Acleda Bank is a true Cambodian success story. Now it is bringing its expertise as an early mover to the region’s last untapped frontier
While the rest of the world gauges how best to enter Myanmar, Acleda Bank is already enjoying its early move advantage.
More than 20 foreign banks have approval from the Myanmar government to open representative offices in the country, but Cambodia-grown Acleda was the first to make transactions after acquiring a licence in late January to open its wholly-owned microfinance subsidiary. It only took the Acleda MFI Myanmar two months to complete its first 100 loans.
“Myanmar, in terms of population, is four times larger than Cambodia, but in terms of access to finance [it] is far smaller. In Cambodia, loans to GDP for 2012 is just 37%, while in Myanmar it is only 5%, meaning that it has a large market baseand we believe the bank can grow quickly over there,” said In Channy, CEO of Acleda Bank.
Having poured $10m into its new MFI operations in Myanmar – far above the government’s minimum requirement of $37,000 – Channy said that Acleda wants to promptly flip the company into a fully fledged commercial bank once foreign ownership laws are instated – which is expected to happen in 2015.
“Initially, we will have 36 Myanmar staff and 13 Cambodians, but this year we plan to expand to 700 Myanmar staff with new offices,” he said, adding that he expects those operations to become profitable within three years.
The expansion does not stop there. In Phnom Penh’s developing financial district, Acleda is building a $45m, 20-storey headquarters, which is expected to house nearly 8,000 staff when it is completed in 2014.
As of February 2013, Acleda Bank was backed by a number of reputable shareholders including the International Finance Corporation, Stichting Triodos-Doen, JSH Asian Holdings, Cofibred and Acleda NGO Trust. It is also the largest of about 32 operational commercial banks in Cambodia in terms of loan portfolio, assets and savings deposits.
“With the market changing, some banks have begun targeting corporate customers, but we offer inclusive finance for the low, medium and high segments,” Channy said. He added that at the end of 2012 Acleda had more than 315,000 active borrowers, representing 92% of all borrowers in the entire Cambodian banking sector.
According to the bank’s most recent data, Acleda’s total loan portfolio reached $1.31 billion at the end of February 2013, up 32% from the start of 2011, while deposits grew 29% to reach $1.51 billion during the same period. Channy said that Acleda’s high deposit to loan ratio means that the bank avoids costly refinancing expenditure to foot new loans.
“Normally we build the portfolio first and when it reaches a certain level, we set up an office there so that it can be profitable from the beginning,” Channy said. “That is how we have done it in Cambodia.”
Photo: Sam Jam for Focus Asean