PRASAC Microfinance Institution Plc – the largest microfinance provider in Cambodia – has posted $68.47 million in half-yearly net profit equivalent to 82.55% compared to the same period last year. The rebound occurred after concerns over a $800 million “technical default” last year.
The company stated in the report the main reason of increasing profit was interest income and fees and commission income which grew respectively by $19.66 million and $1.63 million due to growth of loan portfolios in the second quarter this year.
Adding, that total expenses also decreased by $3.48 million equivalent to -9% compared to second quarter of 2020. The Non-Performing Loans Ratio rose to 1.58% from 1.37% last year.
Kwi Sang Jun, Chairman of Prasac stated in the report: “Despite this time of uncertainty, PRASAC continues to grow in all key areas, including the total assets, deposits and loans, profit as well as financial technology. We have learned a lot from the challenges of the past several years that made PRASAC become a strong and stable institution for more than 25 years of sustainable growth.”
Last year PRASAC told local media outlet Khmer Times that it had received full consent to waive the covenants from all lenders. The concerns were outlined in the company’s 2020 half-yearly financials submitted to the local securities exchange and reported that the company “had been considered as being in default of more than $800 million in liabilities to funders due to the quality of its assets”.
The confirmation came after the company said it was requesting all its lenders to temporarily waive some covenants stipulated in its loan agreements. The requests were made after PRASAC was unable to meet its obligations to its lenders because of the economic effect of the COVID-19 pandemic during the first half of 2020.
Last year, the National Bank of Cambodia approved South Korea’s KB Kookmin Bank, a subsidiary of KB Financial Group, to purchase a 70% stake in PRASAC for $603.4 million. The acquirement was considered as an important safety guard for PRASAC depositors.
In addition, the company issued a corporate bond on the Cambodia Securities Exchange raising $31.8 million. The coupon rate was 7.5% with a three-year maturity (semi-annual payment). The bond was fully guaranteed by the Credit Guarantee and Investment Facility, a trust fund from the Japanese-led Asian Development Bank.