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Managing Director & CEO's Report
"During 2015 ACLEDA Bank Lao Ltd's management and staff took corrective actions related to the Bank's policies, procedures, performance qualities and productivity, work ethics, and work culture to parallel the standards of its parent company, ACLEDA Bank Plc., Cambodia. During the year continuing investments were made to support staff training in order to upgrade human resource capacities to ensure consistent quality service to our customers."
Performance in 2015
Almost a decade ago Laos had only 12 banks. However, the situation changed dramatically after the Law on Commercial Banks was promulgated in 2006. Since then the number of banks has soared and, at the end of the third quarter in 2015, there were 40 commercial banks and 142 licensed microfinance institutions in Lao PDR. The environment became much more competitive in 2015 with additional significant regional newcomers entering the market. This obliged the Bank of Lao to update some articles on the Establishment of a Commercial Bank. This included that commercial bank applicants should have sufficient funds and total assets of not less than USD 5 billion. In spite of this, amongst the private commercial banks ACLEDA Bank Lao Ltd. 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.
- 2015 was a difficult year for banks in the Lao P.D.R. Commercial banks in Laos were obliged to lower their interest rates for both deposits and loans 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 is a major change for the banking sector as the government wanted to lower the loan rate, a decision designed to promote and boost domestic productivity for commercial purposes. Since 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 10 percent per annum at the end of 2014, which then fell to an average of 7.7 percent per annum by November 2015.
- To ensure the announcement takes effect, the BOL is continuing to inspect the operations of commercial banks to ensure the adjustment of deposit and loan rates is properly carried out and regulations are 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 loan portfolio resulted in 82.81 percent of this portfolio maintained in Lao Kip, while the overall banking sector was at 33 percent for 2015.
- 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 112.16% and Small2 loan clients by 50.49% of active loan clients compared with the end of 2014.
- The value of Small1 Loans grew by 87.26% and Small2 Loans by 50.67% of the gross loan portfolio outstanding.
- Retail deposits grew by 10% to USD 86.17 million. This growth was mainly led by first time depositors such as factory employees paid through our Payroll 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 2015 comprised 45 ATMs and 100 POS terminals throughout the country with 24,136 cards issued.
- ACLEDA Bank Lao Ltd.'s long term strategy is to expand our retail banking services throughout the Lao PDR with a special focus on providing tailor made financial services to small business enterprises.
- 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.
- Follow our customers' needs by providing a comprehensive range of financial innovations as they move up the wealth ladder.
- 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).
In anticipation of continued happiness and prosperity in the coming years, I offer my sincerest and most profound thanks to all our loyal customers, my colleagues on the Board of Directors, shareholders, management and staff, our professional consultants, the Government of the Lao PDR and the Bank of the Lao PDR who have supported us.
Mr. PHON Narin
Managing Director & CEO
March 18, 2016