PRASAC Microfinance Institution Plc, which has a corporate bond listed on the Cambodia Securities Exchange (CSX), reported sound business performance last year, which has been interpreted by some as a reflection of the upbeat pace of post-Covid-19 recovery in local economic activities.
In a financial report filed to the CSX on March 27, PRASAC reported gross loan portfolio and deposit balance – as of end-2022 – at $4.35 billion (up 16.05 per cent year-on-year) and $2.78 billion, respectively through approximately 502,000 and 714,000 accounts.
For comparison, as of March 31, 2022, PRASAC’s total assets, gross loan portfolio and deposit balance amounted to $4.5 billion (up 21.3 per cent year-on-year), $4.0 billion and $2.7 billion, respectively, according to the lender’s May 13 statement.
That statement noted that the microfinance institution (MFI) had freshly increased its registered capital by one-third to 1.6 trillion riel ($400 million) as part of its years-long pursuit of becoming a full-fledged commercial bank.
At end-2022, PRASAC’s non-performing loan (NPL) ratio stood at 1.19 per cent – compared to the 1.54 per cent reported for the year-ago period – with after-tax net profit coming in at $181.3 million versus $155.5 million a year earlier.
PRASAC chairman Jun Kwi-sang commented in the filing that in 2022, global inflation rose to 8.8 per cent as world-growth estimates dropped from 4.4 per cent to 3.2 per cent – all figures consistent with those provided by the International Monetary Fund (IMF) – due to fallout from the Ukraine crisis and supply chain disruptions tied to lockdowns in China.
In Cambodia, economic growth climbed to 5.1 per cent last year, buoyed by: escalating foreign demand; economic and financial safeguards; the government’s adoption of a living-with-Covid stance and moves towards the broad resumption of activity following the success of vaccination programmes; and the central bank’s withdrawal of regulatory forbearance, he said.
Jun highlighted the formal “banking” system’s role in supporting economic recovery in the Kingdom, sharing that credit to the private sector among its institutions “increased by 21 per cent while consumer deposits rose by 11.3 per cent”. The numbers match the central bank’s “Macroeconomic and Banking Sector Development in 2022 and Outlook for 2023” report.
According to this report, Cambodia’s formal “banking” system at the time comprised 59 commercial banks; nine specialised banks; five deposit-taking MFIs (including PRASAC); 82 non-deposit-taking MFIs; 224 rural credit institutions; 16 financial leasing companies; five third-party processors; 34 payment service providers; one credit information sharing service provider; six foreign bank representative offices; and 2,869 money exchange businesses.
Jun added: “We have always been there in both the good times and when we are needed most for our customers and communities since our inception. Amid the pandemic, PRASAC continued restructuring loans following the guidelines from the National Bank of Cambodia [NBC] to help alleviate financial pressure and uncertainty for both individuals and businesses.
“PRASAC participated in ‘SME Co-Financing Scheme [SCFS]’ and ‘Tourism Recovery Co-Financing Scheme [TRCS]’, the initiatives of the government to provide affordable loans to SMEs [small- and medium-sized enterprises] and tourism-related businesses for capital expenditure and working capital, [with] the objective to promote recovery [in the] economy and the tourism sector,” he said.
Also speaking in the filing, PRASAC president and CEO Oum Sam Oeun similarly remarked that, especially in the wake of the Ukraine conflict, the world has been ruled by uncertainty stemming from elevated inflation, slower global economic growth, and problems with energy availability.
“To build a strong financial position to sustain our robust growth of customers, investors and public trust, PRASAC increased its registered capital up to $400 million in 2022.
“This was also an orchestrated effort to undergo the transformation process from an MFI to a full-fledged commercial bank with the strong support of our single shareholder KB Kookmin Bank in [South] Korea,” he said.
Initially an NGO, PRASAC was wholly bought – over 2020-2021 – by South Korea’s Kookmin Bank Co Ltd, Seoul-listed KB Financial Group Inc’s commercial banking unit, for more than $925 million.
One share, among the exactly 300 million, is held by the bank’s local unit Kookmin Bank Cambodia Plc, PRASAC has affirmed.
Shortly after the acquisition, many top-level executives and high-profile financial veterans – including then-CEO Sim Senacheert – stepped down.
On May 5, 2020, Prasac listed a corporate bond on the Cambodia Securities Exchange, allocating 1,272,000 units in the offering, with a total issue amount of 127.2 billion riel.
On the Korea Exchange, KB Financial Group’s (105560:KS) share price rose 1,200 won or 2.57 per cent to close at 47,900 won on March 28 for a market cap of 18.01 trillion won ($13.9 billion), 52-week range of 43,100-61,900 won and trailing price-to-earnings (P/E) ratio of 4.47, with 1.67 million shares traded versus the 1.52 million 65-day average, according to the Wall Street Journal.
