Message from the Chairman

The world financial markets and economy in 2012 was turbulent. The year was marked by volatile swings in the world’s stock markets caused by the possibility of Greece exiting from the Euro. The risks were highlighted when Moody’s rating agency cut its assessment of Spanish Banks in May 2012. The financial markets’ relief that the 17-nation European currency area had avoided plunging deeper into crisis was mitigated by concern about unresolved problems in Greece, the lack of a comprehensive plan for the euro zone as a whole, and weakness in the world economy.

In the ASEAN Summit held on April 3 and 4, Cambodia took over the Chairmanship. The establishment of the ASEAN Economic Community by 2015 will increase demand and open new markets for Cambodian entrepreneurs in the ten member country group. The Regional Comprehensive Economic Partnership (RCEP) was launched in November and the leaders of the ASEAN member countries, along with the leaders of Japan, India, China, Korea, Australia and New Zealand, issued a joint declaration to begin RCEP negotiations in order to pave the way to boosting trade and investment under the Free Trade Agreements. This partnership has the potential to lead to the formation of the biggest single market in the region, a market that would be significantly larger than the traditional markets of the US and the EU.

A new partnership looking to export Cambodian rice to world markets was formed in May 2012. The alliance of Rice Producers and Exporters of Cambodia (ARPEC) elected their first executive committee. Several of the ARPEC members had signed a memorandum of understanding with Chinese provincial authorities to build rice mills around Cambodia with the potential capacity of 400,000 tones.

Property prices in Phnom Penh and the surrounding suburbs have increased around 10 percent in the first half of 2012 as more foreign investors bought new condominiums and banks provided more housing loans. After years of flat prices due to weak demand in the wake of the global financial crisis, the cost of both residential and commercial properties has risen for the first time since 2009.

A report released by the World Bank in October highlighted Cambodia as the most improved country in terms of businesses getting credit, due to the establishment of the country’s first credit bureau in March. Cambodia ranked 133 out of 185 in the World Bank’s report, up from 141 in the previous year.

On February 20, 2013, the government revised the economic growth for 2012 upwards from 7 to 7.3% at the 7th Cambodia Outlook conference. The IMF had projected that Cambodia will have a low inflation rate of 3.5% for 2012; this was 0.1 % below the government revised projection and 0.5% higher than the ADB.

The Cambodian banking sector in 2012 saw many new developments, with new banks from Vietnam, Taiwan and Malaysia. However, banking penetration as measured by GDP to loans ratio in Cambodia is 30% compared to Singapore and Malaysia where the figure over 100%. The number of ATMs increased from about 500 at the end of 2011 to 613 as at June 25, 2012. The number of customers using ATMs in the provinces has also increased. Several banks have also launched RMB settlement services during 2012. The RMB is projected to become a major trading currency in the region in the not so distant future. The National Bank of Cambodia officially launched the National Clearing System on December 12, 2012 in an effort to build efficiency and to expand clearing and settlement service for inter-bank transfers.

As at December 31, 2012, the total assets of Union Commercial Bank, plc (UCB) stood at USD 330.95 million, an increase of 31.9% over 2011. The net profit after tax for 2012 was USD 5.1 million, an increase of 14.0% over 2011.  Total shareholders’ equity stood at a record USD 47.1 million, an increase of 9.1 %, as a result of the increase in retained earnings and reserves during 2012.

Gross loans and advances increased to USD 179.5 million as at December 31, 2012 from USD 145.7 million and customer deposits increased to USD 260 million in 2012 from 190 million the year before. By contrast to the banking industry, which grew by 34.2%, the rate of loan growth was 23.2 %. However, growth in deposits outstripped the banking industry figure of 24.9% and grew at 36.8 %, reflecting enhanced customer confidence in the Bank and a steady deposit base from our loyal customers. UCB continued to grow conservatively, with a loan to deposit ratio of only 69.0%; thus signaling ample opportunities for the Bank to grow its lending portfolio in the coming years.

During the year, the Board and all Board Committees met on a regular basis to approve and ratify all senior management decisions, including the annual budget, the business plan and other risk issues relating to finance, compliance, internal control, regulatory requirements and operations. The Board’s composition is further strengthened by the appointment of additional directors.

On behalf of the Board, I would like to express my sincere thanks and gratitude to our customers, shareholders, our dedicated and committed staff, the correspondent Banks and the guidance from the NBC and the Royal Government of Cambodia for the Bank’s achievements during the year.


Oknha Yum Sui Sang
31st March 2013

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