HKL’s Financial Infrastructure Evolution
to Grow Micro & Small Business Holders
in Cambodia
Presented
on
NORFUND 2014 Summer Conference
By Hout Ieng Tong, President & CEO
27-29 August 2014
This is Cambodia…
Thank You!
No 606, Street 271, Sangkat Phsar Doeum Thkov
Khan Chamkamorn, Phnom Penh, Cambodia
PO Box 2044, Phnom Penh 3
+ T : ( 855) 23 999 266
+ F : ( 855) 23 996 306
+ E : info@hkl.com.kh
+ W : www.hkl.com.kh
3
And So Is THIS
Total Land Area
Total Population ( 2012)
Population Density
Population Growth ( 2010-2012)
Population in urban area ( 2011)
Income Category
GDP (2013)
Telephone Lines (2012)
Cellular Subscriptions (2012)
Internet users (2012)
181,035 Km2
14.86 Millions
81 per km2
1.50%
20%
Low Income
15.67 billions
3.93 per 100 population
128.53 per 100 population
4.94 per 100 population
Cambodia World Heritage
Phnom Penh
Preah Vihear Temple
Apsara Dance
Khmer Shadow Theater
GDP’S GROWTH TREND…
Economic Indicator
Real GDP Growth %
GDP ( USD in Billions)
GDP per Capita (USD)
Inflation rate (%)
2010
6.00
11
753
4.00
2011
7.10
13
853
5.48
2012
7.30
14
926
2.93
2013
7.20
16
1016
2.95
2014 (e) 2015 (e)
7.00
17
1088
3.84
Trend
7.30
19
1177
3.25
Source: IMF & ADB
The predicted growth rate of 7% is good as it
will help Cambodia to reduce the poverty rate by
at least 1% annually.
The nation's poverty rate had fallen to 19% in
2013.
The agricultural sector is the main driver of
Cambodian economy. Agriculture accounts for
27.5% of Cambodian GDP and represents the
primary source of income for 80% of the
population. It gives work to 70% of the kingdom’s
labour force.
5
The Cambodia Financial Sector…
- Loan in bank was USD 7.3 billions in 2013; average annual loan
growth rate is around 30%.
- Bank received deposit of USD 7.5 billions in 2013, average annual
deposit growth rate is around 18%.
- 29 Micro finance Institutions ( MFIs) and 7 Micro finance Deposit
taking Institutions (MDIs) are operating in 25 provinces and cities of
the Kingdom.
- MFIs’ loan was USD 1.3 billions in 2013; average annual loan
growth rate is around 45%.
- MFIs’ deposit was USD 437 millions in 2013, average annual
deposit growth rate is around 120%.
- MFI’s Non performing loan ratio is 0.59% in 2013
( slightly increase to 0.62% in first quarter of 2014) 45%
120%
Growth
in MFIs
HKL’s Key Achievement & Strategy
7
HKL’s Profile and Highlight
- HKL is MFI and MDI licensed operating in Cambodia country wide,
providing financial services to the low income people.
- Loan portfolio reaches USD Million 194 with number of Active
Borrowers of 91,992 clients. Non performing loan rate is 0.04%.
- Large proportion of loan is micro loan (95% are micro & small
business holders) ; HKL’s borrowers mainly are female ( taking lead in
loan access), with major purpose in agriculture and trade ( &
commerce).
Reference data is June 2014
- Agriculture represents the primary source of income for 80% of the
population that is why HKL retains focus.
9
- Well-maintained superior loan portfolio quality in general, except 2010 was
resulted from hiccup event driven by global crisis impact in 2009.
10
Geographic outreach
HKL's Geographic Outreach
2008
'2014-6
Province
Districts
Communes
Villages
43%
55%
37%
19%
100%
96%
93%
66%
Growth ( In thousands) 2010 2011 2012 2013 '2014-6
Gross Loan Porftolio
44,310 75,315 102,838 145,667 194,719
Gross Saving Portfolio
4,631 15,776 44,255 83,386 126,200
Total Asset
47,640 86,786 122,973 179,573 247,856
Net Profit
1,838 3,023
4,418
4,260
2,804
-
Trend
Declining in portfolio yield is due to the competitive market rate and the larger loan size
provided to existing clients under “We Grow With Clients” commitment.
Heavy investment in technology for both cored banking and mobile banking has claimed
HKL to be less profitable in 2014 compared to 2013.
12
How does HKL get these achievement?
HKL’s Operational Strategy..
Staff capacity
building &
Development
Innovative
products
development
Leading in
tailor-made
financial
services
Market demand
& Penetration
Client
Protection
Principle
HKL’s Infrastructure Evolution To reach
Micro and Small business holders
15
Where has HKL been so far?
From the project…
• Started as
security
project in
Pursat
1994
1996
• Registered
as NGO
named
“Hattha
Kaksekar
NGO
• Registered as
limited
company
“HKL””
2006
• Micro
banking
system
2001
• Permanent
license as
MFI
2007
To the reliable MDI to be trusted by public in saving collection…
• MDI
license
2010
2011
• Core
banking
system
• ATM
official
launch
2012
2013
• Mobile
banking
products
• Product
innovationtailor made
service
2014
HKL’s infrastructure evolution…
Head Office at Pursat provinces from
the start to 2004; while served as Pursat
branch
Head Office has been moved to Phnom
Penh in February 2004, and lately to this
current Head Office Building, located on
large and busy street of Phnom Penh,
where almost 250 staff members are
working. Operational Office, also
attached to the building, serves as the
key functional service points.
Office Network
BRANCH NETWORK 2014
From 45 offices
in 10 provinces
& cities in 2008
to 135
operational
offices in 25
provinces and
cities of
Cambodia
With 49 ATM
machines in
2014
Evolution of HKL’s financial products
More specific product Innovation
Specific loan
 SME loan
 Green Loan
 Mobile Banking (USSD &
 Student Loan
Mobile App)
Mobile Banking
 SMS notification
Incept Mobile Banking
Go live ATM service
2014
2013
Public Saving
Collect Deposits from public
General Loan
 General Loan with
various business
purpose
 Compulsory savings
 Local Money Transfer
2012
2010
 Core Banking System
 ATM
MDI license
2008
 Micro Banker System
 Off line & Stand along MIS system
Tailor-made Products offered..
General
- Loan purposes: (1) trade/ commerce, (2) agriculture, (3)
service, (4) construction, (5) transportation, (6)
household/family and (7) production.
- Flexible repayment method & offer in 3 currencies
Green
Loan
Student
SME
- For environmental purposes: biogas, solar energy, water
basin, water filter, toilet Etc.
- Offer with lower interest rate
- Flexible repayment method & offer in 3 currencies
- Support students during their academic years in university
- Loan term up to to 7 years
- Favorable interest rate & free 3 months interest
- Loan provision to Small & Medium Enterprise ( biz loan for
biz set up, and expansion)
- Larger loan size ; longer term; in 3 currencies
Tailor-made Products offered..
Voluntary
Saving
Fixed
Deposit
Saving &
Deposit
Recurring
Saving
- Open for public
- Customers can deposit and withdraw money any time
- Marketable interest earned
- In the form of Capitalized Deposit, High Income, High
Return & Charity Deposit
- Higher interest rate than voluntary saving
- Deposit term up to 1 year
- In the form of Planned saving, Kid saving & Retirement
- Customer is required to deposit certain amount of money
in a specific time which agreed by the clients and HKL.
- Highest interest rate up to 11% per annum.
Tailor-made Products offered..
Local
Money
Transfer
ATM
Mobile
Banking
Customers can transfer their money to relatives, friends, and
other business partners with very speedy delivery and reliable
services.
- Equipped with state-of-art technology by the world class
ATM producer and switch.
- Function: Cash withdrawal, Cash deposit, Cardless deposit,
Fund Transfer, Remittance, Mobile Top-up, Bill Payment &
Account Enquiry
- SMS notification, USSD Baking, Mobile Apps.
- Function: SMS alert, Fund Transfer, Remittance, Mobile
Top-up, Bill Payment & Account Enquiry
Opportunities & What Next
Cost of setting up physical
office to serve unbanked
clientele with low density in
rural area are costly
• Innovate products with technology driven
to target those unbanked clientele in
rural areas through mobile and agent
banking.
Incomes from other products
rather than loans are relatively
low, but market proven more
rooms to source that incomes
• Orient fee-based incomes services, such
as Utility Payments, Mobile Top up, Local
Wire Transfer, Payroll
Highly penetration of savings
collections mostly in capital
cities, while rural areas
remains low
• Agent banking enables HKL to collect
small deposits from rural & unbanked
people, which will then contribute lower
cost of funding and sustainable savings
in the long run.
What Challenges do we have?
Regulation
Human
resource
Competition
• License fee
• Capital increase
• High cost for staff development
• Lack of experienced HR
• Many MFIs, MDIs and Banks
• Unfair competition
Investment cost
• High operating cost
• Lower return
Capital
• Raise saving deposit
• Inject more capital
Thank You!
No 606, Street 271, Sangkat Phsar Doeum Thkov
Khan Chamkamorn, Phnom Penh, Cambodia
PO Box 2044, Phnom Penh 3
+ T : ( 855) 23 999 266
+ F : ( 855) 23 996 306
+ E : info@hkl.com.kh
+ W : www.hkl.com.kh