Shinhan Bank Cambodia Plc has introduced a slew of proactive measures to ensure its customers do not default on their loans during the Covid-19 outbreak that has shattered businesses.

The bank reached out to around 180 customers to adjust their loans and interest payment schedules to help reduce the financial stress on business operators.

“We decided to introduce [loan] restructuring for our customers even before the National Bank of Cambodia’s [NBC] announcement to do so. We are talking to all our customers and not restricting the financial restructuring to any particular sector.

“Most requests from customers are to postpone payment of the principal [amount] because that is usually a burden for customers.

“The most affected businesses are rentals and properties, and restaurants,” Shinhan Bank Cambodia’s president Lee Taekyung told The Post.

In early April, the NBC directed banking and financial institutions to implement loan restructuring exercises to relieve customers’ financial burden as their incomes suffered due to the closure of businesses or a slowdown in their operations.

The four main areas on which the NBC focused were tourism, garment manufacturing, construction and transport.

Shinhan Bank Cambodia is a subsidiary of Shinhan Bank, which is the largest bank in South Korea.

Established in 2007 in Phnom Penh, the bank has opened nine branches so far and plans to open three more this year.

According to Lee, 4.5 per cent of the bank’s borrowers – or around 180 clients – have faced some sort of financial hardship since the Covid-19 outbreak, and loans worth around $16 million have been affected.

“We have one product with high a interest rate, which is car loans. So we have waived a portion of the interest payment for six months, not postponed it. And after six months we will charge the normal interest [rate]. Payment of the principal is postponed,” he said

Shinhan Bank’s current outstanding loans stand at $364 million – with mortgages making up 40 per cent, while the personal loans ratio is 30 per cent, with commercial and other loans also amounting to 30 per cent.

Lee is confident the bank’s non-performing loans (NPL) will not spike due to the quick financial restructuring exercises taken by the bank to maintain financial stability.

“Our customers are strong. I don’t think NPL will go up much because we are providing them relief, helping restructure their loans so they can come out of their hardship during this period.

“By strengthening our risk management team and diversifying our loan products, we were able to manage our NPL ratio to 0.6 per cent as of May this year.

“We maintain a relatively stable NPL ratio through thorough management and strong organisation, and we will keep maintaining loan stability through the maintenance of the loan management process and the expansion of the loan review department,” Lee said.

In addition, Shinhan Bank has introduced another financial package – “Covid-19 Business Financial Recovery” – to help business owners affected by the pandemic by offering favourable interest rates and a one-year grace period to ease their instalments plan, with long term tenures with a maximum period of 10 years.

“Covid-19 support loans and loan restructuring will play an important role easing customers’ payment difficulties to give those suffering in these testing times a good chance to survive and recover in the future,” Lee said.

Shinhan Bank offers a range of microloans such as personal loans, car loans and employee unsecured loans, as well as mortgages.

It also plans to introduce market loans – credit provided to local vendors using their market stall as collateral.

“All loans are provided to customers with very favourable and competitive offers in order to increase living standards and the success of people’s businesses,” Lee said.