Phillip Capital which commenced its business in Cambodia almost a decade ago has grown by leaps and bounds, and offers a bouquet of financial services from personal loans, insurance to retail banking. Its Shareholders’ Representative Ong Teong Hoon spells out the bank’s expansion plans and growth prospects for the year ahead.

Given a solid economic growth in Cambodia, how was Phillip Group’s performance in 2018 and what is the growth forecast for next year?

Ong Teong Hoon: We must provide some context here. Any revenue or profits generated by Phillip Capital Group in Cambodia in 2018 are derived from Phillip Bank and Kredit MFI. Our General Insurance subsidiary has now obtained approval for selected products and our Life Assurance subsidiary is in the process of getting product approval in early 2019. We also have an associate company – First Finance MFI.

Both Phillip Bank and Kredit MFI are on target for 2018. We will be focusing much of our attention and resources to their approaching merger next year, so our growth forecast for these two entities will be moderate.

Our presence in the insurance industry should provide the added impetus to Phillip Capital’s overall 2019 performance in Cambodia. For General insurance, we forecast fairly strong growth with more product approvals expected and for Life Assurance we expect that business to gain momentum in 2019 and beyond with product approvals.

What is the main segment that is driving the group’s business in Cambodia and what are the factors contributing to its growth?

Our target sectors are corporates, SMEs and family owned businesses, the rising middle class and working class consumers. The growing economy provides the impetus for growth and the unmet needs of these targeted sectors offer us the promise of growth.

 

Could you brief us on the progress of the respective companies – Phillip Bank, Phillip Life Assurance and Philip General Insurance? And, how do you see their performances in 2019.

If we look at the progress of Phillip Capital Group in Cambodia, we started with an initial investment of $100,000 in First Finance MFI in 2009,which quickly grew to close to $1 million.

We are now the second largest single shareholder in First Finance. In 2012, we bought the majority of Kredit MFI PLC, and in 2018 we bought over the MFI completely. In 2014, we bought over HwangDBS Bank.

In 2017 we started our Phillip General Insurance Company, which since then has shown accelerated revenue growth, and in 2018 we started Phillip Life Assurance Cambodia PLC which should soon receive approval for its first products. 

So over the past nine years, from a modest investment of $100,000, we are now amongst the largest investors in Cambodia with over $100 million investment.

Since our investment in Kredit MFI in 2012, profitability has grown significantly after we provided the much needed increase in capital and funding. And for the bank, we turned a loss making bank since inception in 2009 to profitability growth year- on- year from 2014. 

Since receiving the product approvals for our general insurance, revenue growth is accelerating and we expect it to continue on this trajectory in the coming years. We hope to receive product approvals for our Life Company soon and this will enable us to report growing revenue trends.

We are cautiously optimistic for 2019 as we are all anxiously watching the outcome of the EBA (Everything But Arms) discussions in Brussels.

The financial sector is becoming increasingly competitive with too many players. Do you think the market is congested and what is your outlook for Cambodia’s overall financial sector?

It is indeed getting more crowded and competitive in both insurance and banking spaces. But with corresponding growth in the economy, there should be sufficient space to accommodate all the players. At least, to some extent. Much will depend on how much and how quickly the economy grows.

Fintech has become the latest industry buzzword in Cambodia as well. How do you rate this sector and do you foresee fintech companies to pose a strong competition against financial institutions in coming years?

Fintech is not only here to stay, but will grow. The general acceptance by consumers elsewhere will be followed in Cambodia. It’s a question of how quickly Cambodian consumers adopt it.

Thus, instead of resisting fintech and trying to compete against them, we should be collaborating  and embracing them. It can only benefit consumers with lower pricing, wider reach and greater efficiency.

 

Relating to the insurance sector, the market is still at its infancy as awareness about insurance remains low among Cambodians. How do you see this sector, especially life insurance, to take off?

There is a need to provide a lot of education to the Cambodian public to further grow awareness. It is also important to change mindset. Breaking superstitions and general avoidance on the subject of death or any untoward events has to be dealt with in a positive manner. 

And perhaps a concerted industry effort as well as the appropriate government agency will be a very good start. Public seminars and use of media will go a long way in this endeavour. Cambodia can perhaps have a shorter learning curve and leapfrog its education effort, as it can learn from the experience of neighbouring countries that now have a matured insurance market. 

And, what is Phillip Group’s plan for next year, any plans to launch new products for local customers?  

As a bank, apart from working on the merger with Kredit, we just started building our Retail Bank and you can expect to hear more about us in this regard. We just launched our Personal Loans campaign which is still ongoing and started a massive rebranding. There will be a few other initiatives. For the insurance companies, now that we have launched them, we are working very hard to get them into orbit. 

As a group, we are strategising on providing the full suite of financial products to consumers from a place to park and safe-keep their money (and grow it with our very attractive deposit rates of five per cent for 12 months) to helping entrepreneurs grow their wealth (with loans from us) to placing with us their risks against personal injuries or harm to loss of life or limb or loss or damage to properties.

We will be working on how to “package” these services to consumers so they need only to stop at any of our branches with Phillip Logo. Or log on to our portal for any of these services. After the merger, we will have about 80-90 branches throughout the country.