ACLEDA Bank Plc. – Cambodia, the largest microfinance institution and the third largest bank in Cambodia, received a rating of B+/B from Standard and Poor’s, four levels below investment grade (Associated Press). This is the first Standard and Poor’s credit rating on a Cambodian financial institution.

Standard and Poor’s reports that ACLEDA Bank’s balance sheets and asset quality is strong, with a Non-Performing Asset (NPA) ratio of 0.10 percent in August 2007 compared to an NPA ratio of 0.16 percent in 2005. Despite the strong credit rating, Standard and Poor’s has categorized Cambodia’s banking industry in the lowest level (level 10) along with Jamaica, Ukraine, Bolivia and Venezuela (Associated Press) because of weaknesses in its economy and legal infrastructure (Standard and Poor’s).

ACLEDA Bank Plc. has nearly USD 160 million in loans and 12 percent of Cambodia’s banking system’s assets. The vast majority of their loan portfolio is secured against tangible collateral, with an interest rate at 19.9 percent in August 2007 (Standard and Poor’s). A risk concern is that laws on secured transactions are not well defined in Cambodia, and recovery of these assets is not guaranteed (Standard and Poor’s).

With over 193 branches in 24 provinces nationwide, ACLEDA Bank is the largest microfinance institution in Cambodia. Focusing on rural areas and small businesses, ACLEDA Bank has over fifty percent of the domestic microfinance market. ACLEDA Bank targets the lower market segment, specializing in small business and micro credit loans (ACLEDA Bank Case Study). Though it is considered an MFI, ACLEDA Bank is positioned as a commercial bank and offers a range of financial services such as cash management and trade finance (Standard and Poor’s).

ACLEDA was established in 1993 as an NGO microfinance institution, reliant on international development agencies. By August 2000, it had expanded to over 14 of the 24 provinces in Cambodia, and was able to operate at a profit. In October 2000, ACLEDA was given a bank license by the National Bank of Cambodia. ACLEDA Bank was also given a B3 credit rating by Moody’s Investor Service in May of 2007.

By Melissa Duscha

Additional Resources:

CNNMoney.com: Cambodia-based Acleda Bank assigned ‘B+/B’ CCR with stable outlook – S&P

Banking Times: First Cambodian bank gets credit rating by S&P

Yahoo! News, Associated Press: Standard & Poor’s gives 1st credit rating to Cambodian micro-credit bank

Manufacturing Business Technology: Cambodian leading micro credit bank to operate in Viet Nam

ACLEDA Bank Plc.: ACLEDA Bank Expands to Laos

In Channy, ACLEDA Bank: Rural Financial Institutions: Start-ups, The Case Study of ACLEDA Bank