CEO’s MessageThe Cambodian banking sector has experienced a dramatic decline in profitability, losing over $416 million in net profit from 2022 to 2023. The total net profit of the sector plunged from $916 million in 2022 to $500 million in 2023, marking a historic 45% decrease. The fall comes after several near-record profit years in the banking sector in 2021 and 2022 driven by low interest rates, rising loan portfolio, and generous concessions during the COVID-19 pandemic.
With the relentless hike of the non-performing loan and the global hawkish monetary policy, NHFC was not insulated from these negative impacts, suffering negative growth of profits and loan outstanding in 2023.
We always take CSR as important as business activities grounded on the belief that a business is responsible to the society around it. In 2023, we donated materials and budgets, with a total amount of US$11,383 to various NGOs and public stakeholders to promote education and women’s protection.
On the Right Track, Centering on a More Resilient and Forward-Looking Perspective
Let’s light what progress has been made in the overall organization since mid-2023
We have undertaken organizational and operational reshuffles, segregating between the duty of loan marketing & sales, and loan assessment. The changes have enhanced rigorous loan screening and lending decisions, cultivating a high loan underwriting standard culture Companywide, which is considered a bedrock of sustainable loan business.
To operate efficient and balanced credit operations, NHFC has adopted the innovative risk management approach, subscribing to the credit scoring service, locally known as K-Score, equipping the staff with tools to gauge the credit’s creditworthiness at the click of a button. Furthermore, we have re-assessed and developed several guidelines and loan/collateral assessment-related checklists to ensure that the critical features of the loan and its collateral securities are sufficiently checked and satisfied before granting the loans.
NHFC has launched a creditworthiness-based pricing and tenure scheme, offering clients the best terms and conditions of loans as long as they possess good creditworthiness. It is to attract and target clients with good credit, business prospects, and qualified collaterals to grow the balance sheet healthily. In this regard, we have enacted a Specialized Sales Team, acting as a think-tank for onboarding high-profile loan requests and supervising general branch sales staff in need.
With the continued evolution of consumer behaviors and industry business models, we introduced a Loan Origination System (“LOS”) in mid-2023. It has enhanced the client’s experience and operational efficiency. To maximize its full potential, we have kept improving several features of the LOS for the efficiency of loan assessment and approval.
A well-functioning company needs to have an adequate and robust Internal Control System in place. In this regard, NHFC has prioritized functions of Compliance, Risk Management, and Internal Audit, reflecting several new assignments, especially the new enactments/revisions, into their working scopes in 2023. These will help keep the executive management and board of directors appraised of incidents and/or loopholes in daily business operations. They keep alerting and advising the business side to conduct operations in a balanced and compliant manner.
The aforementioned operational process enhancements, loan competitive rates, sophisticated LOS, etc. are not a panacea; they are nothing but papers if not handled and overseen by properly trained and committed manpower. Therefore, NHFC has committed substantial investments in manpower training. We have rolled out an internal learning platform, dubbed Learning Management System (“LMS”), and a sophisticated internal communication platform, called Morningmate. These two smart platforms allow, among other things, NHFC to introduce various training programs and share the Company’s regulations, communications, and other tasks among the staff efficiently. In addition, NHFC has also offered various external training courses to the staff.
Finally, we would like to thank our board of directors for their tireless efforts in guiding the Company’s strategy, and we are grateful to our regulatory authorities, esteemed shareholders, and valued customers for their support.
Sincerely yours!
