As we complete our 25th year of operations in market, we feel honored and proud to lead PRASAC to become 1st ranked in MDIs and 4th ranked in the Cambodian banking sector. Over the last decade, Prasac has experienced unmatched performance and gone from strength to strength.
Our 2019 results demonstrate that these strategies continue to deliver success despite challenges, and show how PRASAC can bring our strengths and capacities to bear, with the lowest NPL in the sector, high staff productivity, effective cost management, strong client relationships, prudent capital and risk management and highly engaged staff. We have a strong culture, integrity, trust and ethical behavior in all of our businesses; we have a shared pride in our performance; we have a successful history and our footprint is unique among our competitors, and thereby we will create long-term value for our stakeholders.
In 2019, PRASAC maintained the position as a market leader with the largest branch network, high return, and loan portfolio, and proven record of sustainable growth. Here are some notes on key operational highlights:
- Total assets at year-end were USD 3.1 billion, growing 30.25% percent compared with the end of 2018.
- Total loan portfolios were USD 2.5 billion increased by 27.49% with the total of 417 thousand clients.
- PRASAC maintained its leading position in loan portfolio quality in the sector with the Non-Performing Loan (NPL) at 0.36%.
- The deposits outstanding balance reached USD 1.79 billion with the total of 600 thousand depositors.
- After-tax net profit increased by 31.62% to USD 103 million from USD 78.64 million in 2018.
- Return on Equity (RoE) was 28.9% and Return on Assets (RoA) was 3.8%.
- Office network covering all 25 provinces and city through 180 outlets, 135 ATMs, operating in more than 14,053 villages, equal to 86% of total villages, with a total of 9,091 staff.
PRASAC is Ready for the Future
Looking ahead, the financial service industry will be further shaped by rapid innovation and disruption. We are prepared for increasing capacities of our data center, DR, sophisticated cyber security and fraud risks, as well as evolving regulatory landscapes. We will continue to strengthen our implementation of the NBC’s IT security guideline.
PRASAC will continue to invest in its business, IT infrastructure, people and branding to deliver customer-centric experiences and help those clients we serve to have confidence about their financial future. We will also maintain a strong risk management culture, and focus on operational excellence while fostering our unique and inclusive culture to bring out the best in our clients and stakeholders.
Executing on a Focused & Consistent Strategy
Our strategy is focused and consistent. We are committed to delivering high-quality growth, industry-leading returns and long term value. It is also built to deliver high asset quality and sustainable earnings growth, so we will pursue opportunities that are aligned to our view of market trends, build on our strengths and deliver strong returns to shareholders.
We are the market leader and the largest MDI by both assets and loan portfolio. We are focused on extending our lead through our size, scale, breadth and cross-selling ability of products and services.
Building an Even Better Financial Institution
Looking ahead, our operating environment will continue to be shaped by rapid advancements in the financial industry and regulatory change. Moving forward, PRASAC continues to grow organically.
- Competition in the Market
- Competition is an important characteristic of a market, and drives better outcomes for clients, such as lower prices and more choice. Competition for market share in retail banking, including from non-banks, improves client’s welfare through lower prices, more choice, better products and improved quality and access to services. In the long term, client benefits are also crucially dependent on a stable and robust financial system in Cambodia.
- The banks and financial institutions we compete against have generally remained strong. We are also experiencing increased competition in certain geographies and business segments from new market entrants. Notwithstanding increased competition, we remain well positioned and are making the necessary investments in people, processes and technology to deliver on the needs of new and existing customers throughout our footprint.
- Regulation changes
- The financial services industry has been subject to increased regulation over the past several years and we are optimistic that we are through the majority of the changes. PRASAC has been responsive to changes in regulation and has invested considerably to adapt to the new standards. Our liquidity profile is solid and our common equity Tier 1 ratio is strong and complies with regulations. We are confident that, on balance, new regulations have made us a stronger and better financial institution.
- Continuing to build on a strong foundation
- PRASAC has a great foundation to continue to build a strong culture; integrity, trust and promote ethical behavior in all of our businesses; we have a shared pride in our performance; we have a successful history; and our footprint is unique and coveted by many lenders and stakeholders around the world. Throughout PRASAC, employees place great value on working together and they share a genuine desire to serve our customers. The high productivity of our 5,700 credit officers and extensive network of 180 branches provides us with significant operational flexibility and stability. Our cost to income ratio of 36.20% is among the best in the industry and materially lower than most other industry participants. We believe that these aspects will continue to underpin PRASAC’s industry leadership position and cost competitiveness.
Leading through Confidence
While regulatory changes, the interest rate cap, increased capital buffer requirements, market volatility and increasing competition will pose some challenges, we also see opportunities. We are committed to delivering the right strategy, diversify products and services, while strengthening our culture and staff to drive continued growth and take advantage of changes in the marketplace. What these times have shown us is that our strategies are functioning well. We are more confident than ever that we selected the right strategies and have the right people to meet the challenges ahead. As we pursue responsible, sustainable growth, we strive to earn the right to bring our clients and shareholders with us on this journey – leading through these difficult times into the favorable future.
We are confident that our strategy is sound. By executing our strategy well, and making meaningful progress against our focus priorities, PRASAC will be in a good position to perform within the ranges of our medium-term performance objectives and create longer-term stakeholder value.
On behalf of PRASAC Management, I would like to thank the management team and staff for their efforts and commitment, the Board of Directors for their supports and advices, and the Royal Government of Cambodia, regulatory bodies, the National Bank of Cambodia, and local authorities, who always support us.
The PRASAC’s best ever performance in 2019 is testimony to the dedicated effort of nearly 9,100 employees. We acknowledge their contribution and thank them for their commitment to our success.
President and CEO