Cambodia hit hard by COVID 19 in 2021, some potential locations had been locked down frequently including Phnom Penh, some urban areas and Seam Reap town. The authority extended its restrictions and rolled out the vaccination campaigns until forth quarter of 2021. Thank the National Bank of Cambodia (NBC) for COVID restructuring program to support bank and microfinance to help their clients from COVID-19 affects. The COVID restructuring program was phased out by mid-year of 2022. Just ease from the global pandemic while some key economic sectors not yet fully recovered, the world has been under pressure again from Russia-Ukraine war. Overcome inflation, the policy makers decided to increase interest rate. These continue to be constrained for people income; while we can see the non-performance loan (NPL) increased compare to last year. The NPL of bank and microfinance rose to 3.1% and 2.5% respectively while Funan was 3.4%.
It has been six years since the acquisition in 2017 which Funan Microfinance Plc has been taken over by CP Bank; our asset size has been increasing year on year. By the end of 2016, Funan’s asset size was recorded at USD12 Million and moved to USD82 Million by the end of 2022. Before the COVID-19 outbreaks, the Compound Annual Growth Rate (CAGR) of Funan’s asset was 69% while the CAGR was 11.4% after the COVID 19. As of 2022, Funan was ranked in the third place in term of asset size; and stood in number one for the biggest branch networks among the non-deposit microfinance operators in Cambodia. With its branch networks and ecosystems where Funan potentially reaches to their consumers, especially the low-income people in the community. In 2022, the gross loan portfolio was USD77.99 Million with 8% growth. We also made a profit at USD3.25 Million; it was 20% greater than financial year 2021. Funan has been leveraging its asset and equity efficiently that is reflected with the Return of Asset (ROA) and Return on Equity (ROE) recorded at 4.0% and 16.2% respectively which were better than industry as whole of Microfinance sectors with 3.0% for ROA and 13.6% for ROE.
With the good business momentum of Funan Microfinance Plc., in the beginning of 2023, we were awarded Fastest Growing Microfinance Company Cambodia 2023 in the Global Banking and Finance Review Award 2023.
Implementing digitized lending process through the developed loan origination system, Funan has fully launched to all branches in 2022. With the automating process, deviation verification with the set parameters, system integration with local and Credit Bureau Cambodia (CBC) systems, would reduce human errors and fasten loan approval process. Our Credit Officers are using tablets instead of paper writing for client onboarding and loan assessing. For better managed customer interaction, customer complaints compiling and handling, Funan invested in contact center system in 2022. Within one platform in which integrating all Funan’s social channels, our agents would be able to track and respond to our prospects with good quality. With our customer centricity, Funan commits to bring our segment with new experiences. In our regular annual action plan, in 2022 for corporate social responsibility (CSR), the CSR agenda was Financial Literacy Campaigns Aligning with Government strategy on Financial Inclusion 2019-2025 in part of Promote financial literacy campaigns. In the strategy of government leading by NBC, it is mentioned the role of financial service providers in Financial literacy campaigns. Besides implementing the transparency pricing and some parts of client protection principles—FUNAN raises the Financial Education program. The implementation of Financial Education was targeted to Funan’s clients and client’s families under the topic of “Basic knowledge of family financial management”. Funan developed and published the Financial Education handbook (FE handbook) of 25,000 units. Our key staffs were invited to join training of trainer (ToT) to ensure the FE handbook contents would be able to deliver to community with expectation. Funan has been cooperating with Sovannphum Life Assurance since 2021 under bancassurance business of referral model to bring our clients with protection. By the end of 2022, 35% of loan portfolio have been protected with credit life insurance. As the Microfinance to enables success and enriches lives of Cambodia people what we have supported to our clients in the hard time including COVID loan restructuring or non-COVID loan restructuring, maintaining the loan interest rate to clients during the world financial interest rate increased, we expect our clients would be resilient and recovered as well as loyalty with our institution while we believe that client success is our success. Planning ahead for Funan Microfinance Plc., in order to strengthen collection capability, loan collection system is under development and plan to implement in 2023.
Last but not least, we are grateful to have immense support of our customers, regulators, shareholders, partners, management team and staffs. Without your support and advice, Funan won’t success and grow as of today.
Again, we thank you and are looking forward for such a great support in the next coming years.
Mr. Khou Buntry
Chief Executive Officer