ACLEDA Bank Plc. (CSX:ABC) has announced a $79 million commercial syndicated loan. Cathay United Bank will act as the mandated lead arranger and bookrunner – committing the funds to support the bank’s general working capital, as well as assisting Cambodian SMEs.
According to a public release last week, the loan was between 4 – 5% (interest + fees) over three years for the “long-term facility is to support strategic growth and diversification of funding sources in line with Bank’s plan”.
Mar Amara, Chief Financial Officer at ACLEDA Bank told Cambodia Investment Review the funds will be used to provide loans to customers, and particularly to collaborate more actively with the Credit Guarantee Corporation of Cambodia (CGCC) for SMEs whose businesses are viable but have insufficient or no collateral.
In addition, the funds have also been earmarked for the Small and Medium Enterprise Co-Financing Scheme Phase II between the government and SME Bank.
The 4 – 5% repayment rate is comparably low to the recent ABA Bank bond listed on the local stock exchange in 2019 with both banks holding an S&P B+ with a stable outlook rating. The ABA bond was floated around $21 million over three years and a coupon of 7.75% annually.
According to Mar, ACLEDA was able to secure such a competitive interest rate based on its reputation, financial strength, credit rating, and as a listing company as well as its ability to absorb deposits from the public both individual and corporate.
She added ACLEDA has joined the Co-Financing Scheme between SME Bank of Cambodia to lend small and medium enterprises with a better interest rate as well as strengthen the risk assessment process and capacity valuation to match loan products with SMEs capacity and to minimize risk.
The government-backed SME CO-Financing Scheme Phase II (SCFSII) was launched last month to provide affordable financing with favorable conditions to promote the development of SMEs in priority sectors. The sectors covered by the program are industry, service, and trade.
Around $100 million was set aside for SCFS II, with $50 million of it coming from the government (SME Bank of Cambodia), the remaining will be covered by another 26 participating financial institutions, which includes ACLEDA Bank.
SMEs in need of financial access can apply at any participating bank for capital expenditure-investment (limited to a maximum of $500,000) and working capital (limited to a maximum of $300,000).
Loans can be repaid over a maximum of seven years at a rate of between 6.5 – 7.5% per annum. Back in mid-October 2020, the SME Co-Financing Scheme (SCFS) phase I have successfully approved loans worth USD 100 million with an interest rate capped at 7% to 753 SMEs.
ACLEDA posted a record first half-yearly profit of $81 million, an increase of 27.4% compared to the same six-month period last year, attributed to an increase in net interest income of 12.6% over the same period, according to the company’s interim financial report.
ABC shares however have continued to trade well below what many analysts consider fair market value after a large number of staff shares flooded the market.
ABC stock price dropped to a record low of KHR 11,480 this month, closing trade at KHR 11,620 this week down 28% from its KHR 16,200 IPO last year.