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ACLEDA Bank Lao Ltd.

 »  Financial Information  »  Managing Director & CEO's Report

Managing Director & CEO's Report


Dr. SVAY Hay, Managing Director & CEO of ACLEDA Bank Lao Ltd.

"The sustained, continued growth of the rural economy of the Lao PDR enabled ACLEDA Bank Lao Ltd. to achieve its Business Plan 2017, as well as maintain positive progress on the Bank's medium and long-term strategies. The Bank continued its efforts to support the development of our Laotian staff's human resource capacities. With emphasis on building cross-functioning capabilities for both management and staff in all our Laotian offices, we believe we will increase employee effectiveness with the overall goal of providing the best possible service to all our customers. On the financial side, 2017 witnessed an eventual turn around, such that the Bank achieved a solid growth in the quality and quantity of our loan assets, as well as an increase in our domestic savings local currency LAK portfolio. Overall, 2017 proved to be a stable environment for doing business where both the Bank and its customers took the opportunity to grow together. In short, we continued to offer our valued customers the most secure financial services and products via an expanding ACLEDA Bank branch network, the Bank's range of quality financial instruments, and guaranteed self-service via, ATMs, and Points of Sale."

Performance in 2017

Competitive Environment

Laos' financial market with its liberal regulatory environment is highly competitive with more than 42 private and state owned commercial banks, 96 branch offices, 494 Services Units 1,156 ATMs, as well as more than 180 increasingly aggressive licensed microfinance institutions. This obliged the Bank of Lao to update regulations to deal with the continued decline in interest rates on deposits and loans, and the restriction on loan fees maintained by commercial banks. The Bank of Lao also amended the compulsory reserve ratio for banks, while it imposed stricter controls on currency exchange operations and the use of foreign currencies in an effort to promote the use of the Lao Kip. In spite of this, amongst the private commercial banks ACLEDA Bank Lao Ltd. still managed to maintain its position as market leader in terms of retail banking, the number of offices, and small business lending to Laotian entrepreneurs in remote areas covering 15 provinces and cities amongst the 18 provinces and cities of the Lao PDR.

Operational Performance

  • 2017 witnessed a continued stable environment in the Lao PDR, even though the banking sector had to deal with several challenges. Commercial banks in Laos were obliged to lower their interest rates for both deposits and loans, and loan fees were restricted in line with a decision made by the Bank of the Lao PDR, which sought to reduce loan rates and thereby stimulate economic activity. This was a major change for the banking sector as the government wanted to continue to lower the loan rate, a decision designed to promote and boost domestic productivity for commercial purposes. After the lower interest rate was announced, the number of deposits made and loans issued by commercial banks dropped over a short period of time. Lao currency deposits attracted interest rates averaging 4,55 percent per annum at the end of 2016, which then fell to an average of 4,25 percent per annum by December 2017.
  • To ensure the announcement took effect, the BOL continued to inspect the operations of commercial banks to ensure the adjustment of deposit and loan rates was properly carried out and regulations were complied with, including a 4 percent net-weight gap between deposit and loan rates.
  • Given the corrective action of the Central Bank concerning prudential standards with respect to the provision of loans in foreign currencies, ACLEDA Bank Lao Ltd.'s efforts to manage its outstanding loans portfolio resulted in 6 percent of this portfolio maintained in Lao Kip, an increase of 98,58 percent compared with the end of 2016, while the overall outstanding loans in the banking sector increased 14,84 percent compared with the end of 2016.
  • ACLEDA Bank Lao Ltd. took adequate measures to improve its liquidity and loans portfolio in local currency, by expanding the number of active borrowers among small businesses. The number of Small1 loan clients grew by 37,65 percent and Small2 loan clients by 54,21 percent of active loan clients compared with the end of 2016.
  • Value of Small1 Loans grew by 12,79 percent and Small2 Loans by 66,73 percent of the gross loan portfolio outstanding.
  • Retail deposits savings accounts in Lao Kip grew by 12.%, and total deposits consolidated at USD 91.142 million. This growth was mainly led by first time depositors such as factory employees paid through our Payroll Service, and the Bank's cash collection service. As well, savings accounts increased from new customers. An important factor in the growth of deposits was the continuing development and expansion of our automated delivery system, which at the end of 2017 comprised 45 ATMs and 83 POS terminals throughout the country with 37.259 cards issued.
  • The Bank continued its cost reduction and risk control efforts to maximize income. Non-performing loans in 2017 were maintained below 0,72% while the overall banking sector was 3,25%, and the Bank's total portfolio outstanding increased by 22% compared with the end of 2016.
  • In 2017 ACLEDA Bank Lao Ltd. posted a record profit, which resulted from our high margin loans to small businesses and the Bank's operating efficiency ratio improved from 53% to 49,81%. Its Return on Assets (ROA) was 2,42% and Return on Equity (ROE) was 10,11%, while ROA and ROE for the overall banking sector were 0,27% and 4,09% respectively at the end of 2017.

Strategic Priorities

  1. Maintain a strong capital base with Capital Adequacy Ratio requirements comfortably exceeding the regulations;
  2. Expand our retail banking services throughout the Lao PDR with a special focus on providing tailor made financial services to small business enterprises;
  3. Concentrate on developing our "service culture" personal accessibility for our customers, and grow our services as the market expands by adopting the best practices of our parent company;
  4. Follow our customers' needs by providing a comprehensive range of financial innovations as they move up the wealth ladder;
  5. Focus on expanding value added fee-based services to diversify the income stream and reduce dependence on capital;
  6. Develop and upgrade Electronic Banking Service (EBS) with Financial Technology Solution (FinTech) and Branchless in order to expand outreach, increase income efficiency, create cross-selling opportunities, offer a competitive advantage, and conveniently serve a broader customer base, by using a direct line between ACLEDA Bank Lao Ltd. and our parent company's Electronic Banking Services (ACLEDA Bank Plc., Cambodia).
  7. Enhance our risk management function and embed 'risk awareness' into our daily working practices;
  8. Invest in multi-channel systems for the Bank's operational improvement and customer satisfaction while significantly reducing operational risks by automation rather than manual procedures; and
  9. Enhance the delivery system for products and services and shorten the workflow/process-flow by focusing on delegation of responsibility and authority down to front-line management and staff while decreasing paper work to guarantee quick service to customers while maximizing productivity by letting staff cross function.

To all our customers, my colleagues on the Board of Directors, Shareholders, management and staff, our professional consultants, and not least the Government and the Bank of the Lao People's Democratic Republic, I offer my sincerest thanks both for your support in 2017 and in anticipation of a happy and prosperous 2018.


Dr. SVAY Hay
Managing Director & CEO
March 20, 2018

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