Chairman's Message

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Mr. Brindley de Zylva

Chairman

THE GLOBAL ECONOMY has continued to recover – albeit at a slower pace than last year due to the protracted Russian-Ukrainian war, which has tightened monetary policies in major developed countries, and rising geopolitical tensions in the Middle East. According to the International Monetary Fund, global economic growth in 2023 was expected to reach 3%, down from 3.5% the year prior. Developed economies were expected to grow by 1.5%, while emerging and developing countries were expected to see a growth of 4%. Meanwhile, global inflation slowed from 8.7% in 2022 to 6.8%, but remains above target levels, prompting central banks to continue tightening monetary policies.

CAMBODIA’S ECONOMIC GROWTH is projected to continue at 5.5%, slightly higher than the previous year’s 5.2%, mainly supported by growth in tourism and nongarment manufacturing, and despite low growth in the garment, construction, real estate, and agriculture sectors. Tourism has steadily increased, contributing to the recovery of relevant local economic activities such as transportation, trade, and telecommunications. Exports of non-garment products, such as electronics, auto parts, and solar panels, have grown well, while exports of garments and footwear have been affected by declining demand from major trading partners, especially the European Union and the United States. The construction sector experienced low growth, primarily driven by investment and development of public infrastructure, while foreign investment in real estate declined. The agricultural sector grew slightly, supported by growing foreign demand and favorable weather conditions. Meanwhile, Cambodia’s inflation rate slowed to an average of 2.1% in 2023 from 5.4% in 2022, due to lower prices of fuel-related goods and services and a slowdown in food prices, according to the Annual Report 2023 issued by the National Bank of Cambodia.

THE COMPANY adopted a cautious approach to ensure its quality and sustainability. Customers, whose incomes were impacted by COVID-19 and flood disasters, have not fully recovered their income compared to the preCOVID-19 situation. With regulatory support from the National Bank of Cambodia (NBC), LOLC Cambodia was able to continue providing its clients with relief measures, allowing them the necessary time and space to recommence business activities, especially in the tourism sector.

In this digital and innovative era, people have raised the demand for digital financial services (DFS). LOLC Cambodia has fast-tracked the uptake of DFS, and we are able to offer a wide variety of digital banking solutions that support our customers’ increasing demands, including iPay, our mobile banking application providing seamless access to internet banking services, RFT, FAST, and Bakong. With these digital channels, our customers can perform banking transactions conveniently from their mobile devices at any time without having to visit branch offices. Since 2022, LOLC Cambodia has rolled out the use of tablets in the field for client onboarding and data collection, which has improved productivity and reduced manual work, including loan origination, loan collection, and deposit taking. We will continue to enhance our digital offerings to provide convenience to customers.

We are strategizing the use of the fast-evolving digital ecosystem in Cambodia to move micro-entrepreneurs from the informal sector to the formal sector. Currently, we serve around 260,000 micro-entrepreneurs (66% of total borrowers), of which 70% are women, with a majority coming from rural Cambodia. The micro sector contributed just 20% of our total portfolio, of which 81% of loan accounts were without real estate collateral. The average loan size for the microloan was only USD 965. The small, medium, and large sectors, constituting 80% of our total portfolio, have largely contributed to subsidizing the micro sector, which has assisted us in no small way in continuing with the inclusive nature of our business model.

In the upcoming years, LOLC Cambodia will continue to extend its innovative digital financial services and products designed to reflect customer requirements. LOLC Cambodia will also continue to extend its social activities, financial literacy awareness, and ESG activities to meet emerging business requirements.

It is very reassuring to note that the management and employees of the company have demonstrated resilience and the capacity to adapt to macroeconomic changes and constraints while ensuring compliance with all applicable laws and regulations. LOLC Cambodia is in compliance with all regulations and prudential ratios issued by the National Bank of Cambodia. We continue to uphold the Sustainable Development Goals to ensure the long-term sustainability of the company.

Last but not least, thank you to all our stakeholders, including our customers, investors, regulators, and banking and funding partners—both local and international—for placing their trust and confidence in LOLC Cambodia and supporting our growth over the years.

I would also like to take this opportunity to extend my appreciation to my colleagues on the board for their counsel and support, as well as the entire LOLC Cambodia team, which is under the direction of a competent and dedicated management team, for their outstanding achievements.

We pledge to all our clients and shareholders that in 2024 we will continue to focus on areas that represent the best opportunities and support businesses that have shown resilience without losing sight of our environmental and social responsibilities.

LOLC (Cambodia) Plc. has been serving Cambodian public and society for over 30 years, and has been recognized by both local and international financial authorities. Our products and services are committed to improving the livelihood of Cambodian customers.

#666B, Street 271, Kbal Tumnub Muoy Village, Sangkat Boeng Tumpun 2, Khan Mean Chey, Phnom Penh, Cambodia.