Harrison White
Launched to market in 2008 Phnom Penh Commercial Bank Plc (PPCBank) was fully acquired, in 2016, by the Korean consortium of South Korean JB Financial Group and what is now OK Financial Group (a conglomerate run by Korean Japanese entrepreneurs), each obtaining 60% and 40% of stakes respectively.
As of June 2021, PPC Bank has total assets of $1.02 billion and total equity of $161 million. In its most recent half-yearly report, the Bank reported income in the first six months of the year earning $6.81 million in net profit.
Last year, the Bank also successfully raised KHR 80 billion (approximately $20 million) during the two phases of its bond issuance process on the Cambodia Securities Exchange. Investors subscribed to the FX-indexed bonds with an interest of 6.5% per annum and maturity of three years.
This period marks to the Banks ex-President Shin Chang Moo (Andrew) who has returned to his home country of South Korea – after spending five years in Cambodia.
Earlier this year, the company announced that its Board of Directors appointed Baek Jongil as President, effective April this year.
In an exclusive interview with Cambodia Investment Review Leader Talks Mr. Baek Jongil discusses his banking experience, Korean influence in Cambodia’s financial sector and how the Bank is distinguishing itself from the pack.
“Before starting this role I previously held the position of CEO at JB Asset Management Co Ltd, a subsidiary of the JB Financial Group, a major PPCBank shareholder,” Baek said.
“With over 30 years of experience in the financial industry, I am no stranger to the Cambodian banking sector, having been a member of PPCBank’s Board of Directors from September 2016 to August 2019, and has visited the Kingdom on several occasions,” he added.
Baek believes that like many other growing countries Cambodia has great potential specifically mentioning higher financial inclusion, the dynamism of the government, and for the population to adopt new technology and services.
However, he added that there needs to be more done around lack of human resources, lack of databases and its management systems.
Adding, the well-versed concerns by many in the sector that the Kingdom currently has too many financial institutions and the market is too heavily leveraged on property-related Industries.
Korean investment in Cambodia’s financial sector
There has been strong investment into Cambodia’s financial sector by Korean firms over the last 20 years – most notably the Cambodia Securities Exchange being established with 45% ownership by its Korean equivalent.
Most recently there was also the full acquisition of Cambodia’s largest microfinance institution PRASAC Microfinance paying $322 million for the remaining 30% of the company by KB Financial Group.
Baek says that firms are entering into the Cambodian market as a part of an overall trend of Korean financial institutions expanding into the South Asian region, “where they see high growth potential and alternative market opportunity”.
“As we are well aware, Korea is a developed country with low Gross Domestic Product growth with banking industry near at saturated level,” he added. Baek added, that Korea has a relatively advanced industry structure with a variety of sectors and a balance of capital and debt markets.
“In addition, pricing is quite sophisticated according to risks, and technology and capability to assess the risk backed from a credit bureau and is one of the keys to success,” he said.
That said, Baek commented at PPCBank they have tried to localize as much as possible. “We believe we have been quite different from other Korean FIs in many aspects of banking business, namely corporate culture and client portfolio both in-home and here in Cambodia, we do not see any major threat or competition with them,” Baek said.
“They will go their own respective ways based on different strengths and strategy’s they have,” he added.
PPCBank focusing on Cambodia’s SME sector
During the COVID 19 pandemic PPCbank saw an increase in its Non-Performing Loan ratio over the six months growing to 0.77% at the end of June 2021 from the 0.5% recorded at the end of December 2020.
Reflecting on how he will lead PPCBank out of the COVID era and into new growth. Baek said his previous president Mr. Andrew Shin made a strong base. Adding, his challenge starts from this base and that a business entity is like a living creature, continuously required for changes to survive.
“My job here is to identify which to change, design how, and take prompt actions in response to changes in business environments on a forward-looking basis. My goal is to make our Bank more popular with a wider and deeper customer base by providing the easiest and warm banking service to the people of Cambodia,” Baek said.
“Cambodia’s financial sector in terms of several banks, it is overly crowded, causing lack of skilled bankers and a bit of a competition for their share. However, in terms of financial resources, it is never a serious oversupply, setting aside the impact of COVID-19 on the overall economy I believe,” he added.
Looking to the future the Bank has set its sights on focusing on Cambodia’s Small and Medium Enterprizes with plans to launch new fast-tracked loans ranging from $3,000 to $100,000.
“We have designed our SME products so that we can fast track loan approvals that will allow our customers to access funds quickly and with minimal paperwork, we are also a member of the Credit Guarantee Corporation of Cambodia,” Baek said.
PPCBank also provides a full suite of products and services, ranging from deposits and loans to modern digital mobile applications, as well as its internet-based corporate service ‘smartBiz’ and it’s Mobile Teller’ for in-branch and remote consultations.
“I’d say PPCBank will focus further on quality-driven growth and distinguish itself by setting a right target at right time with right resource allocation. To achieve this, we will dig into every small detail of each business line and segment,” Baek added.
For more information on PPCBank products and services click here.
‘Cambodia Investment Review – Leader Talks’ series interviews Cambodia’s most influential and important decision-makers so our readers can better understand current and future investment opportunities.
