PPCBank (Phnom Penh Commercial Bank) has seen noticeable business expansion in the two years since it was purchased by a joint venture between South Korea’s JB Financial Group Co Ltd and Apro Service Group Co Ltd. The bank is also diversifying its loan portfolio from corporate clients to medium and small loans.
Hor Kimsay of The Post spoke with PPCBank president Chang Moo Shin to discuss the bank’s progress and its expansion strategy.
How has PPCBank progressed after its shareholders changed in September 2016?
During the two years since we took over PPCBank, we have tried to offer new products and a more efficient process and procedure. Our loan portfolio has been diversified. Almost 80 per cent of our customers were large corporations.
We understand that in order to create a sustainable business environment. We need to have a strong customer base in retail and SMEs. We not only try to [offer] better terms and conditions on loans, but also better services.
Large corporations now form only 65 per cent of our customers. The rest are SMEs and retail loans. By “retail loans”, we mean housing and vehicle loans.
What is your current loan portfolio and deposit and how does it compare to 2016?
At the end of this year, we will have about $570 million in outstanding loans, which is almost a 70 per cent increase from two years ago. In 2016, we had about $350 million in outstanding loans. Our deposit is currently about $600 million.
What can you tell us about your digital banking strategies and what is your view about its future trend?
We have introduced and currently offer a lot of digital channels. Two years ago, we only had two channels – branches and ATMs. But now, in addition to expanding branches and ATMs, we also provide mobile banking apps, corporate internet banking and mobile retail financial services among others. We have various channels that customers can conveniently use.
I think many banks are now turning to digital channels and services. At PPCBank, we have changed a lot of banking practices. Before we bought and took over PPCBank, a mere five per cent of its banking transactions were done digitally. Now, more than one-third of our banking transactions are conducted through digital channels. That will increase further.
What are your main challenges in operating a bank in Cambodia?
We don’t see any major challenges at all. Before we moved into the market, we studied a lot about the Cambodian economy and culture for about three or four years. We are familiar with how people are and how the financial industry works.
A challenge I should mention is the quick change of regulations required after the central bank [the National Bank of Cambodia] announced seven or eight prakas. However, we have the capacity to adapt to the change. I’m pretty sure that through these prakas, the Cambodian banking and financial industries are moving forward. So, I would say it is not a real challenge.
Do you think the Cambodian central bank regulation requiring lending institutions to have at least 10 per cent of their loans in Khmer riel by the end of next year is a challenge? What are your strategies to fulfil the requirement?
We have less than five per cent of our portfolio in Khmer riel at present, but we will definitely increase it and reach at least the 10 per cent required by the central bank by the end of next year.
We work directly with SMEs and are increasing our market share of SMEs right now. We are trying to promote better terms and conditions for loans in Khmer riel for them.
We also have a lot of exposure to Microfinance Institutions (MFIs). We work with MFIs to persuade them to increase their loan portfolio in Khmer riel. We can finance their operations by giving them loans.
We deposit Khmer riel into microfinance deposit-taking institutions, and by doing so, we indirectly increase our Khmer riel loan portfolio. Rather than invading the MFI market, we try to promote their operations so that they can provide loans in Khmer riel to their customers with better terms and conditions.
Our strategy regarding the 10 per cent Khmer riel requirement is indirectly through MFIs and also through other direct channels.
This interview has been edited for length and clarity.