ACLEDA Bank (CSX: ABC)’s standalone credit profile has been upgraded by global ratings agency, Standard & Poor’s (S&P) from ‘bb-’ to ‘bb’ with the bank’s overall credit rating listed as a B+.

The standalone credit profile represents S&P’s opinion of a debt issuer’s creditworthiness, in the absence of an extraordinary intervention from its parent or affiliate(s) or related government. It is one component of an overall credit rating.

ACLEDA Bank was the first bank in Cambodia to have been assigned ratings by international ratings agencies, specifically Standard & Poor’s and GIIRS.

The upgrade was awarded despite the COVID-19 pandemic having severely affected Cambodia’s economy. The Asian Development Bank has forecast a 4 percent contraction in Cambodia’s gross domestic product (GDP) for 2020.

In response to the upgrade, Dr In Channy, president and group managing director of ABC, said the upgrade from ‘bb-’ to ‘bb’ is down to a number of criteria, including the bank having maintained a diversified asset portfolio, practised careful management and conducted [judicious evaluations] of relevant risks as a basis for strong growth and capitalisation.

These factors reflect the strength of ACLEDA Bank’s business network operations in maintaining sustainable revenue and avoiding (negative results), he added.

Speaking of ACLEDA’s future outlook, Mar Amara, the bank’s group chief financial officer, said she expects its ratings to be further upgraded as the economic impact of COVID-19 subsides with the arrival of vaccine in the region and across the globe.

“We expect credit risk to improve in [both 2021 and the following year] as COVID-19 [comes] under control with the arrival of vaccines around the world. [We agree with [Ministry of Economy and Finance forecasts] that [domestic] GDP growth will rebound to 3.5 percent in 2021, 5 percent in 2022 and 6.5 percent by 2023,” she said.

According to the company, this outlook reflects the view that ACLEDA Bank can maintain its strong financial profile with sufficient buffers [in place for business stability].

ACLEDA’s third-quarter report disclosed to the Cambodia Securities Exchange showed a record $98 million in after-tax profit for the first nine months of 2020, an increase of 14 percent year-to-date.

ACLEDA Bank Plc is 51 percent owned by Cambodian interests, including its staff. The remaining 49 percent is owned equally by Sumitomo Mitsui Banking Corp, COFIBRED, ORIX Corp and three investment funds overseen by Triodos Investment Management (Triodos-Doen Foundation, Triodos Fair Share Fund, and Triodos Microfinance Fund).

ACLEDA Bank listed its IPO in May, issuing 4,344,865 shares to the public, (close to 1 percent of the bank’s total of 433,163,019 shares) at 16,200 riels a share. At the close of Friday trading, ABC shares rose 60 riels to close at 17,200 riels per share.

• Tags: Acleda, S&P