The new shareholder of AMK Microfinance, one of the few remaining microfinance institutions (MFIs) to focus on small loans in rural areas, on Tuesday expressed a commitment to preserve its business model.
It said the company will continue to focus on micro and small loans for the rural market.
With an average loan size of only $700, AMK is one of the few remaining MFIs in the Kingdom that still focuses on small loans.
The declaration from the new shareholder comes after the company announced in August that it had officially sold 80 per cent of its stake to Taiwan-based Shanghai Commercial & Savings Bank (SCSB) for an undisclosed sum.
‘AMK has done well’
Speaking at a press conference on Tuesday, SCSB executive vice-president John Yung said its mission is to provide better financial services to rural Cambodians.
“AMK has done very well as the loans they offer are not for consumer spending but helps generate economic activity."
“We commit to sticking to what AMK has been doing because it is a major MFI that actually spreads out to rural areas. It covers about 90 per cent of villagers – even other major [institutions] don’t cover that much,” he said.
Yung said AMK’s management infrastructure and business model will remain the same since SCSB’s help is primarily focused on corporate governance and control of capital funding.
An annual report at the end of last year showed that AMK’s total borrowings stood at $214 million, while total deposits were at $121.6 million. The company saw a decline in net profit last year – down to $5.27 million from $6.63 million the previous year.
AMK CEO Kea Borann said on Tuesday that the decision to work with a foreign bank as a new shareholder is a normal change in the industry as the sector has always had a new turning point every 10 years.
He said all lending institutions were set up by NGO funds and operated as NGOs during the 1990s. But there was a commercialisation of the sector during the 2000s as institutions became private enterprises.
Many foreign banks, Borann said, were now entering and acquiring major MFIs which is another turning point.
He said SCSB’s share in AMK will allow the latter to work better as it will be able to strengthen human resources, source funds and utilise the bank’s new technology.
“I believe that working together with [SCSB] will help us to provide better financial services and give confidence to Cambodians, especially our rural clients,” he said.