The newly appointed Chairman of the Association of Banks in Cambodia (ABC) Mr. Raymond Sia spoke with CIR Leader Talks on his ambitions and aspirations for the association.
Taking over the role in March this year, the Malaysian national and Chief Executive Officer of Canadia Bank is the association’s ninth Chairman but the first international banker since its establishment in 1994.
Raymond Sia who has over 28 years of experience in banking, treasury, and financial services across multiple senior management roles in Cambodia, Malaysia, and Vietnam took over the role from ACLEDA Bank’s Dr. In Channy. As a foreigner, he is honoured to be given this stewardship to lead an important association such as ABC.
To read CIR Leader Talks with Dr. In Channy click here.
“I am heartened and honored to receive the support and vote of all our members in the last Annual General Meeting; and I am excited to work with the elected Council Members for the future development of the banking & finance industry ” Raymond Sia said.
“We need to be mindful that this role of Chairman or Council Member is transitory and not permanent and as good stewards we need to be responsible to carry-out our duties and action for the best interest of the industry” he added.
Collaboration, Cooperation, and Capacity Building
According to Sia, he and the association’s council of 12 board members will be guided using the simple principles of 3Cs of; Collaboration, Cooperation, and Capacity Building, designed to bring together its 76 members to strengthen the relationship with each other.
As well as within the sector and also with key & important external stakeholders such National Bank of Cambodia and Ministry of Economic and Finance.
Formally registered with the Ministry of Interior in 2012, the ABC Council must consist of at least eight members from Commercial Banks, one from a Specialised Bank, one from CMA, at least one from MDIs, and one from CAFT.
“One of the major focuses of mine has and will continue to be capacity building for our industry. With this regards, it is good to see almost full participation of members in the Development Fund. We have a handful of members who are still considering their participation in the DF and I am hopeful we will have full participation during the tenor of this Council,” Raymond Sia said.
“Our members are also cognizant of the importance of training and having adequate capacity building for their employees to ensure growth and sustainability of the industry” he added.
Under the 2019 Development Fund, financial institutions that poach other institutions’ staff are now required to pay one month’s gross salary into the fund to assist with the professional training of staff for the sector.
Headwinds and tailwinds for the sector
According to the latest National Bank of Cambodia 2021 annual report, outstanding loans rose by 21% year on year to $45.7 billion, while customers’ deposits only increased by 15% to $38.5 billion.
It has been this trend of increasing loan-to-deposit ratios that banking institutions need to be mindful. On the subject of liquidity, Sia mentioned “liquidity is the blood and life-line” of any business.
In the case of banking industry, it is important that financial institutions fund themselves before they lend. I am confident our member institutions in their wisdom practice prudent financial management.
“The last two years events have been unprecedented, with the rage and impact of the Covid-19 pandemic, geo political tension and war in Europe & South China Sea, high inflation rates, rising interest globally. These events have certainly taken a toll both direct and indirectly on our economy and will & have created headwinds for the banking industry and other industries,” Raymond Sia explained.
To read more about Cambodia’s economic outlook for 2022 click here.
So far, the Non-Performing Loan ratio (NPL) for the industry has remained stable at around 2% however Sia believed there is upward pressure for NPL in the coming quarters due to the headwinds highlighted earlier.
Reflecting on the current policies implemented by the NBC, the Chairman and his association are happy and believes the Regulator will continue to practice pragmatic and consultative approach with regards to new policies.
Raymond Sia also opines that the Cambodian Banking Industry still holds much opportunities and the emergence of new entrants into the industry is a testament of this.
Better engagement with media
As Cambodia’s financial sector has developed away from its initial development framework in the 1990s towards more traditional international ‘for profit’ financial institutions, the industry has come under increased scrutiny from both non-governmental organizations as well as international media outlets.
A key agenda for ABC as well as its partner association the Cambodia Microfinance Association is to proactively engage with both local and international media outlets.
According to Raymond Sia, while some negative press is constructive, provided they are accurate and true, and provides opportunities for the sector to learn from. He outlined taking a more proactive approach as well as highlighting the good work the industry does is equally if not more important.
Addressing these concerns, Cambodia’s three leading financial associations have recently launched their flagship Banking and Financial Institutions Code of Conduct and updated Lending Guidelines to Prevent Over-Indebtedness aiming to increase the current level of trust and accountability of members.
The guidelines aim to address some of the most common complaints by critics of the industry including aggressive selling and debt repayment techniques as well as non-transparent fees.
To read more about the self-regulatory guidelines click here.
“Like any industry around the world, there will individual members that may not be fully compliant and places the industry in a negative light. However, under my tenure I will aim to proactively work alongside my esteemed Council Members and with the media to address these issues and highlight the measures in place to promote better and responsible banking,” Raymond Sia said.
Most recently, the association also joined Cambodia’s Ministry of Information to raise awareness of the financial sector and increase cooperation between the media to build trusted sources and reliable information for local media outlets.
“In summary, I hope to utilize the agreed and endorsed by the Council Members and Members of ABC three C’s concepts of collaboration, cooperation, and capacity building over the next two years to fulfill the association’s purpose of promoting constructive dialogue amongst member banks, and to serve as an industry voice to the public and the Government,” he said.