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Chairman's Report

Dr. In Channy, Chairman of the Board of Directors of ACLEDA Bank Lao Ltd.

In 2025, macroeconomic conditions in the Lao PDR experienced a significant improvement, reflecting greater exchange rate stability, easing inflation, and a gradual recovery in economic activity. Real GDP growth rate is estimated to be 4.8 percent, supported by the continued recovery of tourism, stronger transport and trade services, and steady expansion in the energy, mining, and manufacturing sectors. These developments contributed to a more stable operational environment for the banking sector, despite the fact that underlying structural and financial vulnerabilities persist.

Headline inflation moderated significantly during the year, with an average of 7.7 percent in 2025, decrease sharply from the hyperinflation recorded in 2024 (IMF, 2025). This disinflation was a result of stricter macroeconomic policies, improved foreign exchange liquidity, currency appreciation, weaker global commodity prices, and improved domestic food supplies. While easing inflation has helped stabilize household purchasing power and supported depositors confidence, monetary conditions remained appropriately constrained, with real interest rates turning positive and credit growth moderating.

The banking system remained adequately capitalized at the aggregate level, although performance continued to vary across institutions. Sector-wide capital adequacy remained sound, while reported non-performing loans remained low. Nevertheless, the necessity of ongoing vigilance was emphasized by the progressive cessation of regulatory forbearance. These developments reinforce the importance of conservative provisioning, strong capital buffers, and disciplined liquidity management across the sector.

Our Bank maintained a prudent and measured approach throughout the year. We prioritized the preservation of balance sheet strength, strengthening risk-management and governance frameworks, and maintaining sound liquidity and funding positions. Credit growth was approached selectively, with emphasis on asset quality and borrower resilience, particularly in an environment of tight monetary conditions and elevated external risks. We also continued to strengthen compliance and internal controls in line with evolving regulatory and supervisory expectations.

There has been substantial progress at the national level in strengthening financial sector oversight, crisis preparedness, and the Anti-Money Laundering and Counter-Financing of Terrorism framework. The completion of the second National Risk Assessment and the authorities' commitment to an ambitious reform agenda are important steps toward reinforcing financial integrity, restoring confidence, and supporting long-term sector stability.

Economic growth is expected to remain stable in 2026, with supported by services, tourism, and resource-based activities. Inflation is projected to decline, but fiscal space remains constrained by high debt-service obligations, and global uncertainties particularly among major trading partners continue to pose risks. In this environment, the Bank will remain prioritize on capital strength, asset quality, liquidity resilience, and prudent growth, while selectively supporting productive sectors of the economy.

Significant Decision of the Board of Directors and Achievement of ACLEDA Bank Lao Ltd. in 2025

Governance

The Board of Directors held three in-person meetings at ACLEDA Bank Lao Ltd.'s Headquarters (Vientiane Capital, Lao PDR) in March, June, September, and one in December 2025 at ACLEDA Bank Plc.'s Headquarters, Phnom Penh, Cambodia.

Decision of the Board of Directors of ACLEDA Bank Lao Ltd. in 2025

The Board of Directors passed resolutions and made decisions on special matters via E-mail. The main activities in 2025 are as follows:

• Reviewed on the Bank's quarterly Financial Reports and received progress reports on all operational aspects of the bank's operations, including services and products;
• Review, approved and recommended to the Shareholders for final approval on the Audited Financial Statements and Annual Report for the year 2024;
• Review, approved and recommended to the Shareholders for final approval on the Business Plan, Budget and Capital Expenditure Plan, and Funding Strategy 2025;
• Reviewed and approved on the Amendment of TORs of Board Committees;
• Reviewed Reports of Board Committee Chairmen on their committee activities;
• Reviewed and approved on the Amendment of Policies and Operating Manuals of ACLEDA Bank Lao Ltd;
• Approved and recommended to the Shareholders for final approval on the dividend of profit for the year 2024;
• Approved and recommended to the Shareholders for final approval on the registered Capital Injection Plan from 2026 to 2035 of ACLEDA Bank Lao Ltd.;
• Approved and recommended to the Shareholders for final approval on the Engagement Letter for the year 2025 and 2026 of ACLEDA Bank Lao Ltd., with the independent external auditor PricewaterhouseCoopers (Lao) Sole Company Limited (PwC);
• Approved the appointment Mr. Rathmony LEAH as the new Managing Director & CEO, and member of the Board Governance Committee of ACLEDA Bank Lao Ltd., to replace Mr. Raksmey NGUON;
• Approved and recommended to the Shareholders for final approval of the appointment Mr. Rathmony LEAH as the new member of the Board of Directors of ACLEDA Bank Lao Ltd., to replace Mr. Raksmey NGUON;
• Approved the appointment Ms. Sovanny PECH as a new Finance Consultant & CFO of ACLEDA Bank Lao Ltd., to replace Mr. Rathmony LEAH;
• Approved the Feasibility Study of Saravane Branch, upgrading Saravane Service Unit “A” to be Saravane Branch, and appointed Mr. Thipphathai KEOKHAMXAY as a Branch Manager of Saravane Branch of ACLEDA Bank Lao Ltd.;
• Approved the appointment Mr. Kongkeo INSANE as a new Branch Manager of Xaysettha Branch of ACLEDA Bank Lao Ltd;
• Approved the appointment Mr. Thongmai NELAVANH as a new Branch Manager of Paksong Branch of ACLEDA Bank Lao Ltd;
• Considered and approved to revise the composition of the Board Committees of ACLEDA Bank Lao Ltd;
• Approved on set inflation rate for ACLEDA Bank Lao Ltd.'s employees for 2025;
• Approved the schedule of the meeting of the Board of Director and Board Committees for the year 2026 of ACLEDA Bank Lao Ltd.

Achievement of ACLEDA Bank Lao Ltd. in 2025

In conclusion, the Lao PDR economy and ACLEDA Bank Lao Ltd. have both realized consistent progress and strategic positioning in 2025. The economy exhibited resilience in the face of macroeconomic challenges, including inflationary pressure and currency volatility, by exhibiting a broad-based sectoral recovery, increased foreign investment, and rising service and industrial outputs. ACLEDA Bank Lao Ltd. continued to be instrumental in supporting this recovery by enhancing its financial performance, expanding its outreach, and maintaining robust governance practices. With a strong focus on innovation, financial inclusion, and sustainability, the Bank has established the groundwork for long-term development through the enhancement of digital infrastructure and a future-ready strategy. The Bank's dedication to responsible banking, strategic leadership, and solid risk management will be essential to its mission of fostering and providing long-term value to its stakeholders.

We are deeply appreciative of the unwavering support of the Government of the Lao PDR, the Bank of the Lao PDR, regulators, relevant authorities, and our valued customers. We also thank our management and staff for their dedication. The Board of Directors and all employees remain committed to making ACLEDA Bank Lao Ltd. the leading financial institution in Lao PDR.

Dr. In Channy
Chairman of the Board of Directors