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HKL’s Financial Infrastructure Evolution to Grow Micro & Small Business Holders in Cambodia

HKL’s Financial Infrastructure Evolution to Grow Micro & Small Business Holders in Cambodia. Presented on NORFUND 2014 Summer Conference. By Hout Ieng Tong, President & CEO. 27-29 August 2014. This is Cambodia…. And So Is THIS. Cambodia World Heritage. Phnom Penh.

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HKL’s Financial Infrastructure Evolution to Grow Micro & Small Business Holders in Cambodia

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  1. HKL’s Financial Infrastructure Evolution to Grow Micro & Small Business Holders in Cambodia Presented on NORFUND 2014 Summer Conference By HoutIeng Tong, President & CEO 27-29 August 2014

  2. This is Cambodia…

  3. And So Is THIS Cambodia World Heritage Phnom Penh PreahVihear Temple Khmer Shadow Theater Apsara Dance

  4. GDP’S GROWTH TREND… Source: IMF & ADB • The predicted growth rate of 7% is good as it will help Cambodia to reduce the poverty rate by at least 1% annually. • The nation's poverty rate had fallen to 19% in 2013. • The agricultural sector is the main driver of Cambodian economy. Agriculture accounts for 27.5% of Cambodian GDP and represents the primary source of income for 80% of the population.It gives work to 70% of the kingdom’s labour force.

  5. The Cambodia Financial Sector… • Loan in bank was USD 7.3 billions in 2013; average annual loan growth rate is around 30%. • Bank received deposit of USD 7.5 billions in 2013, average annual deposit growth rate is around 18%. • 29 Micro finance Institutions ( MFIs) and 7 Micro finance Deposit taking Institutions (MDIs) are operating in 25 provinces and cities of the Kingdom. • MFIs’ loan was USD 1.3 billions in 2013; average annual loan growth rate is around 45%. • MFIs’ deposit was USD 437 millions in 2013, average annual deposit growth rate is around 120%. • MFI’s Non performing loan ratio is 0.59% in 2013 • ( slightly increase to 0.62% in first quarter of 2014)

  6. HKL’s Key Achievement & Strategy

  7. HKL’s Profile and Highlight • HKL is MFI and MDI licensed operating in Cambodia country wide, providing financial services to the low income people. • Loan portfolio reaches USD Million 194with number of Active Borrowers of 91,992clients. Non performing loan rate is 0.04%. • Large proportion of loan is micro loan (95% are micro & small business holders) ; HKL’s borrowers mainly are female ( taking lead in loan access), with major purpose in agriculture and trade ( & commerce). • Reference data is June 2014

  8. Agriculture represents the primary source of income for 80% of the population that is why HKL retains focus.

  9. Well-maintained superior loan portfolio quality in general, except 2010 was resulted from hiccup event driven by global crisis impact in 2009.

  10. Geographic outreach

  11. Declining in portfolio yield is due to the competitive market rate and the larger loan size provided to existing clients under “We Grow With Clients” commitment. • Heavy investment in technology for both cored banking and mobile banking has claimed HKL to be less profitable in 2014 compared to 2013.

  12. How does HKL get these achievement?

  13. HKL’s Operational Strategy..

  14. HKL’s Infrastructure Evolution To reach Micro and Small business holders

  15. Where has HKL been so far? From the project… To the reliable MDI to be trusted by public in saving collection…

  16. HKL’s infrastructure evolution… Head Office at Pursat provinces from the start to 2004; while served as Pursat branch Head Office has been moved to Phnom Penh in February 2004, and lately to this current Head Office Building, located on large and busy street of Phnom Penh, where almost 250 staff members are working. Operational Office, also attached to the building, serves as the key functional service points.

  17. Office Network From 45 offices in 10 provinces & cities in 2008 to 135 operational offices in 25 provinces and cities of Cambodia With 49 ATM machines in 2014 BRANCH NETWORK 2014

  18. Evolution of HKL’s financial products • More specific product Innovation • SME loan • Mobile Banking (USSD & Mobile App) • Specific loan • Green Loan • Student Loan • Mobile Banking • SMS notification Incept Mobile Banking Go live ATM service Public Saving Collect Deposits from public • Core Banking System • ATM • General Loan • General Loan with various business purpose • Compulsory savings • Local Money Transfer MDI license • Micro Banker System • Off line & Stand along MIS system

  19. Tailor-made Products offered.. • Loan purposes: (1) trade/ commerce, (2) agriculture, (3) service, (4) construction, (5) transportation, (6) household/family and (7) production. • Flexible repayment method & offer in 3 currencies • For environmental purposes: biogas, solar energy, water basin, water filter, toilet Etc. • Offer with lower interest rate • Flexible repayment method & offer in 3 currencies • Support students during their academic years in university • Loan term up to to 7 years • Favorable interest rate & free 3 months interest • Loan provision to Small & Medium Enterprise ( biz loan for biz set up, and expansion) • Larger loan size ; longer term; in 3 currencies

  20. Tailor-made Products offered.. • - Open for public • Customers can deposit and withdraw money any time • Marketable interest earned • In the form of Capitalized Deposit, High Income, High Return & Charity Deposit • Higher interest rate than voluntary saving • Deposit term up to 1 year • In the form of Planned saving, Kid saving & Retirement • Customer is required to deposit certain amount of money in a specific time which agreed by the clients and HKL. • Highest interest rate up to 11% per annum.

  21. Tailor-made Products offered.. Customers can transfer their money to relatives, friends, and other business partners with very speedy delivery and reliable services. • Equipped with state-of-art technology by the world class ATM producer and switch. • Function: Cash withdrawal, Cash deposit, Cardless deposit, Fund Transfer, Remittance, Mobile Top-up, Bill Payment & Account Enquiry • SMS notification, USSD Baking, Mobile Apps. • Function: SMS alert, Fund Transfer, Remittance, Mobile Top-up, Bill Payment & Account Enquiry

  22. Opportunities & What Next

  23. What Challenges do we have?

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