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ABA on B+ long-term rating, stable outlook: S&P

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S&P has assigned ABA’s long-term issuer rating at ‘B+’ with ‘Stable’ outlook. ABA

ABA on B+ long-term rating, stable outlook: S&P

Advanced Bank of Asia Ltd (ABA), a subsidiary of National Bank of Canada, on December 7 became the Kingdom’s second commercial bank this year to be given a long-term issuer rating of “B+” with “Stable” outlook by international credit rating agency Standard & Poor’s Global Ratings (S&P).

This comes just a couple of weeks after S&P evaluated the Stand-Alone Credit Profile (SACP) of rival lender Acleda Bank Plc at “BB” and Credit Ratings at “B+/Stable/B”.

ABA said in a statement on December 13 that the “Stable” outlook reflects the US rating agency’s view that the bank will sustainably manage rapid loan and deposit growth as Cambodia emerges from the Covid-19 pandemic.

The researchers believe that ABA’s digital platforms provides a competitive advantage that supports loan and deposit expansion, the bank said.

Compared with domestic peers, the bank also employs more sophisticated risk management systems, including cash flow analysis, to support its credit decisions, according to ABA.

The S&P report indicates that ABA is strengthening its brand presence, underpinned by substantial growth in its market share in terms of loans and deposits, physical and digital distribution network, and customer base.

“Combined with good operating efficiency, these factors support its superior profitability S&P experts also view management as having the skills, capabilities, and flexibility to navigate volatile operating conditions amid the pandemic and believe the oversight provided by the National Bank of Canada, both in ABA’s board and group audits, supports risk-based decision-making at ABA,” S&P said.

S&P also highlights ABA’s stable business position and its potential for further growth, according to the statement.

“The bank’s large customer deposit base will likely continue to grow at least in line with loans, given its strong digital platforms. Our base case is that the Bank’s business franchise trajectory, capitalization, risk profile, as well as funding and liquidity will remain broadly stable over the next 12-18 months,” S&P added.

ABA chief international operations officer Zhiger Atchabarov underlined that the S&P report offers an independent opinion on the bank’s creditworthiness and reliability, and that the agency’s reaffirmation of its rating this year confirms the steadiness of the institution’s business strategy and adaptability to changes.

“Despite the Covid-related challenges, we were able to maintain the high quality of our assets, execute proper governance, and solidify our financial stability, preparing for further growth,” he said.

In 2017, S&P assigned a “B” credit rating to ABA Bank and the rating was upgraded to “B+” in 2019 based on the bank’s material and growing market share of loans and deposits, with above-average profitability.

In its second quarter financial report filed to the Cambodia Securities Exchange (CSX) on August 18, ABA said total interest and comprehensive income reached 443.938 and 195.248 billion riel ($109 and $48 million) in the quarter, respectively, surging by 29 and 42 per cent year-on-year. Net profit “continued to rise steadily” over the period.

The bank also booked $93 million in total comprehensive income over the January-June period.


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