The Bank and financial sector is healthy and have actively contributed to financial inclusion, supported economic growth, and reduced the poverty in Cambodia. In the last five years, Bank and Financial Institutions have been actively merged, acquired and new invested by commercial investors. For instance—in 2019, 33% of total foreign direct investment (FDI) inflow to Cambodia was in financial sector. The Credit growth has accelerated after slowing down over the past three years. In 2019, the credit growth rate was 24% as whole sector that was equivalent to Compound Annual Growth Rate (CAGR) of the last three years. The growth was driven by an increase in credit to construction and real-estate, consumption and trade due to the surge of the people income. The Non-performing loan in Banking and Microfinance sector was 2% and 1% respectively. It was slightly lower than 2018.
FUNAN Microfinance got a break record for its financial performances of the year 2019.
Comparing to last year performance, the profitability was 71% increase. FUNAN asset size reached to USD59 million with the CAGR of 69% for the last four years. The ROE and ROA was increased from 19.9% to 26.2% and 4.1% to 5.5% respectively, from 2018 to 2019. The Non-Performing Loan (NPL) was 1.16% comparable to the Microfinance market as whole.
To welcome 2020, the new pandemic originated in the Wuhan City of China was declared for the outbreak and named as the new coronavirus disease (COVID-19) by the World Health Organization (WHO). The COVID-19 pandemic is defining as global health crisis of our time and the greatest challenge, stressing every one of the countries. It has the potential to create devastating social, economic and political crises that will leave deep scars. Cambodia was also announced the first case in January 2020 and then found other cases, 122 cases in total (By May 2020). All cases have been confirmed by Ministry of Health (Cambodia) for the recovery. Almost of the sectors are correlatively affected by this pandemic. The National Bank of Cambodia (NBC) required the Financial Institutions to take care of the affected customers and instructed on loan restructuring with priority sectors including hotels and guesthouses, restaurants, food and beverages, garment and textile, construction, transportation and other services. The main areas of businesses that have been adversely affected by COVID-19 such as—First, financial impact: the cash flow problem, inability to repay or renegotiate debt refinancing/ restructuring obligation. Second, decrease in consumption, the people have no willing to spend; except on the main basic needs. Third, the decrease of employee productivity due to the social distancing, working from home, team splitting, reducing business dealing etc. and Forth, the supply chain issue. These business affects would lead to freeze the business operation, suspension or bankruptcy.
To response this crisis, FUNAN have been placing the Business Contingency Plan (BCP) in to implementation to ensure business operation still be usual and support to its clients without any disruption and ensuring the staff well-being. Staff and clients are introducing to conduct temperature scan, hand sanitizing before access to FUNAN offices. 14days quarantine have been introduced to high-risk employee who joined big gathering of any religious or social events through the working from home. FUNAN have been implementing strictly to the authority instructions on the COVID-19 fighting campaign. Through our social media, hygiene or basic methods of self-protection from COVID-19 have been posting and sharing by our staff and FUNAN fans. While FUNAN’s segment is targeting to low-income people for both self-employed person and salaried person, freezing their income as mentioned above affects would be challenging our clients to follow their loan obligation. To ensure the sustainable of our clients who were affected by the crisis—our Boards have approved procedures to support affected clients through loan restructuring. Now, some clients obtained approval and new obligations have been releasing.
For the year of 2020, FUNAN projected to accelerate its growth rate, around 11%. In this meant time, we are focusing on staff capacity building, internal control management, developing the Loan Origination System (LOS), pursuing Bancassurance license and other franchises development for the readiness of business resilience after the crisis.
To the end, we are grateful to thank and whish our customers, shareholders, regulators, staff and their family with happiness, prosperity and successfulness.
Stay safe and healthy.
Mr. Khou Buntry
Chief Executive Officer