Cambodia Investment Review
Acleda Bank Plc (CSX:ABC), has reported a significant downturn in its financial performance for the year ended December 31, 2023, with total net profit decreasing to $138.3 million, down from its record annual profit of $170.3 million in 2022. This 18.6 percent decline in profitability underscores the heightened economic pressures the bank faced, including an increased allowance for impairment losses due to regulation requirements and the lingering impact of the pandemic on loans and advances.
Read more: ACLEDA Bank Reports Consecutive Record Annual Profits in 2022
This decrease has been attributed to a higher allowance for impairment losses, necessary due to regulation requirements and the ongoing impact of the pandemic on loans and advances. The bank’s net interest income also experienced a 4.3 percent year-on-year decrease to $107.4 million.
Despite these challenges, the Bank saw a 13.1 percent increase in customer deposits, reaching $7.2 billion, and a 7.1 percent rise in total assets to $9.8 billion. However, the bank’s revenue growth and deposit expansion were overshadowed by the continuous pressure on its share price, which, as of February 24, hovers around 9,800, significantly lower than its initial public offering (IPO) price of 16,400 in 2020.
NPL Increases To 6.39% From 2.9% In 2022
The bank’s 4th quarter filing with the Cambodia Securities Exchange (CSX) revealed that the non-performing loan (NPL) ratio increased to 6.39 percent from 2.9 percent in 2022, indicating a slight increase in financial stress among borrowers. Despite the uptick in NPLs and the decline in net profit, Acleda Bank described 2023 as a year of “strong performance,” with total revenue and operating profit up by 11.9 percent and 14.9 percent, respectively.
In his commentary, ACLEDA Bank Chairman Mr. Chhay Soeun addressed the broader economic challenges, including global geopolitical tensions and the impact on global trade, which have contributed to the uncertainty facing the bank and its stakeholders. Despite these challenges, the Cambodian economy continues to show positive signs of recovery, supported by manufacturing exports and the gradual revival of the services sector.
The Bank also highlighted its stable credit rating of “B+/Stable/B” from Standard & Poor’s (S&P) and its efforts to enhance digital banking services and facilitate business-matching events between Cambodian and Japanese investors. These initiatives are part of ACLEDA Bank’s strategy to navigate through economic headwinds and maintain its position as a key player in Cambodia’s banking sector.
Continued Low Share Price After IPO
The significant drop in ACLEDA Bank’s share price since its IPO reflects investor concerns with large stock held by the company’s staff and the broader market sentiment affected by both local and global economic uncertainties. The decline poses a challenge for the bank, highlighting the need for strategic initiatives to bolster investor confidence and drive long-term growth.
Read more: ACLEDA stock price plunges after staff shares float surprises market
As the Bank looks to the future, Mr. Soeun expressed gratitude to stakeholders for their ongoing support and emphasized the bank’s commitment to navigating the complexities of the current economic environment. ACLEDA Bank’s resilience in the face of these challenges will be crucial as it seeks to recover share price value and sustain its growth trajectory in the competitive banking landscape.
