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Kookmin's motto: 'close, kind and friendly'

Jang Ki-sung, CEO and President of Kookmin Bank-Cambodia, spoke to reporter Nguon Sovan about banking development in Cambodia.

Kookmin Bank launched in Cambodia during the global financial crisis. More than one year later, how is business faring?
Even thought we launched during the global financial crisis, Kookmin Bank came to Cambodia as it has great potential. Cambodia is an important member of ASEAN and of the Great Mekong Sub-region, and Korea is seeking to play a role in the development of the region.

Within only a year and half, our assets have tripled and customers have simultaneously increased. Our portfolio of loans is around US$16 million and deposits reached $20 million. We could successfully make profit this year, which is earlier than our expectations.

Cambodia has 28 banks and numbers will reach 30 by the end of this year. What do you think about the environment?
I think it’s time to strengthen the conditions for new entries in the industry – such as licensing only one new bank to enter the Cambodian market a year, considering the huge number of banks here.

The National Bank of Cambodia has asked commercial banks to triple their registered capital to US$37.5 million by the end of 2010. Is your bank going to meet this requirement?
Kookmin Bank in Korea is the major shareholder of Kookmin Bank Cambodia and has an A2 rating from Moody’s, an A by S&P, and A+ by Fitch. Therefore we are not required by the new regulations to increase capital to $37.5 million at all. On the other hand, since our business keeps growing, we need to inject more capital to expand our operations in Cambodia by the end of this year. We plan to open branches from 2012.

In the context of tough competition, what is the bank’s strategy to attract custom?
Our motto is to be very close, kind and friendly to our customers. Our processes are very fast and transparent, due to our advanced IT system. In terms of interest rates, we just follow the market trends, but it varies according to the customer’s credit.

Recently, Campu Bank set its interest rates for loans at 6 percent per annum. Could Kookmin Bank lend to customers at this rate?
If Campu Bank made the right decision, other banks should follow its footsteps.

In reverse, if it doesn’t work out well, the interest rate of Campu Bank will go back to what it was before.

With my long experience in banking industry, customers do not decide to choose a bank by looking into interest rates alone but other items as well. Trust, loyalty, transparency and service quality could be the important factors in choosing a bank.

What is the perception of Cambodian people towards borrowing and depositing money in banks, when compared to those in Korea?
In past history, there has been a bad image of the banking sector – Cambodian people did not trust in the banks and were reluctant to use services and products.

But in Korea, every single and eligible Korean person commonly uses a bank. All payments and business can be made through banks and banking instruments. I hope banks recover trust from Cambodian people soon and become a part of their lives in the near future.

What are the opportunities and challenges that the bank sees in Cambodia?
The financial industry in Cambodia is still young, and there are opportunities that Kookmin Bank Cambodia can squeeze into. The average annual growth rate for banking assets is around 40 percent for last five years, but its proportion of GDP is still small.

When Cambodia becomes an advanced country in the industry, Kookmin Bank Cambodia will be at the centre as one of the leading banks in Cambodia.

However, at the midpoint of development, we are challenged by a lack of infrastructure – such as inter-bank and banking networking.

In other words, the financial market is yet to be established, money clearing system between the banks and credit report systems are just at the beginning stage of development. I think if such infrastructure is in place, the number of people using banking services will increase sharply.

What have you observed regarding demand for loans and deposits this year?
Demand for loans has increased as the global economy recovers. I think that deposits will increase faster than loan demand this year and also next, so the banks should be careful handling money because we should pay a lot of interest.

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