After seven years of a metaphorical journey permeating all levels of financial services and elevating the banking profession, Chief Bank’s Chief Executive Officer, Soeung Morarith, is now onto accelerating banking digital transformation. In a Cross-Talk interview with Khmer Times senior editor Kay Kimsong, he shares an insight into his new gateway of making the bank more customer-centric with the introduction of new and innovative financial products to remain competitive.
Can you tell us a little about the history of Chief Bank? Specifically, its founding and establishment, its shareholders and its business activities both in Cambodia and in Hong Kong.
Chief Bank received its licence from the National Bank of Cambodia on December 5, 2013, permitting the bank to carry out specialised bank businesses in Cambodia.
Because of the continued success of bank operations over the past years, the bank was successfully upgraded to Chief (Cambodia) Commercial Bank Plc under licence number B-43 on June 6, 2018. The bank’s official launch was held at a grand opening at Sofitel Phnom Penh Phokeethra on July 22, 2018, which was presided over by Mr. Chau Chung Kai, our respectful chairman, who is also founder of Chief Group, based in Hong Kong, one of the international financial centers in the world.
Chief Group was established in 1979 and places business integrity ahead of business gains in its long-term business strategy and strictly adheres to corporate social responsibility. With our shareholders’ backgrounds in Hong Kong as comprehensive financial service providers for more than 41 years, Chief Bank inherited the fine tradition of doing business by embracing a customer-focused philosophy, with a relentless pursuit of service excellence. Chief Bank is working for a better future for people in Cambodia – our valued customers, our employees and Cambodia’s banking industry and society at large. Their success is our success.
We have introduced our corporate philosophy ‘The Chief Way’ to guide our team to a series of successful accomplishments and achievements. It is a way to build mutual trust and partnership with our customers. That is the key to shared prosperity and the way that our business is conducted, sincerely with the highest professional ethics possible.
Chief Group has evolved into a comprehensive financial institution with diversified products and services. We are one of the local leaders in Hong Kong’s securities brokerage industry, proudly holding one of the biggest branch service networks.
What prompted the bank to establish itself here in Cambodia? This is already a highly competitive market which has been described as approaching saturation with commercial and specialized banks.
To be frank, the competition environment in Cambodia’s banking industry is currently tougher. So, managing a commercial banking institution is quite challenging, especially during the global outbreak of a pandemic. Yet, our actively strategic implementations—our utmost priorities for customer satisfaction first, simplicity, efficiency and talented staff—have ensured that Chief Bank continues to attain remarkable milestones. Our bank performance confirms that this has occurred.
First, our customers are more satisfied and choose us more frequently to help them achieve their financial ambitions. Second, our continued investment in digital expansion, as the key agenda, has recently made the bank simpler and easier to operate for customers and colleagues. Third, our positive profitability, zero non-performing loan status until now and full settlements of the related party loans have strengthened our capital base and improved our bank risk profile.
Finally, our employees are more engaged and positive about the bank they work for. This is clearly demonstrated by the continuing improvements in our employee performance appraisal scores.
Our achievements during the year were made possible through the concerted efforts of staff and management, who have demonstrated strong dedication and commitment, through guidance by the bank’s clearly-defined vision and mission and by the effective, strategic leadership and oversight of the Bank’s chairman of the board of directors, members of the board of directors and independent directors.
Thanks to the continued success of Chief Bank’s operations over the past years, Chief (Cambodia) Specialized Bank Plc has recently been successfully upgraded to Chief (Cambodia) Commercial Bank Plc, which is the first commercial bank in Cambodia, owned by the Hong Kong-based shareholders. Chief (Cambodia) Commercial Bank Plc has been well managed to meet all of the requirements from the National Bank of Cambodia (NBC) and has started to offer comprehensive commercial banking products, including various deposit accounts, individual loans, commercial loans, ATMs with CSS, trade finances (BG), local remittances, oversea remittance to Thailand (ThB currency) and Chief mobile banking, with attractive and innovative features. Chief Bank is also part of the National Bank of Cambodia’s Bakong payment system, which offers alternative options for transactions such as deposits and withdrawals, as well as sending and receiving money via e-wallets. Chief has collaborated with Wing (Cambodia) Specialised Bank in a digital partnership across the country to give customers greater convenience when repaying their loans. The Bank is seeking out long-term partnerships and collaborations with other financial institutions, agents and others to deliver higher value of financial services to its customers. In addition, we are going to launch our own credit and debit card products and so on in the very near future.
Chief (Cambodia) Commercial Bank Plc has been committed to fulfilling customers’ needs and helping them succeed. The bank has also been committed to being the most innovative and efficient foreign bank that lends full support to Cambodia’s four pillars of economic growth drivers: exports, tourism, agriculture and real estate. It provides world-rated services to its clients in Cambodia—a small Southeast Asian country that has enjoyed a high economic growth rate of more than 7 percent per annum without overheating, thanks largely to both political and macroeconomic stability, which is an indispensable foundation for development. According to the recent forecast by the word bank, the country’s economy will partially recover and grow at 4% in 2021.
At the end of 2019, Cambodia’s banking system consisted of 47 commercial banks, of which 17 are local banks, 17 subsidiaries and 13 foreign branch banks; 15 specialized banks; 7 microfinance deposit-taking institutions; 76 microfinance non-deposit taking institutions; 245 rural credit institutions; 15 financial leasing companies; 4 third-party processors; 21 payment service institutions; 1 credit bureau company; 6 representative offices and 2,913 money changers (NBC’s Annual Supervision Reports, 2019).
Cambodia’s banking sector since 2000 has continued to grow over time. From 2004 to 2019, the total assets of the financial sector as a percentage of gross domestic product (GDP) increased from 22% in 2003 to 56% in 2010 and continued to rise to 107.9% in 2015 and reached 155.1% in 2019 (NBC’s Annual Supervision Reports, 2011-2019). Thanks to an increase in public confidence in the Cambodian banking system, transactions in banking institutions have remarkably increased.
Over 2015-2019, the number of depositor accounts grew from 2.65 million to 4.84 million while the number of borrower accounts rose from 512.58 thousand to 878.28 thousand in 2015 and 2019, respectively. It is interesting to note that the strength of the banking sector has been improving, as the ratio of nonperforming loans to total loans decreased from 9.64% in 2004 to 3% in 2010 and to 2% in 2019. NBC has prudently supervised the banks and financial institutions, which are under the control of the National Bank of Cambodia by on-site and off-site supervision and monitoring and examining the daily, weekly, bi-weekly, monthly report and quarterly reports of banks and financial institutions. NBC has effectively supervised and monitored risks, through focusing on both macro and micro prudential analysis in order to maintain the soundness of financial status and to increase public confidence. The NBC’s supervision is based on the CAMELS method and is risk-based and forward looking to assess and ensure the soundness and stability of the whole banking system. These imply that the banking supervision has primarily concentrated on governance, internal control, asset quality, and risks, which might be a challenge for the institutions’ business. As a result, financial institutions are seeming to perform well reflected by their financial position, risk management, and the implementation of laws and regulations.
The overall banking sector’s performance remains strong when compared to many other countries thanks to the stringent and prudent regulatory framework implemented by the National Bank of Cambodia and to the authentic leadership of H.E CHEA Chanto, Governor of NBC and his colleagues.
Chief Bank has been committed to complying with laws and regulations applicable to banks and financial institutions as our supervisory activities. Chief Bank foresees a positive economic and social environment in which to expand its activities in the coming years. The bank has developed a formal capital management framework with clearly defined objectives for maintaining an appropriate level of capital adequacy. This ensures sufficient leeway for future business expansion. A digital banking agenda is one of the high priorities for Chief Bank. We are now actively working on our innovative approaches by investing in cutting-edge solutions to digitally distribute our ethical financial services to all Cambodians and to make them simple, convenient and secure in order to contribute to promoting financial inclusion in Cambodia.
The rapid economic expansion and improved business environment offer more opportunities for robust growth in the banking industry although competition has undoubtedly intensified. Yet, Chief Bank is really confident of having a solid grounding and the right formula of working with clients for mutual benefits. This helps build stronger public confidence in the banking and related sectors, leading to the higher demand for conducting financial and other banking services with us. By looking ahead with much optimism and with our superior organizational realignment, we strongly believe that our sharpened strategy coupled with our client centric approach to business success will drive the bank’s sustainable growth and competitive advantages.
Can you share the corporate mission statement and vision of Chief Bank with us?
Our corporate vision statement is ‘The Chief Way’. It describes us as the most innovative and efficient foreign bank, the one with a view to guaranteeing and enhancing service excellence. Secondly, it shows us as having become a full-fledged and most respected bank, having the largest branch networks. Thirdly, it is emblematic of our being the “Bank of First Choice” by offering enjoyable customer experiences. Finally, it declares the ensuring of good corporate governance and compliance in everything we perform.
Our corporate mission – ‘The Chief Way’ – is a promise of our committment to fulfilling customers’ needs and helping them succeed financially.
‘The Chief Way’ builds mutual trust and partnership with our customers. That is the key to shared prosperity and the way our business is conducted, sincerely and with the highest professional ethics.
How many branches and employees does the bank currently have and what are the bank’s plans through 2025?
Chief Bank has seen continued growth in the Kingdom since beginning operations in December 2013 with initial capital of just $10 million, with our total assets being more than $151 million as at February 08 this year, with more than 160 members of staff.
Chief Bank foresees a positive economic and social environment in which to expand its activities in the coming years. The bank has developed a formal capital management framework with clearly defined objectives for maintaining an appropriate level of capital adequacy. This ensures sufficient leeway for future business expansion.
A digital banking agenda is one of the high priorities for Chief Bank. We are now actively working on our innovative approaches by investing in cutting-edge solutions to digitally distribute our ethical financial services to all Cambodians, and to make them simple, convenient and secure, in order to contribute to promoting financial inclusion in Cambodia.
The bank is undertaking branch network expansion in the areas of greatest potential in Phnom Penh and in the main provincial towns, where the financial supply is lower and demand is higher, together with a digital strategy expansion and agent banking to complement its existing distribution channels.
With the expansion of the branch network, Chief Bank is able to offer holistic and end-to-end products and services to customers in high potential areas in Phnom Penh and in the main provincial towns.
Currently, we have four branches in Phnom Penh – our Boeung Kak branch, Chbar Ampov branch, Olympic branch, and Preah Norodom branch – all in prime locations across Phnom Penh and we are set to open at least another four.
We will continue to look at any location that would require a branch presence in order to meet our customers’ requirements.
This also supports the bank’s operations and brand recognition. Given the bank’s change from being a specialised bank to a commercial bank in 2018, the business concept and model of the bank has been transformed.
The objective of the transformation of Chief Bank’s business concept and its model is to fast-track its expansion plans with minimal capital expenditure, thus maximising social impact delivery.
You’ve mentioned the bank’s current asset valuation. We would also like to hear about the bank’s NPL status and its loan-restructuring model.
Chief Bank considers clients to be long-term partners as the bank continues to flourish. Our loan impairments or restructuring increased but at a very small scale within the period as the pandemic took hold and the bank has experienced zero NPL since beginning operations in December 2013 until now.
We have placed a comprehensive loan support scheme for individuals, corporate clients and businesses including bullet loan repayments, late fee waivers, deferred loan repayments and loan rollover or extension facilities. We have approved new applications, which demonstrates our determinations to support customers within these particularly vulnerable segments of our communities that are seeking help from all of us.
Is Chief Bank looking to enter into other finance related sectors? What plans might you have regarding expanding your services into products such as insurance and micro- finance to complement the bank’s existing business portfolios?
Chief has collaborated with GC Life Insurance as our strategic partnership to give customers more options and alternatives when needing insurance service, especially life insurance, based on the approval in place from our regulators and the agreements between both of us and to contribute to the development of the financial sector in Cambodia. While the bank is investing heavily in digital transformation, we are thinking differently, in term of micro finance products to ensure competitive advantage. Our flagship development is to be our micro-lending app, which will be available by the end of the year. Customers will be able to assess their eligibility for a micro loan through the digital banking system and be able to apply for a micro loan from the bank digitally.
In your opinion, what sets Chief Bank apart from its competitors of the same size and structure?
Chief Bank has been utilizing a business model which is localized, customized and best suited to the real needs of clients in Cambodia. We have actively been working to further refine our existing products and new products or services to meet our clients’ growing needs.
With our stable business model and exemplary balance sheet, we have built the confidence and trust with our existing customers and many perspective ones and established digital partnerships to grow together.
This ensures our competitive edge and a continuous growth of our bank, helping to further bolster our strong position in the highly competitive market of the banking industry. We stayed the course by sticking to our vision, mission and goal philosophy and serving our customers better than ever, leveraging those to yield sound results and the most comparative advantage.
Chief Bank is really confident of having solid grounding in good business strategy and operation philosophy; clear credit policies and procedures; strong credit control environment; policies and procedures that are clear and in place and fully carried out; strong financial support from its shareholders with low cost of funds; strong support from the BOD and INED of the bank with high motivation and warmth; strong relationship with business communities; strong financial and accounting management; high loyalty both from clients and staff and the right formula of working with clients for mutual benefits.
By looking ahead with much optimism and with our superior organizational realignment, we strongly believe that our sharpened strategy coupled with our client centric approach to business success will drive the bank’s sustainable growth, competitive advantages and stand above the other competitors.
What is the bank’s thinking on expanding into other financial services products like debit/credit cards, payment systems or cashless wallets?
We have been actively working to further refine our existing products and services and rolling out new products and services to satisfy our clients’ growing needs.
With the strategic expansion, we are accelerating the scaling up of the bank’s product and service distributions and we are thinking differently, with our new product developments into other financial services sectors such as Visa debit/credit cards, which will be available in the very near future.
Payment systems and/or cashless wallet will also be considered on our agenda if suitable partners are available. That will provide more options, greater financial freedom and greater convenience to our customers and ensure competitive advantage.
What drives and motivates you as the CEO of the bank to excel at what you do?
First, I would like to express my sincere thanks to my respectful chairman and all of the board of directors’ members for choosing me to be CEO to overlook the bank’s daily operation. I have been inspired by the top management of the group and I personally have the highest commitment to build Chief Bank into a renowned bank in Cambodia.
Secondly, special thanks go to all of our clients for selecting Chief Bank Plc to be their long-term business partners as the bank continued to flourish.
Third, I am very proud to have professional and dedicated team members who have actively been forging the image and future of Chief Bank in Cambodia. Indeed, they have very high commitment and have been working very hard with a high standard of professional ethics in order to take it to the new heights. I am really proud of the significant progress we have made so far. Together, we are confident that we are delivering a better and innovative bank, a bank of first choice, a bank that our employees, customers and stakeholders can genuinely trust.
With this, I would also like to thank all the officials of the National Bank of Cambodia and all relevant local authorities, for their respective on-going unwavering support given to me in fulfilling my position as CEO.
I suspect your role as CEO does not include a lot of downtime but what are your passions or hobbies when you do get the opportunity to recharge?
I like going to the farm at the countryside a couple of times a month, growing crops, keeping animals, raising fish, reading newspapers, sharing knowledge to the students, developing new friendships and expanding my involvements such as helping the poor etc.
Would Chief Bank consider the bond market as a means to raise capital towards further growing its liquidity?
A bond market’s main function is to enable businesses to raise new capital. Thus, Chief Bank may use this market to raise capital by issuing shares or loan notes in the future when we can meet stringent bond market requirements concerning size, profit history, information disclosure and so on. Listed businesses of Chief Bank would be, therefore, likely to find it easier to raise long-term finance, do so at lower cost and further strengthen bank liquidity. It may help us by:
■ raising profile, which may be useful in dealings with customers and suppliers
■ ensuring that shares are valued in an efficient manner.
■ broadening our investor base
■ acquiring other businesses by using its own shares as payment rather than cash
■ attracting and retaining employees by offering incentives based on share ownership schemes.
Which portion of the bank’s business portfolio takes up most of the bank’s capital? Would that be real estate or SME lending, or perhaps other sector categories?
Our loan portfolio was led by construction at about 27%, followed by real estate activities at about 16%, mortgages (owner-occupied housing) at about 12%, retail trade at about 9%. Other economic sectors were about 36%.