent year on year, and the exchange rate is very stable, about 4000 Riel per dollar during the past 15 years. This is a good ground for people to save in local currency”

She said that NBC has developed a draft national strategy to promote the use of local currency.

“Our intention is to have all the price quoted in Riel, though customers can have the choice to pay in Riel or USD for a transition period.” she said. “We will have a public consultation, consultation among the ministries and hopefully the government will adopt it we hope before the end of this year. De-dollarization is very critical now.”

Chea Serey says Cambodia needs to have the ability and the tools to set interest rates.

“We need to be able to use our local currency because it shows our independence and shows our sovereignty.”

As for the future, Chea Serey approaches it with cautious optimism. “I see a lot of potential in the banking system. I see development coming and potential in contributing more to the economy, more to poverty reduction and banks are starting to provide mortgage loans. Newly married Cambodians are getting loans for houses. Microfinance institutions are providing loans for motorcycles and appliances.”

She said that while rapid growth is good, there are mechanisms in place to “put on the brakes” if the economy starts to get overheated.

“We are moving too fast, we can use tools to put on the brakes. At the moment we are watching very cautiously on the speedometre and it is going okay. We need to see if the road is conducive to that speed. If the bank is going too fast and the economy is not there, it’s a problem. If the economy can absorb it, we will be okay. We look at road conditions and the speedometre, and we watch for any hazards, warning sign along the road.”

Some of the recent work of the NBC includes the development of the “Interbank Market” by the third quarter of this year which enables banks to use the NBC’s negotiable certificates of deposit.

Banks will be able to use the Interbank Market for their liquidity management, she said.

Source: http://www.phnompenhpost.com/special-reports/banking-most-transparent-industry-kingdom

Maybank rated13th strongest bank in the world by Bloomberg

Maybank was ranked number 13 in Bloomberg Markets Magazine’s third annual ranking of “The World’s Strongest Banks” in the June, 2013, issue.

The banks were ranked based on several ratios including capital to risk-weighted assets, non-performing assets to total assets, loan-loss reserves to non-performing assets and costs to revenue.

Here in Cambodia, Maybank’s CEO Lee Tien Poh was pleased to hear the news. In Cambodia for over a year now, Lee previously held various portfolios at Maybank’s International Division and has been the Head of Overseas Operations, Head of Strategy & Business Development and Head of International Strategy & Operations, with Cambodia as one of his oversight responsibilities even before he was appointed as CEO just over a year ago.

Maybank Group, which employs 47,000 people, is Malaysia’s largest in terms of total assets with more than $162 billion and $25 billion in market capitalisation. A public listed company, it is also the largest company in Malaysia and the major shareholder is Permodalan Nasional Berhad, the investment arm of the Malaysian government.

Maybank has been operating in Cambodia for two decades now, and will be celebrating its 20th anniversary this year.

“It all started in 1993 with only one branch in Phnom Penh,” Lee said.

“Back then, our business model was to support Singapore and Malaysia businessmen. In 2007, we changed our business model as we decided to adopt a long haul strategy to also serve the local community and started to expand our network.”

From 2008 to 2011, Maybank added 10 more branches and by 2012, had a total of 12 branches.

“By the end of 2015, we are projecting to operate more than 20 branches, with 80 per cent of them in Phnom Penh and 20 per cent throughout Cambodia,”

At the moment, the eight branches in Phnom Penh are complemented by four outside, with one each in Siem Reap, Battambang, Kampong Cham and Sihanoukville.

Maybank has also expanded its ATM network with three offsite ATMs, one at the Bayon Supermarket, one at the Phnom Penh International Airport and one at the Siem Reap International Airport.

Lee says Maybank intends to have a total of 40 ATMs in Cambodia, onsite and stand alone by 2015.

“These are regionally linked ATMs which means our customers can transact at Maybank ATMs in various regional locations including Malaysia, Singapore, the Philippines, Brunei, Vietnam as well as Papua New Guinea at no extra cost.

The bank is set to further entrench its presence in Cambodia, expanding its reach to serve its customers nationwide over the next few years. Following local incorporation of its operations in Cambodia last year, it is now in the midst of building its capability and introducing new business channels. Its total staff strength is expected to reach 300 by end of this year. In addition, the bank launched its internet banking portal M2U last December 2012 and has set up various new departments to support its growth for example, a credit and risk management department.

Lee says there are signs in the marketplace that the demand for consumer banking products and services are on the rise because of an emerging middle class segment.

“People now have more disposable income which is in tandem with the country’s strong economic growth. There are a lot of development plans in the pipeline, including shopping malls for the middle income families. For convenience, people from this income group will need credit cards and this is where the usage of credit cards will pick up.”

Lee says this growing segment of young working adults will need housing loans, transaction banking services, ATMs and children’s accounts.

He also sees growth coming specifically from sectors like agriculture, education and medical services. It is the country’s agenda to see these productive sectors grow especially agriculture where the focus is on the higher value chain.

“Efforts are being directed to manufacture finished food products from the produce of the land, for example noodles and rice crackers from rice. This is to ensure that value is added within the country. The other important growth sector is infrastructure development, the improvement of roads, highways and railway lines. Generally, at Maybank, we support the productive growth sectors of the country,” Lee said.

Maybank now offers consumer and business loans. Lee says that granting trade financing facility to support local businessmen is also among Maybank’s agenda.

As at end December 2012, Maybank Cambodia’s loan portfolio surpassed the US$200 million mark and its growth outpaced that of the banking industry.

“We deal in US dollars at the moment, and we are already having an initiative to offer Khmer Riel accounts,” he said.

Back when he was overseeing the Cambodia operations from Kuala Lumpur in 2008, Lee saw a need for local banking talents to support the expanding growth there.

“I was initially puzzled why we couldn’t attract local talents. The market probably at that time did not know us well and felt we were not expanding our operations aggressively.”

Since then, Lee has headed an effort to hire talented people who have more than five years experience in banking and let the word of mouth spread around that Maybank has changed its business direction and expanding aggressively.

“We hired some key talents and this started to change people’s perception of Maybank. Since then we received overwhelming requests from people wanting to join us. There are many young Cambodians who were educated overseas, and to this group it is not so much about compensation and benefits but our compelling vision and mission and how they can grow with us. They are young and they want to make progress,” he added.

One of the key differentiators for Lee in a market of more than 32 commercial banks is Maybank’s mission of humanising financial services in Cambodia. Humanising would mean providing people with convenient access to financing with fair terms and pricing, advising customers based on their needs and being in the heart of the community they operate.

“In order to illustrate being in the heart of the community, apart from been a socially responsible corporate citizen, when we develop products and services we think of customers needs first and that the products and services will bring value to them. The profit element is the consequence of our effort to serve the community.”

Maybank Cambodia’s vision, according to Lee is to be the first-choice financial services provider in the country.

“First choice would mean whenever an existing and potential customers look for banking products and services, Maybank is a first choice as we walk the talk on our mission. We treasure long term business relationships and promote a win-win situation for us and the customers.

“It is common to hear people say that the customer is number one. We always tell the customer that we need to win together in order to sustain our relationship. When we share this with many of our customers, they firmly acknowledge it and confirm that we are the bank they want to deal with in the long term,” Lee said.

Source:http://www.phnompenhpost.com/special-reports/maybank-rated13th-strongest-bank-world-bloomberg

Canadia Bank CEO articulates strategy of ‘truly local’expansion

Michael Lor was appointed the CEO of Canadia Bank Plc, Cambodia, in July 2011. In leading the Bank’s senior management team, he is responsible to key areas of competitive business transformation including business expansion, process enhancements and optimisation, customer experience, risk management, corporate governance and complaints and leadership development.
Lor sat down with the Post’s Moeun Nhean for an interview.

Our readers want to understand Canadia Bank’s secret for success. Can you give us an overview of Cambodia’s banking industry today where 35 banks serve a population of more than 14 million people?

Canadia Bank is leveraging our strong pedigree and reliable history to transform and build a comprehensive financial services provider. For over 20 years the bank has grown steadily and expects continued steady and sustainable growth for years to come. Equal importance is placed on growing revenue and profits as well as on strong liquidity and capital position.

Canadia Bank recognises that to remain the leading bank in Cambodia, it is imperative that the bank respond appropriately and decisively to new market conditions and realities. Much of this has entailed leveraging our strong brand and experienced management to embark on ambitions but realistic goals. We devote great attention and resources to ensure that we streamline operations and become more efficient in how we conduct business with and for our customers.

Today, Canadia Bank remains the safest bank in Cambodia. Local and global customers and banking partners are assured that Canadia Bank balances growth aspirations with a strong and stable balance sheet.

Despite significant growth ratios, we have maintained our loans to deposit ratio conservatively at 69 per cent and our regulatory liquidity ratio at 17.3 per cent. Our total capital adequacy radio remains among the highest in the industry at 21 per cent and our solid total shareholder’s equity position of US $204 million, which is comfortably above the minimum regulatory requirement, augurs well for the continued business expansion of Canadia Bank in the near future.

Canadia Bank is truly a local Cambodian Bank with its growth, culture and existence completely entwined with the Cambodian people and economy; simply put,” we are here to stay”.

How many branch offices does Canadian Bank have nationwide?
By the middle of this year our distribution network will comprise 48 branches and more than 80 ATMS located nationwide across Cambodia. Our aspiration is to be in every single province where our customers are located. Very shortly, we would also be announcing the launch of our internet banking services for both our individual and corporate customers.

What is Canadia Bank’s recent financial performance?
Canadia Bank Plc reported financial performance for fiscal year ending 31 December 2012, with growth of total deposits by 22 per cent to US$1.28 billion, and also grew loans book by almost 20 per cent to US$880 million. Amidst very competitive environment, Canadia Bank grew loan its portfolio in a disciplined manner placing priority on credit quality. With improved efficiency, total operating income jumped more than 35 per cent compared to 2011, to reach US$70 million. The Bank’s total assets continue its upward path and grew by 23 per cent to reach almost US$1.56 billion.

The year 2012 resulted in impressive financial gains and standing. Our total income increased by 35 per cent. A total of $70 million, and driven by net interest income, accounting for 52 per cent, and net fee income, accounting for 25 per cent; Our cost to income ratio improved by seven per cent; Thanks to effective action on delinquent loans, NPL ratio improved to 4.5 per cent as compared to 5.3 per cent prior year; Our solvency ratio continues to be solid, which at 17.3 per cent we are above NBC’s solvency requirement; Our return on equity increased to almost 19 per cent, which is higher than target, and also higher than our prior two years; During 2012 net profit for Canadia Bank grew by 63 per cent as compared to 2011l.

What is Canadia Bank’s recipe for success?
Canadia Bank is building a strong and resilient organisation; with sustainable business franchises and a long term view, and we are well positioned and prepared for competition.

In keeping with a history of disciplined growth, the Bank will continue to grow and strengthen existing core business line and grow its core commercial banking business. In due course we will also announce the consummation of our respective partnerships with two significant regional partners with strong reputations and brands, and standing in their respective markets, to start two new business franchises, which will transform Canadia Bank into a Universal Banking Group; capable of delivering a complete range of financial services from commercial banking, microfinance, life and general assurance, and investment banking to our existing and potential customers. Strategically, Canadia Bank will become a clearly diversified and successful Cambodian financial institution, able to stand strong and tall amongst the regional banks within ASEAN.

Meanwhile, we also continue to receive requests and invitations from large and established financial institutions with strong global presence expressing their keen interest to partner with Canadia Bank and to partner their respective customers’ intentions to invest into Cambodia.

These recent developments point to and provide clear indication of strong growth, and continued financial strength and leadership Canadia Bank’s reputation and standing amount financial institutions globally is a direct result of our disciplined approach to growth, financial soundness and fidelity to our customers, shareholders and employees.

Having built a strong and successful banking franchise in Cambodia, we have now, a clear and logical aspiration to grow our franchise into the region. We are presently evaluating an opportunity to enter a neighboring country, partnering with a strong and establish institution in the region and we hope to be able to make an announcement within the next quarter.

In addition, we are also watching the exiting developments in Myanmar as well as in China with a keen interest.

Source: http://www.phnompenhpost.com/special-reports/canadia-bank-ceo-articulates-strategy-%E2%80%98truly-local%E2%80%99expansion

ACLEDA CEO helps Myanmar create microfinance association

Following a trip to Yangon to attend a microfinance conference sponsored by the Myanmar government and UNDP, ACLEDA Bank CEO In Channy was happy to learn that his suggestion to set up a microfinance association had been taken up a few days later in the capital city of Naypyidaw.

Attending a conference sponsored by the Myanmar Ministry of Finance and the UNDP on May 9 and 10 earlier this month called Emerging Microfinance Sector in Myanmar, Regional Lessons on Selected Issues, In Channy suggested that in order to have good regulation in Myanmar, they could open direct dialogue between the public and the private sector, like Cambodia had done.

“I said they should form an association of microfinance so they could bring the issues to their counterparts,” In Channy said. “The idea is that Cambodia has good regulation on microfinance, because NBC opened direct dialogue between public and private sector, so we can talk and debate.”

After obtaining a microfinance license for Myanmar in February, ACLEDA Bank now has 448 micro business customers and US$57,000 equivalent in outstanding loans, with 338 accounts and a deposit balance of $16,000 in savings, according to In Channy.

The Myanmar office of ACLEDA Microfinance employs 45 people, including 35 Myanmar staff and 10 Cambodians.

“Next month we plan to send 20 people from Myanmar to train in Cambodia. We will do a six week training, with three weeks in the field,” he said.

There are 142 licensed microfinance enterprises licensed in Myanmar which are local, and two foreign: one ACLEDA and the other Aeon Microfinance.

The Myanmar Microfinance Supervision Enterprise (MMSE) operates under Myanmar’s Ministry of Finance and Revenue which oversees the Central Bank, which in turn regulates commercial banks. MMSE is also under the same ministry, but in a different department.

In Channy sat down for an interview last week, having just returned from his three-day trip to Myanmar.

“My suggestion for microfinance in Myanmar was that to have good regulation we should have direct dialogue with private sector, and I said you should form an association of microfinance, and they can bring issues to their counterparts,” Channy said.

Within Cambodia, In Channy says ACLEDA Bank has grown into the position of market leader because of listening carefully to customers and implementing their suggestions when possible.

“ACLEDA is the largest because we listen to our customers. The customers have provided good suggestions and we care about them and focus on what they need. They advise us to have more financial products, and we introduce new products and services based on customer needs,” he said.

In 2000, ACLEDA had 14 branches and has since expanded to 238.

“The customers asked us to expand to the district level and some districts are remote, so we needed more branches at the commune level. Then we added ATM machines that function 24 hours so people can access their accounts on a daily basis,” In Channy said.

The next service introduced was ACLEDA Unity whereby account holders could use their mobile phones from home to perform funds transfers, check balances, pay suppliers and bills.

“This is the product of listening to the customer and implementing it. In our case we listen, especially if the customer suggests it. We know our customers are working with other banks, and they have ideas and experiences, so they come to us and ask for something. If they can do many things with one bank, rather than deal with more banks, it saves them time.” There are some suggestions, however, that are not accepted and ACLEDA policy is to offer an explanation.

“Listening to the customer and following the suggestion is key to success. What we can accept we accept, what we cannot, we explain why. Our service is quick, convenient and secure. Time is money for us and the customer understands that,” In Channy said.

In Channy said ACLEDA would launch internet banking before the end of the year. Also in the works are VISA credit cards which the bank will begin to issue in the coming weeks.

“Currently we have VISA debit card, but customers want to go international and it is more convenient to use the VISA credit card.”

The strategy is to issue the VISA credit cards to ACLEDA staff first, so they can understand the whole process and then do the public launch.

“At the launching we will issue VISA credit cards to about 300 of our customers.”

In Channy said ACLEDA had injected additional paid up capital of $72.5 million earmarked to finance growth expansion.

“This is to make our ATMs able to accept cash deposits and do inter-account transfers from the ATM machines. The idea is that we want electronic infrastructure to substitute the physical branches especially on public holidays. We have increased the capital to finance our growth.”

ACLEDA has $1.6 billion in deposits, 12.5 per cent of which is foreign currencies reserve which can’t be touched.

“The more you increase your savings, it can help on the liquidity side, however you need to increase your paid up capital to improve your solvency so you can grow.

“We are doing a lot to finance our growth domestically and internationally in Laos and Myanmar,” In Channy said. “We have expanded our ATM machines to a total of 162 and we will increase that number to 220 by the end of the year.”

He’s pleased that the 220 ACLEDA ATM machines will outnumber the total 196 districts of Cambodia.

Also expanding are ACLEDA’s Point of Sale (POS) terminals, which now number 900 and will expand to 1,000 by the end of the year.

“In our long term plan we want to have 8,000 POS terminals,” In Channy said.

In Laos, ACLEDA now has 700 people, 32 branches and offices, with an expansion plan for an additional 10 branches this year, bringing the total to 42.

“As a private bank, we are the biggest in Laos and we have achieved more than we expected, especially in the area of capacity building. We built a strong team with 12 Cambodian experts to help our colleagues there. We have sent eight Cambodian experts already and by the end of this year, only three ACLEDA staff members in Laos will be Cambodian because our transfer was handled successfully.”

In Channy said ACLEDA’s Laos operation very profitable both in monetary terms and in the training of experts through technology transfer. There’s also a good relationship with the regulator in Laos, because of a dialogue through a banking association, just like in Myanmar.

When the ACLEDA team met with Myanmar officials at the first microfinance meeting, they shared experiences of how they became successful in a meeting with people from Bangladesh and Indonesia along with the Myanmar people.

“Myanmar is open to suggestions and they like to listen. We explained what we wanted to do in Myanmar and I could see that in Myanmar was open to debate. When I returned to Cambodia, I got feedback from colleagues who got invited to meet in Naypyidaw to establish the microfinance association. This is a big step for them. It was after just one meeting and they did that,” he said.

In his speech to the Myanmar microfinance officials, In Channy said microfinance should not be limited in terms of loan size, but would grow with the customer from the first cycle of $100, the second $200 and the next one maybe $1,000. In Channy told the Myanmar group that microfinance should be regulated by the central bank, which has professional expertise and that the government should open a dialogue with the private sector, through an association of microfinance institutions so they could improve the laws and regulations.

He was delighted to learn that just such an associate was created by that weekend.

“Myanmar agreed to establish an association of microfinance at the meeting of May 23 in Naypyidaw,” In Channy said.

Here in Cambodia, ACLEDA has 320,000 active borrowing customers, the majority of whom are Cambodians. The total Khmer Riel currency holdings of all the banks in Cambodia amounts to US$270 million, of which ACLEDA holds US$56 million, making it the largest depositor of Khmer Riel in Cambodia, according to In Channy.

“We have more Khmer Riel than anybody because we have offices and branches in the rural areas, and normally their income is generated in local currency and they place their deposits in local currency.”

Khmer Riel deposits at ACLEDA Bank earn 7.5 per cent interest while US dollar deposits earn five per cent.

In Channy said the future looks very positive for Cambodia and ACLEDA Bank.

“Loans and deposits grew 7 per cent during the first quarter of this year,” he said.

As for challenges in the marketplace, In Channy said there’s increasing competition among commercial banks on bigger loans.

“Many bank come and all of them work in the upper segment, so it is challenging, but challenging on the bigger loans.”

In addition to his position as CEO of ACLEDA Bank, In Channy also serves as co-chair of the working group on Banking and Finance, with his counterpart from the National Bank of Cambodia.

“So far there is an interbank facility and we are working with the NBC to develop the interbank market and the NBC expects to have it done by June.”

In Channy said the importance of the interbank facility and market is to enable bank banks to deposit their surplus liquidity in other banks.

“The importance of this is to use the surplus liquidity in individual banks, so if the other bank has surplus liquidity, they can place with other banks. Now they can do it, but we want the law to regulate and protect when we place it with the other bank. The working group discussed this with NBC and they said they expected to have it done in the first half of 2013.”

Source: http://www.phnompenhpost.com/special-reports/acleda-ceo-helps-myanmar-create-microfinance-association

Success factors for Campu bank reflected in its leadership style

One of the reasons Cambodian Public Bank has been successful is the strong corporate governance and policies advocated by Public Bank Group chairman, Tan Sri Dato Sri Dr Teh Hong Piow, who just celebrated his 83rd birthday on March 8 in Kuala Lumpur.

Campu Bank Country Head Phan Ying Tong says the chairman is beloved by both employees and the public, a sentiment he says has enabled the bank to grow over the years.

“We love a boss like him: generous and always rewarding.”

Another of the chairman’s contributions is a culture of rewarding people who turn in good performance, according to Phan.

“One very important quality of Tan Sri’s leadership is he rewards people who can perform; who achieve results. So that shapes the culture of the bank.”

Phan says that the culture goes right through Public Bank and its Cambodian subsidiary, Cambodian Public Bank, also known as Campu Bank.

Phan says a good culture will ensure that any organisation will go in the right direction and consistently perform.

“We are talking about our responsibility. This is a culture that has been inculcated into the staff. Everyone takes up their own responsibility and is happy doing their job responsibly. Everyone has a goal to be efficient and achieve the goals set by the chairman, and at the end of the day, they are handsomely rewarded,” Phan said.

“We inculcate a performance-based culture where rewards are correlated to the delivery of superior performance and we pay good bonuses, grant overseas trips for all levels of staff and we offer career paths and advancement.”

Phan said the meritocracy-driven career progression coupled with priority accorded to internal filling of vacancies by existing well-trained, qualified and experienced staff have created a workforce that is passionately performance driven.

 “Our people are seeking career paths and advancement within the bank. This is evident from the low staff attrition rate of 7 per cent in 2012 and 100 per cent of our managerial appointments were promoted from within Campu Bank.”

In 2012, Campu Bank earned $35 million in before-tax profit, up more than $5 million from 2011.

Phan thinks that the trend will continue because of the good fundamentals of the Cambodian economy.

“I think Cambodia’s economy will continue to do well with GDP growth of not less than 6.5 per cent in 2013. A lot of foreign investors continue to come in possibly because doing business elsewhere is getting more costly like in China and also due to the favourable conditions and incentives offered by the Government” Phan said.

“We also see in Cambodia more Japanese-owned manufacturing companies coming in a big way. May be Cambodia is beginning to see a change from the traditional garment and textile based economy to a more technology based economy.”

He gave the example of the Japanese-owned Minebea Company which manufactures small motors at the Phnom Penh Special Economic Zone.

“I think Cambodia is starting to move into a more technology-based direction and not so much a labour-intensive base economy in the long term.”

Phan said the development of a technology-driven manufacturing base is complimented by the parallel development in the construction and real estate sectors as well as the agriculture and rice sector.

“The prime minister is now talking about rubber and I think this is a very good choice to promote the economy given the suitable climate of the country. We don’t just rely on just one agriculture product to grow the economy.”

Phan says there is more and more competition in the banking sector which is getting keener than other sectors today.

Phan says bankers need to maintain a high degree of professionalism to ensure that loan borrowers make a more informed decision. For example, borrowers should be advised as to how much they should borrow based on the actual business needs or private investments required and not to over or under lend to the borrowers.

With more competition coming into play through entry of new banks and opening of new branches by existing banks, bankers should not sacrifice asset quality for quantity otherwise they would be saddled with bad asset quality which will translate into bad debts.

Campu Bank has 25 branches throughout Cambodia and Phan says there are plans to open more branches in strategic and viable locations.

“We will continue to expand and of course, we will continue to enhance our human capital which is still a challenge in the industry. When you want to open more branches, you need to have the right managers, skilled and experienced staff especially in credit and marketing and so on.”

Some of the coming plans are introducing children’s savings accounts to inculcate savings habit for parents on behalf of their children and also to launch “Customer Care Campaign” to create greater awareness on the importance of good customer services this year as well as ongoing introduction of more promotions for credit card products from time to time.

“For example, we will continue with our tie-up programs with merchants to offer special discount to our cardholders,” Phan said. “For example, at Almond Hotel you can get 10 per cent discount for food and beverages spent at the restaurant.”

Another of Campu Bank’s plans is to roll out instalment plans for purchase of consumer and household goods including computers and electrical items but card holders only need to pay by instalments with no interest being charged for the instalments.

Campu Bank will announce the “Merchant of the month” on their website to inform customers where they can get more value for their credit or VISA debit cards.

Another deal is with Sime Darby Medical Centre from Malaysia whereby a very special discount on medical fees will be offered to its Platinum card holders.

Campu Bank employs more than 600 people and is among the top three banks in Cambodia in terms of asset size, business and performance, Phan says.

In 2012, Campu Bank was awarded “Domestic Retail Bank of the Year in Cambodia” for its management excellence by Asian Banking & Finance. Also in 2012, Deutsche Bank awarded Campu Bank the “USD Straight-Through-Processing Excellence Award” for exceptional quality in the processing of payment messages.

Phan expresses optimism in Cambodia’s economic growth for the next few years for a number of reasons, including increasing interest shown by Cambodians to own affordable homes.

“We are seeing more developments in the Special Economic Zones especially in Phnom Penh, Preach Sihanouk, Koh Kong and Bavet, infrastructure developments in the construction of hydro-power dams and stations and bridges, reconstruction of railways and rehabilitation of the roads linking the key routes for transport and export of goods.

Phan says he’s optimistic about the health of Campu Bank subsidiaries Campu Lonpac Insurance and Campu Securities which he says will also benefit from the favourable economic conditions and development.

“We see more business activities, more flights coming into the country by new carriers, more tourists, and more investors. We hope that the government will continue to promote its liberal business policies and improve the investment climate to make Cambodia one of the most “business friendly” countries in the region which would enhance employment opportunities and improve human capital in the long term.”

Phan complimented the National Bank of Cambodia for regulating the banks efficiently and also for implementing sound monetary and fiscal policy prudence to promote macroeconomic stability, as well as the CDC.

“We appreciate the Council for the Development of Cambodia for their active role and competence in promoting competitive and attractive tax incentive program to attract new foreign investments into the country,” he said, citing the granting of tax exemptions for three years each time for a total of nine years.

Another factor in the improvement of Cambodia’s financial landscape, Phan says, has been the introduction of the capital market under the supervision of the Securities Exchange Commission of Cambodia in 2011.

“The capital market has provided opportunities for business enterprises to raise capital for their business expansion in Cambodia. Campu Securities is principally involved in securities trading and underwriting,” Phan said.

One of Cambodia’s challenges today, Phan says, is to nurture and strengthen human capital.

“Human resources make a difference in productivity if you have skilled and knowledgeable staff in every sector of the economy. It is a priority for all sectors of the economy to intensify efforts to build up a strong human capital in Cambodia.”

Phan was happy to have recently completed the Masters degree in Banking from the University of London, with the support of his company and his family. He said it was an example of the importance of training for people at all levels.

“Learning is the spring board an employee stays abreast with new skills and knowledge, embrace the inevitability of change as well as sustain its relevance.”

Source: http://www.phnompenhpost.com/special-reports/success-factors-campu-bank-reflected-its-leadership-style

CIMB features special preferred customer privileges

Asean-focused CIMB Bank is offering special “preferred customer” status for depositors of $50,000 or more, according to Head of Strategy and Finance Heng Vuthy.

As a preferred member, Heng Vuthy said, the customer will get exclusive services and benefits locally and regionally such as a dedicated Relationship Manager, free access to airport lounges in ASEAN, pre-arrival account opening in ASEAN countries, special discounts at high end hotels, shops and restaurants in ASEAN, access and same recognition at all CIMB Preferred Centres in ASEAN, and more.

“Our preferred centre serves our preferred clients differently from the normal client and you also have a relationship manager; you’re served first and you have privileged rates and other benefits.”
Heng Vuthy says the idea is to target the affluent people in the marketplace.

“We would like high profile people like the CEOs of the companies and so on. Expats are also our target here, who travel in the region and we are also looking for Cambodians of a high profile, who may be sending their child to study in Singapore or Australia. We also have an office in Australia.”

A local Cambodian, who has been given big responsibility in the Malaysia-headquartered CIMB Bank, he was born in Phnom Penh in 1981 and has worked for a number of qualifications including a master’s degree in finance, previously worked at ACLEDA Bank for eight years before joining CIMB in August 2010.

“One of our key differentiators for CIMB is our multi local business model. Our regional model enables us to fully leverage the reach and scale of our Southeast Asian platform while preserving aspects which identify us to the local population,” Heng Vuthy said.

“If you look at the banking landscape of Cambodia, a lot of banks will have a lot of ATMs. For us we also try to see something we can bring to Cambodia for regional leverage of ASEAN. One of the keys is a wealth management product,” he said.

CIMB has linked ATMs in five countries as a regional network so far in Cambodia, Thailand, Malaysia, Singapore and Indonesia.

“Next will be Philippines and Vietnam and then ultimately all 10 ASEAN countries,” Heng Vuthy said. “With this regional ATM link, CIMB customers can access to more than 5,000 ATMs across the five countries free of charge and they can get the local currency as they withdraw the money. The conversion rate will be better than at the counter.”

Other differentiators for CIMB are that they were the first bank to launch a dual currency investment (DCI) services and a service whereby customers deposit in US dollars and they have a passbook that records the amount they have according to the price of gold.

CIMB also offers foreign currency accounts in Australian dollars, Euros, Japanese Yen, New Zealand dollars, British pounds, Singapore dollars, Thai Baht and Cambodian Riel.

 “For DCI the customer can choose whether they want good conversion rate or high interest rate for this pair of currency. With this product we need at least $25,000 to start with. That’s why we target a more affluent client,” he said.

CIMB is offering special treatment for preferred customers.

CIMB has 1,100 branches in 17 countries including China, the UK, India, Sri Lanka, Taiwan, Korea, Brunei and Bahrain. Here in Cambodia, CIMB has 11 branches, with seven in Phnom Penh and branches in Siem Reap, Sihanoukville, Battambang and Kampong Cham.

There are also 11 offsite electronic banking centres – consisting of ATM, Cash Deposit Machine, and Cheque Deposit Machine, 10 in Phnom Penh and one in Siem Reap.

As for expansion plans, CIMB in Cambodia has already created 11 branches since 2010 and has a strategy of growing those offices first before adding additional branches, but they will add some electronic banking centres.

CIMB also offers tier rate savings accounts, mortgage financing, interest-paying current accounts, business loans, and overdraft and trade finance facilities.

“In the near term we are looking to capitalise on this and building our customer base and growing them. For the near term we are looking at especially focusing on SMEs, the mass affluent market and the growing of the mass-affluent-to-be. And in the long term, we are looking at deploying investment banking.”

Heng Vuthy says CIMB has “investment banking blood” owing to the bank’s background, something to watch for in the future.

“The CIMB group acquired a lot of commercial banks in Indonesia, Thailand and Malaysia and quite a number of commercial banks.”

CIMB Bank PLC has 170 employees, grown from 30 when Heng Vuthy joined in 2010.

“We focus on the sales organisation, training and sharing sessions.”

The CIMB view for the Cambodian economy is very upbeat, he said.

“There is still a lot of op to grow in Cambodia. As reported from World Bank, only less than 10 per cent of the population has a bank account. Cambodia is a very young population, mostly under 30 years old and we can see a mass affluent growth in the market.”

For the banking industry, Heng Vuthy thinks the National Bank of Cambodia’s annual report tells the story.

“For last five years in the NBC annual report the growth rate has always been 30 per cent and above. You can see also with the ATMs and cash deposits, the population is not shy to accept these new technologies.”

CIMB’s Heng Vuthy answers questions about products, currencies and interest rates

How many branches does CIMB have total?
CIMB Group has more than 1100 branches across 17 countries (Malaysia, Indonesia, Thailand, Singapore, China & Hong Kong, Vietnam, US, UK, Brunei, Bahrain, Myanmar, Cambodia, India, Sri Lanka, Australia, Taiwan, Korea)

How many branches in Cambodia?
There are 11 branches in Cambodia; 7 in Phnom Penh and 4 more in Siem Reap (Tourism Area) city, Sihanouk Ville city (International Port), Battambang city (Rice Mill Area), and Kampong Cham city (Rubber Plantation Area) and 11 offsite self-service terminal and continue growing.

When did CIMB first open in Cambodia?
CIMB Bank PLC commenced operation in Cambodia in November 19, 2010 with the opening of a first branch of commercial banking in the heart of Phnom Penh city.

What currency accounts can people have at CIMB?
USD, EUR, JPY, AUD, NZD, SGD, GBP, THB, and of course KHR.

How do you differentiate CIMB in the marketplace from other banks?
One of our key differentiators is our multi-local business model – which we have successfully implemented across our ASEAN franchise and which we do the same in Cambodia. Our regional model enables us to fully leverage the reach and scale of our Southeast Asian platform while preserving aspects which identify us to the local population, allowing us to understand and cater for their specific needs. For example, we strongly believe in the empowerment of local leadership and the development of products and services which are familiar to local cultures and practices. In doing so, we hope that the population will treat us not as a foreign bank, but as a local bank with regional resources.

In term of products; on top of our basic deposits, loans, and trade facilities we are continuing introduce wealth management/investment products for our growing affluence customers. Eg DCI (first bank) and GDA.

In term of services; in 2012, we invested in our core-banking system for trade finance module; which has the ability to enhance our customer service capacity, thus improving value for customers.

We launched our preferred banking and regional ATM service, which is another regional benefit for our existing and potential customers, enabling them to enjoy our CIMB Group’s ASEAN network and regional ATM network of more than 4,800 ATMs across the region with no service fee charged.

Recently early 2013, CIMB Bank PLC became the first bank certified by ISO 9001:2008 for its customer services. The evaluation process on our customer service process including account management, counter operation, business continuity plan other processes have been conducted by Guardian Independent Certification (GIC), a United Kingdom Certification Body. This is to ensure that we have a proper as well as consistence procedure in place for our customer services and business continuity plan across our 11 retail branch networks.

What are your expansion plans for Cambodia?
Our commitment to and investment here as reflected by our rapid deployment of branches speaks for our confidence in the growth prospects in Cambodia. We rolled out 11 branches in our first two years of operation complemented by a network of offsite self-service terminals and continue growing.

With our infrastructure, human capabilities and branch network in place, complemented by the full range of products and services [from tiered rate savings, mortgages, Preferred Banking, interest paying current account and business loans and overdrafts to trade finance], we are now in a position to grow our customer base as well as better understand their banking needs.

What kind of loans do you provide? Property? Automobile? Business?

• Business term loan to finance business capital investment (CAPEX) as we as OPEX.
• Personal term loan to finance personal needs including automobile and so on.
• Housing loan to finance residential property (which offering with more flexibility for our client in term of security, repayment etc).
• Overdraft for our customers’ working capital financing, and
• Trade finance facility to facilitate across border trading activity.

What kind of customer is your target customer?
For the near term, we will focus on building up our commercial banking franchise focusing on SME and mass affluent and mass affluent ‘to be’ individuals. In the longer term as the Cambodian economy developed, we will explore other financial services e.g. investment banking, etc in line with and as part of CIMB’s universal banking platform.

Do you have any new products and services you would like to talk about?
DCI product – to facilitate our customer who need foreign currency in the future to save with us and as of yesterday USD-JPY DCI we pay 26 per cent pa.

FCFD – is another alternative saving/investment for customers who holding or using currencies other than USD; we pay AUD 5.5 per cent pa.

Trade Finance – We have deployed TF module in our core-banking system to smoothen our customer service.

Flexible Housing Loan: three options for customers to maximize their needs with a high margin of financing, fast approval process, lower costs and they will be able to get a bigger house with gradual incremental repayments.

What’s your opinion on the Cambodian economy? Does the future look good? Why?
We are positive on Cambodia in view that it is relatively under-banked as per a recent World Bank report which states that only 4 per cent of the population has a bank account, has a very young population averaging less than 30 years old and most importantly, a rapidly developing economy facilitated by open and progressive government policies.

Growing acceptance of banking services and products as reflected by the rapid growth in deposits and loans averaging over 30 per cent annually over the last 5 years in the banking industry; in addition, Cambodian consumers are not shy to adopt new products and services as reflected by amongst others the rapid expansion and adoption of self-service terminals. This is further facilitated by a very progressive and supportive National Bank of Cambodia.

Source: http://www.phnompenhpost.com/special-reports/cimb-features-special-preferred-customer-privileges