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President & Group Managing Director's Report

"Our BANK is committed to enhancing customer experience and driving efficiency through innovative solutions. By prioritizing customer satisfaction, we have successfully implemented a cost-effective transaction process that benefits all parties involved. Furthermore, our continuous investment in upgrading our IT infrastructure has enabled us to effectively manage large volumes of data, allowing us to offer personalized advertising, marketing, and sales strategies to our customers. These tailored strategies create numerous value-added opportunities for our customers. In addition to our domestic market presence, we have expanded our markets into regional markets with the introduction of our Cross-Border Payment system initially launched in Thailand, and we have successfully extended our reach to countries such as Laos and Vietnam, with plans for further expansion beyond the region. Our ongoing dedication to these initiatives has paved the way for our success in both local and international markets."

Performance in 2023

Competitive Environment

In 2023, the World Health Organization (WHO) finally declared the end of the COVID-19 pandemic. Artificial intelligence (AI) has been on an accelerating trend with considerable potential to be able to replace and undertake various types of work and activities carried out by human beings. Globally, the interest rate was noticeably high before realizing a slight downtrend at the year’s end, with predictions pointing towards another rate cut during the first half of 2024. It is now the time for all countries around the world to come together to address pressing issues such as climate change, sustainable development, health improvement, and digital transformation.

In the digital era, as consumers are adapting gradually to the context of the digital economy and society, as well as quickly embracing digital banking products and services, banks and Financial Institutions (BFIs) in Cambodia have been facing fiercer competition, employing various tactics such as marketing channels, promotional strategies, physical and digital branch expansion, pricing, and so forth. In actual fact, customers have now found it relatively more convenient and highly effective to have access to financial products and services, gained significant financial leverage, and improved their financial literacy and inclusion.

ACLEDA BANK PLC. is actively transforming its branches into self-service banking hubs, offering a diverse array of hybrid options. This digital framework has not only enhanced the efficiency, security, cost-effectiveness, and speed of the economic system, but has also become a vital driver of economic growth. Moreover, it has facilitated greater inclusion by connecting communities nationwide and expanding into neighboring countries in the region. ACLEDA Mobile banking Application (Mobile App.) has become a popular payment tool and is competitive, with over two-thirds (2/3) of banks launching their App. ACLEDA Mobile, “the BANK in your hand”, is a leading one, serving registered users/partners over 3.34 million. Customers can use ACLEDA Mobile anywhere all over the world where Wi-Fi/the Internet is available, especially to scan KHQR/QR codes within Cambodia countrywide and engage in cross-border payments with QR in Thailand, Vietnam, and Laos. The volume of digital transactions now contributes up to 97% of the BANK's total transactions, with digital fund transfers accounting for 98%.

Operational Highlights in 2023

• Total loans outstanding at the end of 2023 were US$6,657.31 million, with US$1,414.68 million (or 21.25%) allocated to the agriculture sector. In 2022, lending to agriculture totaled US$1,392.11 million. By the end of December 2023, there were 478,656 active customers for the Group’s small business loans.
• Non-performing loans (NPL) remained high but manageable, at 5.77%, considering the post-COVID-19 economy and tighter financing conditions.
• Total deposits reached US$7,277.81 million across approximately 4.55 million accounts.
• The Group reported a profit for the period attributable to the owner of the BANK at US$148.05 million.
• The BANK consistently made efforts to minimize costs and risks to retain income and maximize profit.
• Fintech products were integrated into the BANK's electronic banking infrastructure, offering customers a range of choices to manage their financial resources.

Financial Services and SME Businesses

Lending in the "Small" business category grew by 4.95% or US$142.03 million. The "Personal & Others" category grew by 84.11% or US$220.90 million. "Housing Loans" balance was US$185.41 million. The total amount of loans outstanding was US$6,657.31 million as of the end of 2023.

The Group’s deposit balance was US$ 7,277.81 million (increased by 13.13% or US$838.82 million) and the total number of accounts was around 4,550,582. The retail sector accounted for the largest segment of the BANK's growth in deposits with a large percentage coming from first-time depositors such as employees paid through the BANK’s Payroll Service and non-bank customers in rural areas using the E-Wallet ACLEDA mobile App. Financial products and services via Fintech solutions have contributed to such strong growth.

The Group maintains a diversified infrastructure of choices with 318 traditional branches (or offices), and 177 self-service banking with 1,453 ATMs and 4,728 POS terminals. It's interesting to note that the Group has issued a total of 1.91 million debit cards. Moreover, the digitized ACLEDA mobile App has proved very popular with registered users of more than 3.45 million at the end of 2023.

Medium and Corporate Businesses

In this product category in 2023, cash management services increased substantially through our arrangement and partnership with the public sector, particularly the Social Security Fund (SSF), government payroll direct deposits, and vehicle stamp tax collection. The demands for payroll services were particularly strong in 2023 with a number of organizations that signed up, including entities in the public sector, local and international companies, and other organizations, thereby providing excellent opportunities for cross-selling of other products and services.

In addition, the best services offered by the nationwide networks of the BANK have highly attracted and engaged medium and corporate business entities to consistently appreciate, remain loyal to, and prioritize the BANK as the first effective coordinator for financial management and sources of their business operations and settlement. These multiple services have also had a significant positive impact on the BANK’s local currency cash flow and have enabled the BANK to fund, strengthen, and expand its local Khmer Riel currency loan portfolios. Meanwhile, the medium and corporate loans outstanding decreased by 5.75% compared to 2022 and accounted for 35.50% of the total loans outstanding.

Furthermore, the BANK and its subsidiaries continued to collaborate with their long–term, experienced, and strategic partners. These entities assist our mutual, common customers to manage their financial resources effectively and efficiently. Together with this, these partnerships also significantly contributed to the BANK’s long-term funding and also provided a useful source of off-balance sheet revenue, while enhancing the international expertise and experience of the BANK’s management and staffs.

Treasury Local and International

The BANK is a prominent provider of Foreign Exchange (FX) service to various sectors and the public at large. The revenue generated from this service has consistently grown, making a valuable contribution to our non-interest income. Adhering to its risk management policy, the BANK refrains from engaging in speculative trading within its FX business, focusing solely on supporting customers' businesses. The BANK maintains a low-risk approach, managing open positions within a certain prudent ratio to comply with both internal and regulatory limits. This service is a stable source of income, demonstrating consistent growth over time, and fostering enduring relationships with customers and partners.

Strong customers deposit inflows and long-term borrowings reinforced and sustained the BANK's balance sheet, which made it possible to sustain a loan growth throughout the year. As a result, a strong financial foundation was established to sustain the rapid expansion of the BANK's operations and activities.

The BANK actively promoted the use of Khmer Riel (KHR) by extending local currency loans to customers and active participations in government initiatives for upgrading the financial market in Cambodia by investing in government bond, amounting to more than 17% of its total loan portfolios, exceeding the regulatory requirement of 10%.

In addition to fortify its long-term funding sources, the BANK diversified its funding options by nurturing and progressively expanding strong relationships with its strategic partners globally, particularly in Europe, the USA and Asia.

The BANK persistently enhanced relationships with other financial institutions and assessed our extensive international correspondent networks during the year. As of the end of 2023, the BANK had 254 correspondent banks residing in 44 countries. Moreover, the BANK commands a significant market share in terms of accounts from local banks and financial institutions, offering fund-transfer services across the country. The BANK has formulated and fully complied with all of its internal risk policies, regulatory requirements, and lenders’ prudent covenants.

Strategic Priorities for 2024

The BANK you can trust, the BANK for the people!

To determine the basic long-term goals and adopt courses of action, as well as allocate the resources necessary for achieving these goals and select a relevant set of activities to deliver a unique mix of value, ACLEDA BANK PLC. has drawn up and set out the ideally matched strategies elaborating how the BANK will achieve its vision, mission, milestones, goals, and business plans. These strategies primarily include Mobile-First; Human Resource Digitalization; Funding; Branding ACLEDA Community; First-class IT; Inclusive Partnerships; Environmental, Social, and Governance (ESG); and Subsidiaries.

The BANK aims to contribute to improving the quality of lives, ensuring sustainable and growing benefits to our stakeholders, and supporting the socio-economic development of the society as a whole.

The Challenges for 2024

As the first listed commercial bank in Cambodia Securities Exchange (CSX), the BANK is accountable to two regulators: National bank of Cambodia (NBC) and Securities and Exchange Regulator of Cambodia (SERC). Meanwhile, the BANK is also accountable to the public at large and individual investors. Over three-decade of its history of development, the BANK has earned trust from the general public through its good corporate governance, the management team with many years of considerable experience, and a culture of transparency.

In the ever-evolving landscape of financial technology, particularly in the digital banking era (BANK 4.0), ACLEDA Mobile services have undergone a full upgrade with the latest technology and continuously maintain its further regular development over time to maintain its leading position, convenience, security, and attractive modernity.

Despite Cambodia’s economy facing a number of challenges such as heightened geopolitical risks, the imperative to accelerate the decarbonization in the economy, the rise in climate-related risks, and dramatic digital transformation, as well as the modest growth in real estate, construction, and garment sectors, the outlook for Cambodia’s economy in 2024 is still optimistic and robust compared to that in the previous year. On the firm basis of the peace and political stability, it is forecasted that Cambodian economy will grow from 5.5% in 2023 up to at least 6% in 2024, driven by more considerable growth in the tourism and service sectors, alongside the resilient agriculture and a manageable inflation rate.

Given this economic scenario and forecast for 2024, ACLEDA BANK PLC. sees the opportunities to continue and further strengthen its existing successful strategies while incorporating new strategic directions for 2024 and the following years in order to ensure its growth, success, and prosperity all together with all of our customers and stakeholders.

Last but not least, I would like to express my profound thanks to all our customers, the Board of Directors, the management, staff, and stakeholders, especially the Royal Government of Cambodia, National Bank of Cambodia (NBC), and Securities and Exchange Regulator of Cambodia (SERC) for all of the unwavering trust, confidence, support, seminal contributions, as well as great efforts, strong will and commitment, solidarity, and synergy in 2023, together with a fervent conviction and anticipation of a happy and prosperous 2024.

Dr. In Channy
President & Group Managing Director of ACLEDA Bank Plc.
March 21, 2024.