‘Analysis key for responsible lending’

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Chief credit officer Bibhu Pandey. SUPPLIED

ABA’s user-friendly digital banking and prudent lending culture will continue to propel the lender’s growth prospects in the coming years, says chief credit officer Bibhu Pandey.

How is ABA Bank a responsible lender? And how has this built trust for Cambodians in the bank taking care of their personal and business banking needs?

Being a socially responsible enterprise, ABA ensures that borrowers don’t have an excess burden in repaying the requested loan, and that the loan is used for productive purposes according to the business plan.

To ensure this, we critically analyse all credit proposals submitted to us. We also ensure that loans are only provided to legal and environmentally friendly businesses. Businesses under the exclusion list, such as those involved in unlicensed sand dredging or logging, are not entertained by ABA.

We always fully inform borrowers about the terms and conditions of credit during the lending process to maintain complete transparency.

As well as that, our loan officers educate micro and small borrowers on how to properly keep financial records and conduct transactions through banks.

It will help them get easy access to financing, should they wish to expand the business to a larger scale in the future.

Together with the professional and cooperative behaviour of our loan officers, these aspects build trust for Cambodians towards ABA in taking care of their personal and business banking needs.

How has the bank’s loan book growth been recently? How did you manage to achieve consistent loan growth over the previous years?

Our loan book keeps growing steadily. Of course, growth slowed down for several months during the pandemic because our loan officers could not travel to inspect and analyse the businesses of potential borrowers.

It is crucial for us, as responsible lenders, to ensure that the declared business revenues will allow the borrower to repay the requested loan without any excess burden.

The bank has managed to achieve consistent loan book growth thanks to people’s increasing trust in ABA because of our strong shareholder and vast digital presence.

Another of the main reasons for the growth is ABA’s technical advancements.

Due to the availability of digital banking and self-banking platforms, interconnected business people – suppliers, buyers and business partners, among others – are more willing to do their financial transactions digitally through ABA.

Our customers find it convenient to digitally access all the banking products and services, including the need for credit, within the ABA ecosystem.

Where do you see the greater loan growth coming from, sector-wise?

Historically, the most significant loan growth in ABA comes from the trading sector.

Has Covid-19 impacted the bank’s asset quality, and how are the non-performing loan (NPL) numbers?

The pandemic has affected the entire country, and ABA is no exception. At the same time, from March 2020, ABA started to provide relief measures to its borrowers whose businesses were affected due to the economic downturn because of Covid-19.

As of the end of September, restructured loans constituted up to 14.8 per cent of the loan book. NPLs remain stable at 0.8 per cent of the portfolio, which is below the market average.

Is ABA continuing to roll out any special financial support programmes to assist vulnerable business borrowers?

Yes, the bank continues to provide relief measures to vulnerable borrowers with existing loans whose businesses have been affected during the pandemic.

The relief is provided by reducing their monthly instalment repayment amount, either by postponing monthly principal repayments or both principal and interest repayments to provide a buffer time to regenerate their business revenue.

ABA has also joined the SME Co-Financing and Credit Guarantee Scheme introduced by the government to support local businesses further.

This scheme allows eligible borrowers or borrowers who don’t have proper real estate collateral to get lower-price financing.

What is your advice to borrowers for maintaining financial fitness?

It is crucial to follow financial discipline to maintain financial fitness. It means building enough knowledge of how a business works, planning properly how to spend and save business funds, and following the plan.

From our market observations, most businesses fail because they either don’t know how a business works, or they don’t have a proper business plan, or they don’t spend according to the plan.