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Chairman's Report

Mr. CHHAY Soeun, Chairman of the Board of Directors

"On behalf of ACLEDA Bank Plc.'s Board of Directors, I am pleased to present ACLEDA Bank Plc.'s 2016 Annual Report which provides a wide and explanatory overview of our 2016 performance, a detailed corporate governance report, and a complete set of the consolidated financial statements as of 31 December 2016."

The Year 2016

In 2016, we continued to implement our foremost goal, outlined in our five-year strategy 2016-2021, to be a unique commercial bank, the Bank You Can Trust, the Bank for the People, with a competitive edge in relevant banking markets. Transparency provides our stakeholders with confidence in the long-term returns available as we continue to support the economic growth agenda and the Rectangular Development Strategy of the Royal Government of the Kingdom of Cambodia.

ACLEDA Bank Plc. continues to strengthen its business model and facilitate the delivery of enhanced banking services to its clients in the public and private sectors that enables sustainable revenue streams into the future and ultimately benefits our shareholders.

This year, we continued to enhance our e-banking services to provide outstanding services and conveniences to our customers and to be ready for our customers around the globe from 2017.

Standard & Poor's has maintained ACLEDA Bank Plc.'s rating at "B+" with an outlook "stable". This rate is a testament to our success in strengthening the Bank's governance, capital, franchise operations, and delivering a consistent performance.

2016 was a year of remarkable growth at all levels in ACLEDA Bank Plc. Net profit for the year ending 31 December 2016 was USD126.89 million up from USD105.07 million in 2015. Profit Before Income Tax for the full year 2016 hit a record high of USD158.38 million and was 19.45% higher than 2015. This growth was driven mainly by the 11.89% growth in Net Interest Income and 23.85% growth in Net Fee and Commission Income that stood at USD287.22 million and USD48.13 million respectively by the end of 2016.

These figures exhibit a strong growth in our banking franchise as we continue to rebalance the income stream from investment to being generated by core businesses. Non-Interest Income contribution from our operations which includes our subsidiaries based in Cambodia, Laos and Myanmar, was USD63.68 million and now accounts for 13.39% of total revenues. ACLEDA Bank Plc. delivered strong balance sheet growth in 2016 increasing total assets by 20.06% to USD4.66 billion compared to USD3.89 billion at the end of 2015. Loans and advances were up 13.30% to USD2.84 billion. Customer and Bank deposits grew by 15.97% to USD3.13 billion as of 31 December 2016 compared to USD2.70 billion at the end of 2015. Credit quality has been preserved, at an NPL ratio of 0.68%.

Earnings per share were at USD0.4123 by the end of 2016, up from USD0.3954 in 2015. The Capital Adequacy Ratio was at 23.10% as per the National Bank of Cambodia's (NBC) regulations.

Pursuant to the National Bank of Cambodia's requirements, the Bank sets aside a risk reserve against its lending a non-distributable part of shareholders' equity. As of 31 December 2016, the regulation risk was USD381.04 million meeting the NBC's requirements. With the aim of maximizing shareholder return over the long-term, the Board of Directors is recommending the distribution of a cash dividend of 10% and a stock dividend of 40% of 2016 NPAT which equals to USD0.2062 per share to the General Assembly (AGM).

Governance

During 2016, there were a number of changes in the governance of the Group. There were a number of changes in the Board in 2016. Ms. HENG Su Yin from SMBC has been appointed as a member of Board of Directors to replace Mr. Tetsuro YOSHINO who resigned from the Board because of his rotation of responsible area. Mr. Ian S. LYDALL has been appointed as a member of the Board of Directors in ACLEDA Bank Lao, Ltd. to replace Mrs. KIM Sotheavy, Group Chief Internal Auditor Officer. At the senior management level, the notable change was Mr. CHAN Serey's retirement as an Executive Vice President & Group Chief Administrative Officer, after serving more than 22 years with ACLEDA and replaced by Mr. LY Thay from Senior Vice President & Head of Operation Division in August 2016.

The Board met face-to-face in Phnom Penh three times; in March, September, and December, and held one 'away' meeting in Paris, France in June. In addition, 13 resolutions were passed by e-mail. Each meeting normally lasts one and a half days including committee meetings. There were some significant decisions made during 2016. First, the approval of audited consolidated annual financial statements of 2015 of the bank and its group and of the audited quarterly financial statements in the course of 2016. Second, the approval of the dividend distribution of 2015 net profit after tax and the transfer of the remaining of net profit after tax to the Bank's general reserves. Third, the approvals of annual reports of 2015 of the Bank and its Group. Fourth, the approval of the external auditor for the Bank and its Group for the period of 2017-2018. Fifth, the approval of the Bank's 2017 strategic and budget plan. Sixth, the revision and approval of the Board's policies. Seven, the appointment and re-appointment of directors on the Board and Board committees in the Bank and its subsidiaries. Eight, the approval of additional capital injection and budget for the project of its subsidiary, ACLEDA Institute of Business.

Lastly, the approvals of borrowings, senior syndicated loans and subordinated loans, from national and international lenders.

The future

The strategic direction for the Group is of course a matter of constant attention for both the Board and management. Regional expansion, new products/services developments and transforming to e-banking and digital banking are our foremost strategies to tackle fierce competition as ASEAN integration develops with markets geared towards high profit growth.

We would also like to thank our customers, shareholders, directors, executive management, and all staff of ACLEDA Group for their support and efforts in implementing the Bank's strategy and in achieving its goals and objectives. We also express our sincerest gratitude to the Royal Government of Cambodia, the National Bank of Cambodia, regulators, and all relevant authorities for their constant support and dedicated efforts to develop Cambodia's financial industry, especially the banking sector.

We reaffirm our commitment to all our customers and shareholders that in 2016 we will continue to focus on areas that represent the best opportunities for ACLEDA Bank Plc., to dedicate all our efforts to achieving a strong and sustainable growth rate, and to deliver on our strategic goals to enhance future returns as well as strengthening the position of ACLEDA Bank Plc. in the Kingdom of Cambodia and the region.


Mr. CHHAY Soeun
Chairman of the Board of Directors
ACLEDA Bank Plc.
February 1, 2017


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ACLEDA Bank Plc. Headquarters
Registration No. 00003077
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Khan Daun Penh, Phnom Penh, Cambodia.
P.O. Box: 1149
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