The S&P Global Ratings agency has raised the long-term credit rating of the Advanced Bank of Asia (ABA Bank) to reflect “sound financial performance from the Kingdom’s third largest commercial bank”.
With the outlook stable, ABA Bank’s rating has been raised to ‘B+’, according to the bank’s filings to the Cambodia Securities Exchange (CSX) on Monday.
S&P had previously assigned the National Bank of Canada subsidiary a ‘B’ rating in 2017, maintaining it last year.
“We raised our rating of ABA Bank based on the bank’s material and growing market share of loans and deposits with above-average profitability. ABA Bank is currently the third largest bank in Cambodia, and its business franchise covers urban and rural customers, and has a market-leading digital platform.
“In our view, the bank’s competitive advantage will likely continue to support long-term business stability,” S&P said in a statement obtained by The Post.
The statement said the positive outlook was due to ABA Bank’s ability to sustainably manage risk and growth in Cambodia’s high-risk environment, adding that “S&P experts view ABA Bank’s digital platform and management capabilities as the bank’s competitive advantage, supported by oversight from its parent, the National Bank of Canada”.
ABA Bank’s growing number of clients across the Kingdom and its strong presence in the micro-, small- and medium-sized enterprises (MSMEs) lending sector would continue to bolster the bank’s expansion, according to the statement.
“We estimate ABA Bank’s market share to be around 10 per cent for loans and around 12 per cent for deposits as of June 30 this year,” S&P said.
ABA Bank chief international operations officer Zhiger Atchabarov said: “We are glad to receive the credit rating upgrade from S&P as it reflects our excellent performance and confirms ABA Bank’s strong position in the market. This is a result of the implementation of our sound business strategy that benefits customers and shareholders.”
Association of Banks in Cambodia president In Channy had previously said that an increase in ABA Bank’s long-term credit rating by international rating houses such as S&P would indicate a stable macroeconomic situation for both the Kingdom and the bank.
CSX Market Operations Department acting director Kim Sophanita told The Post on Tuesday that the positive credit rating would create confidence in ABA Bank as it floats corporate bonds on the market.
“When a bond gets a higher credit rating by a credit-rating agency, it means the bond will have a lesser risk of defaulting than before, so [ABA Bank] bond prices should increase and its yield should drop,” she said.
Prime Minister Hun Sen said last week that Cambodia’s economic growth is projected to be 7.1 per cent this year or about $24 billion thanks to the good performance of the industrial sector creating strong domestic revenue.