1

Our Vision
ACLEDA Bank's vision is to be Cambodia's leading commercial bank providing
superior financial services to all segments of the community.

Our Mission
Our mission is to provide micro, small and medium entrepreneurs with the wherewithal
to manage their financial resources efficiently and by doing so to improve the quality of
their lives. By achieving these goals we will ensure a sustainable and growing benefit to
our shareholders, our staff and the community at large. We will at all times observe the
highest principles of ethical behaviour, respect for society, the law and the environment.

Our Slogan
The bank you can trust, the bank for the people.

This report has been prepared and issued by ACLEDA Bank Plc., to whom any comments or requests for further information should be sent.

Headquarters: #61, Preah Monivong Blvd., Sangkat Srah Chork, Call Center (24/7):
Khan Daun Penh, Phnom Penh, Kingdom of Cambodia.
Tel: +855 (0)23 994 444, +855 (0)15 999 233
P.O. Box: 1149 E-mail: [email protected]
Tel: +855 (0)23 998 777 / 430 999
Fax: +855 (0)23 430 555
E-mail: [email protected]
Website: www.acledabank.com.kh
SWIFT Code: ACLBKHPP
2

FINANCIAL HIGHLIGHTS
31/12/20 31/12/19 31/12/18 31/12/17 31/12/16
Change (%)1
Units in US$ ‘000 Audited Audited Audited Audited Audited

Consolidated Financial Highlights (CIFRS)

Assets 6,551,494 6,175,162 5,683,574 5,247,094 4,673,975 6.09%
Loans and Advances (net) 4,471,301 3,846,021 3,594,359 3,118,577 2,884,712 16.26%
Liabilities 5,461,868 5,210,700 4,830,734 4,496,871 3,996,657 4.82%
Deposits 4,611,296 4,367,898 3,864,455 3,358,968 3,155,516 5.57%
Share Capital 433,163 428,818 395,224 358,545 307,764 1.01%
Shareholders' Equity 2 1,089,626 964,462 852,840 745,661 673,641 12.98%
Gross Income 579,221 550,128 510,655 493,879 471,330 5.29%
Profit Before Income Tax 180,035 153,523 150,832 108,924 151,965 17.27%

Net Profit After Tax 141,493 120,860 119,314 85,144 117,651 17.07%
Earnings Per Share $0.33 $0.2818 $0.3019 $0.2375 $0.3823 13.79%
Dividend 3
- $0.0763 $0.1063 $0.1278 $0.2062 -

Financial Highlights (CIFRS)

Assets 6,379,484 6,017,303 5,567,595 5,123,428 4,569,928 6.02%
Loans and Advances (net) 4,292,649 3,686,579 3,459,566 2,970,967 2,755,666 16.44%
Liabilities 5,285,458 5,045,025 4,704,649 4,370,604 3,883,699 4.77%
Deposits 4,477,033 4,256,424 3,780,278 3,277,577 3,079,358 5.18%
Share Capital 4
433,163 428,818 395,224 358,545 307,764 1.01%
Shareholders' Equity 5
1,094,026 972,279 862,946 752,824 686,228 12.52%
Gross Income 537,756 514,933 482,317 462,465 443,919 4.43%
Profit Before Income Tax 172,154 148,226 146,565 99,784 146,172 16.14%
Net Profit After Tax 138,342 117,887 116,991 79,928 117,913 17.35%
Earnings Per Share $0.32 $0.2749 $0.2960 $0.2229 $0.3831 16.19%

HIGHLIGHTS OF 2020
• Assets rose 6.09% to US$6,551.49 million.
• Loans (net) grew 16.26% to US$4,471.30 million.
• Non-performing loans to total loans was contained at 2.40%.
• Deposits increased by 5.57% to US$4,611.3 million.
• Equity grew by 12.98% from US$964.46 million to US$1,089.63 million.
• Net profit after tax was US$180.04 million.
• Return on equity was 12.99%.
• The Group had 319 offices operating in Cambodia, Lao PDR, and the Republic of the Union of Myanmar.

1 Change from 2019 to 2020.

2 Exclude Minority interest of the subsidiaries.
3 From 2016 to 2018, 100% of dividend was distributed, 20% as cash and 80% as share, in 2019 was 100% (paid out in cash).
4 Share capital of ACLEDA Financial Trust and ASA, Plc. are shown:

Description 2020 2019 2018 2017 2016

AFT share % 25.7392% 26.0000% 26.0000% 26.0000% 25.1061%
AFT Number of Shares 111,492,719 111,492,719 102,758,267 93,221,689 77,267,575
ASA share % 24.7492% 25.0000% 25.0000% 25.0000% 25.8939%
ASA Number of Shares 107,204,547 107,204,547 98,806,034 89,636,246 79,692,026
5 Excluded Subordinated Debt.
 3

TRANSACTIONS AT COUNTER AND DIGITAL

Key Performance 2020 2019

AT COUNTER:

Number of Txn 33,911,358 27,517,943

Value of Txn (Million KHR) 248,015,779 247,781,348

VIA DIGITAL (SELF-SERVICE):

Number of Txn 81,204,412 50,741,542

Value of Txn (Million KHR) 87,818,823 52,853,670

TAX PAID REPORT

In the interests of fiscal transparency, we are pleased to publish our consolidated tax paid report in the table below:

Units in US$ 2016 2017 2018 2019 2020 Total*

Patent tax 19,036 19,309 20,936 19,130 19,576 191,122

Signboard tax 75,826 36,983 57,695 64,096 83,562 799,650

Transportation tax 41,864 39,269 37,242 33,643 20,753 351,953

Property tax 7,651 22,964 23,094 7,673 7,636 119,727

Value Added Tax - - 1,266 5,749 22,181 37,486

Prepayment of profit tax 4,396,660 4,681,733 4,682,423 5,122,833 5,298,199 42,268,763

Profit tax 25,993,217 35,120,547 22,340,330 11,923,464 28,645,171 208,765,340

WHT-Salary 5,033,557 4,092,969 9,394,655 5,163,212 6,497,199 52,928,148

WHT-Saving Deposits 224,284 256,367 225,451 169,667 160,417 2,335,491

WHT-Fixed Deposits 3,904,865 4,410,819 4,208,320 4,758,442 5,129,096 35,898,665

WHT-Asset Rental 856,400 933,996 976,719 1,049,504 1,036,530 10,303,546

WHT-Local Services 288,159 344,495 327,390 335,193 298,033 4,078,313

WHT-Overseas Services 4,724,542 6,049,713 6,391,363 5,865,202 6,519,072 45,344,771

Total paid 45,566,061 56,009,164 48,686,885 34,517,809 53,737,423 403,422,977

Accumulated amount* (year to date) 210,471,696 266,480,860 315,167,745 349,685,554 403,422,977

* Total and Accumulated Amount from year 2000.

4

PERFORMANCE
6,552
6,175
5,684
5,247
4,674

4,471

3,846
2016 2017 2018 2019 2020 3,594

3,119
Total Assets (US$ Million) 2,885

2016 2017 2018 2019 2020

4,611
4,368 Loans Outstanding (US$ Million)
3,865

3,359
3,156

790

683

2016 2017 2018 2019 2020 566

Deposits (US$ Million) 444

345

2014 2015 2016 2017 2018

2016 2017 2018 2019 2020

Number of ATMs
35,114,427

17,488,403
ACLEDA Mobile (Mobile Banking)

9,587,564 Accounts Registered

Account Balance (US$)
3,396,274
1,276,528 1,782,814
263,780 789,819

2017 2018 2019 2020

 5

CONTENTS
6 Cambodia's Key Economic Indicators 32 Report of the Board of Directors
7 Chairman's Report 33 Reports of the Board Committees
8 President & Group Managing 33 Audit Committee
Director's Report
34 Remuneration and Nomination Committee
11 Organisational Chart
36 Risk Management and IT Committee
12 Branch Network
39 Environmental and Social Sustainability Report
13 Corporate Governance
43 Credit Ratings

13 Shareholders' Meeting 44 Principal Branches

13 Shareholders 45 Correspondent Banks

15 Board of Directors Appendix: Financial Statement Audited by the

20 Executive Management Independent Auditor

29 Compliance Division
30 Internal Auditor
31 Code of Conduct
6

CAMBODIA'S KEY ECONOMIC INDICATORS

2016 2017 2018 2019 2020e 2021f

1. GDP

GDP % Change 7 7 7.5 7.1 -1.9 3.5

Per Capita GDP (in U.S. Dollars) 1,302 1,427 1,563 1,700 1,683 1,771

2. Inflation

Inflation (Annual Average) 3 2.9 2.5 1.9 2.9 3.1

(End Year) 3.9 2.2 1.6 3.1 2.9 -

3. Government Budget (as a percent of GDP)

Revenue 18.9 20.2 22.3 25.3 23.8 18.2

Expenditure 22 23.5 24.6 26.1 30.1 27.1

4. Money and Credit (12 months percentage change)

M2 21.0 23.1 26.6 18.2 15.3 -

Total Deposits in the Banking System 21.8 25.1 27.9 15.1 18 -

Total Outstanding Loans in the Banking System 20.5 17.2 24.3 23.9 23.4 -

Loans as % of Deposits 100.6 95.3 92.2 99 103.5% -

Private Sector Credit 22.5 18.5 20.1 26.3 - -

Deposits to GDP 68.4 85.6 91.1 93.3 110.2% -

Loans to GDP 68.8 80.7 83.5 92 114% -

5. Balance of Payments (US$ Million)

Exports 9,595 10,777 11,214 14,530 16,000 -

Imports 12,070 13,019 13,771 22,190 16,000 -

Trade Balance -2,475 -2,242 -2,557 -7,660 - -

Current Account (excluding official transfers) -2,312.5 -2,140.5 -2,180.1 -2,703.9 -2,703.9 -3,814.10

Nominal GDP (Billions of U.S Dollars) 19.86 22.16 24.61 27.13 27.22 29.01

Exchange Rate (Riel per Dollar end period) 4,056 4,045 4,037 4,055 4,065 4,065

Source: ABC, NBC, World Bank, and MoEF.

e: estimate, f: forecast
 7

CHAIRMAN'S REPORT

Mr. Chhay Soeun

Chairman
On behalf of ACLEDA Bank Plc. and the Board of Directors,
I am pleased to present the 2020 Annual Report to all
interested parties.

The year 2020 was a difficult one for most sectors, especially travel and From the date ACLEDA Bank was publicly listed to the end of
tourism. The COVID-19 pandemic has negatively impacted businesses the year 2020, public investors in the Bank increased by 42.63%
significantly in all industries around the world—Cambodia has not (from 2,496 to 3,560). According to the monthly newsletter of the
been an exception. The Royal Government of Cambodia has handled Cambodia Securities Exchange (CSX) issued in December 2020, the
the situation very well and is worthy of being complimented. As total market capitalization increased to US$2.45 billion, growing nearly
a result, several major industries have not felt the full impact of 250% from that of 2019. The listing of ACLEDA Bank Plc., the largest
this terrifying pandemic, as has been witnessed in other nations. local Cambodian bank, enhanced trading activity in the CSX, driving
Growth in the Cambodian financial industry has remained consistent daily trade to around US$1 million for several consecutive days.
with that of previous years. Overall, the health of the sector is still
In closing, let me express my sincerest gratitude to all Shareholders,
considered quite stable. There are signs that economic activity is
customers, employees, and especially the relevant authorities who
beginning to pick up in 2021 mainly due to effective vaccines being
have always supported the Bank’s efforts and who have contributed
made available around the world.
to the positive performance of the Bank, especially during the year
Given the Bank’s operations under the global pandemic for the 2020.
year 2020, and in order to provide even more quality services to the
public at large to meet their needs during this difficult time, the
Bank has widened its self-service network innovation and rebranded
digital banking services by encouraging the expanded use of the
ACLEDA mobile App, which allows for more convenient, faster, and
highly secure banking services. As a partial result of this, and in
combination with the on-going efforts of all the Bank’s management
and staff, the Bank achieved positive outcomes as noted below:

As of December 31, 2020, total deposits increased by US$243.40 million

Mr. Chhay Soeun
while total loans outstanding grew by US$627.18 million compared Chairman, Board of Directors
to the year ended 2019.
24 March 2021
In comparing the Bank’s annual performance in 2020 with 2019, the
Bank achieved a net profit after tax of US$141.49 million, an increase
of 17.07% equivalent to US$20.63 million. The Return on Average
Assets (ROAA) was 2.23%, an increase of 0.19%, and the Return on
Average Equity (ROAE) was 13.79%, an increase of 0.49%.
8

PRESIDENT & GROUP MANAGING DIRECTOR'S REPORT

Dr. In Channy
President & Group Managing Director

Amid the global impact of the COVID-19 pandemic, we revisited our brand image to reflect on the core nature and
strengths of our Bank. The year 2020 has enriched our experience in two important ways. Firstly, we strengthened
ourselves by coping with a negative circumstantial situation. Remarkably, the Bank continued to grow while
maintaining good assets’ quality during the COVID-19 global economic slowdown. Secondly, as the first listed
bank on the Cambodia Securities Exchange (CSX), we had to transform our operations and reporting standards to
fulfill the detailed requirements of the National Bank of Cambodia (NBC), the Securities and Exchange Regulator
of Cambodia (SERC), and the CSX. Prior to listing on the CSX in May 2020, we had only eight institutional
shareholders. After listing, the number of shareholders increased to nearly 4,000 shareholders—both from
institutions and those from the general public—who placed enormous trust in us.

Thanks to the digital technologies we have developed and adopted over many years, we were able to achieve
both solid business performance and strong engagement with a plethora of regulators and shareholders at the
same time.
 PRESIDENT & GROUP MANAGING DIRECTOR’S REPORT 9

Performance in 2020 The Bank maintains a diversified infrastructure of choices with 263
traditional branches (or offices), gradually transforming them to
Competitive Environment self-service centers with 790 ATMs and 4,287 POS terminals. It’s
interesting to note that ACLEDA Bank has issued a total of 1.39
Digital solutions are increasingly becoming the primary choice for
million debit cards. Moreover, the digitized ACLEDA mobile App has
banks and financial institutions in reaching out to their customers
proved very popular, registered by more than 1.7 million users at the
during this COVID-19 pandemic. There are justifiably serious health
end of 2020.
concerns from the public in general. Digital technology is also
believed to be one of the most effective tools to compete in the
current market environment amongst financial institutions. ACLEDA
Medium and Corporate Businesses
Bank at all times strives to serve its customers to grow together not In this product category in 2020, the value of loans outstanding grew

only in Cambodia but also abroad via QR Code Cross border payments. by 30.81%, and accounted for 35.06% of total loans outstanding. Cash
management increased substantially through our arrangement with
Operational Highlights in 2020 the public sector, particularly the Social Security Fund, government
payroll direct deposits, and vehicle stamp tax collection. In addition,
• Total loans outstanding at the end of 2020 were US$4,506.64
private sector business entities and garment factories were also
million, of which US$894.65 million (or 19.85%) was lent to the
involved in this arrangement. As a custodian of the Social Security
agriculture sector. In 2019, lending to agriculture was US$757.04
million. By the end of December 2020, the Bank’s small business Fund, ACLEDA Bank now receives savings deposits from all provinces

loans reached 449,352 active customers. and cities. Several new accounts were acquired, the most significant
of which were from the expansion of the Bank’s ATM networks and
• Non-performing loans (NPL) remained at a controllable rate of
the ACLEDA mobile bill payment for public utilities, as well as via
2.40%, given the COVID-19 crisis.
ACLEDA Internet Banking services. This has had a positive impact on
• Total deposits were US$4,611.30 million from 2,894,907 active
the Bank’s local currency cash flow and has enabled ACLEDA Bank
accounts.
to entirely fund its local Khmer Riel currency loan portfolio from
• The Bank posted a net profit after tax and other comprehensive
deposits. Demand for payroll services were particularly strong in
income totalling US$141.66 million.
2020 with a number of organisations signed up, including entities
• The Bank continuously made efforts to minimize costs and risks in in the public sector, and local and international companies. They
order to to maximize income. provided excellent opportunities for cross selling of other products.
• Financial technology (FinTech) products integrated the Bank's
ACLEDA Bank and its subsidiaries continued to collaborate with
electronic banking infrastructure, offering the Bank's customers
their long–term, experienced, and strategic partners representing
a range of choices to manage their financial resources.
hundreds of years of combined experience in banking and financial
services. These companies assist our mutual common customers to
Retail and Small Business manage their financial resources effectively and efficiently. At the

Lending in the “Small” business category grew by 10.10% or US$202.83 same time, this collaboration helped boost revenue while enhancing

million. The “Personal & Others” category grew by 32.20% or US$38.55 long-term sources of funds for the Bank. These partnerships significantly

million. “Housing Loans” decreased by US$160.80 million, or 12.27%. contributed to the Bank’s long-term funding. The joint efforts also

The total amount of loans outstanding was US$4,506.64 million as of provided a useful source of off-balance sheet revenue, while enhancing

the end of 2020. the international expertise of the Bank’s management and staff.

ACLEDA Bank’s deposit balance was US$4,611.30 million (up by 5.57%

Treasury and International
or US$243.40 million) and the total number of accounts was around
Foreign Exchange (FX) earnings continued to grow and made a
2.89 million. The retail sector accounted for the largest segment of
valuable contribution to our non-interest income. Based on its risk
the Bank’s growth in deposits with a large percentage coming from
management policy, the Bank does not trade speculatively or take
first-time depositors: employee payrolls paid through the Bank’s
positions as its FX business is to support customers' businesses
Payroll Service and non-bank customers in rural areas using E-Wallet
only. This is a low risk and stable source of income, which has grown
ACLEDA mobile App. Financial products and services via FinTech
consistently over time, producing good margins, and helped to build
solutions have contributed to this strong growth.
up long-standing relationships with customers.
10 PRESIDENT & GROUP MANAGING DIRECTOR’S REPORT

The Bank's balance sheet was further strengthened by robust

inflows of customer deposits, resulting in a healthy loan-to-deposit
The Challenges for 2021
As a listed company, ACLEDA Bank is accountable to two regulators:
ratio, which provides a solid platform to support the Bank’s business
the NBC and the SERC. It is also accountable to the public at large
growth in selected market operations.
and to individual investors. Over its long history, the Bank has
The Bank contributed to the promotion of the use of Khmer Riel created trust from its good corporate governance, the rich experience
(KHR) by providing local currency loans to customers, amounting to of our management team, and a culture of transparency.
more than 14% of its total loan portfolio, exceeding the regulatory
Digital infrastructure and FinTech products narrow the gap of finance
requirement of 10%. We actively participated in the Liquidity Providing
and financial service access. These will eliminate distances within
Collateralized Operation (LPCO) to seek further funding support in
the financial market and enable customers to make choices between
local currency.
banks and financial institutions irrespective of their location. They
To support its long-term sources of funding, the Bank diversified will also stimulate strong competition in both service quality and
its funding options by maintaining and gradually expanding good pricing. “ACLEDA mobile” was fully upgraded. The look and feel is
relationships with its strategic partners globally, especially in Europe, appealing to all ages. It has been built with customers’ experiences
the USA and Asia. and user-friendliness in mind. Moreover, it is highly secure and

The Bank continued to strengthen relationships with other financial downloadable at any spot where there is Wi-Fi or internet available,

institutions and reviewed our substantial international correspondent providing a mechanism to place ACLEDA ahead of the competition.

network during the year. At the end of 2020, the Bank had 274 The prolongation of COVID-19 pandemic and the slow pace of the
correspondent banks residing in 44 countries. In addition, the Bank COVID-19 vaccine delivery continues to engender public fears and
has a dominant market share in terms of accounts from local banks likewise may continue to impact global economic growth including
and microfinance institutions, and we provide fund-transfer services Cambodia’s over the short or the longer term.
to them throughout the country.
Compliance with the CIFRS Financial Reports requires a sophisticated
The Bank managed to comply with all its internal risk policies, system as well as regulatory guidelines in place in time of need. The
regulatory requirements, and lenders’ covenants. Bank has successfully developed this, and I am pleased to highlight
it and make it known to all stakeholders.
Strategic Priorities for 2021 To all our customers, my colleagues on the Board of Directors,
1. Continue to develop Financial Technology (FinTech) services in management and staff, and not least the Royal Government, the NBC,
ACLEDA mobile App to cover regional financial services networks and the SERC, I offer my sincerest thanks for your support in 2020
and enrich self-service applications; and in anticipation of a happy and prosperous 2021.
2. Develop banking self-service areas to serve the public and
customers 24 hours a day, 7 days a week;

3. Rebrand and further strengthen the image of the Bank;

4. Enhance the capacity of both local and foreign subsidiaries to

improve the Bank’s competitive advantages;

5. Digitalize administrative processes and documentation to support Dr. In Channy

the Bank’s digitization efforts; President & Group Managing Director
6. Enrich IT systems and security for robust digital functions;
24 March 2021
7. Partner with reputational institutions for business growth;

8. Act as the custodian to diversify funding from the Cambodia

Securities Exchange and worldwide investors; and,

9. Emphasize ACLEDA mobile App as the common means of broader

payment in all markets.
 Shareholders

Board of Directors

Board Remuneration & Board Risk Management

Board Audit Committee
Nomination Committee & IT Committee

President & Group

Managing Director

Executive Committee

ACLEDA MFI ACLEDA Institute

ACLEDA Rep. Office ACLEDA Bank Lao Ltd. ACLEDA Securities Plc.
Myanmar Co., Ltd. of Business

Human Resource
Management Credit Procurement Asset & Liability Porfolio Management Strategic Plan Executive Risk Operational Risk
Committee for IT Steering Committee
Committee Committee Committee Committee Development Committee Management Committee Management Committee
AIDS and Anti-Drugs

EVP & Group Chief EVP & Group Chief EVP & Group Chief EVP & Group Chief EVP & Group Chief EVP & Group Chief EVP & Group Chief Group Chief
Operations Officer Financial Officer Treasury Officer Administrative Officer Legal Officer and Information Officer Risk Officer Internal Audit Officer
ORGANISATIONAL CHART

Corporate Secretary

SVP & Head of SVP & Head of SVP & Head of Financial SVP & Head of Human SVP & Head of Legal SVP & Head of SVP & Head of Risk Head of Internal Audit
Operations Division Finance Division Institutions Division Resources Division Division Application Service Management Division Development Division
Division

SVP & Head SVP & Head of SVP & Head of SVP & Head of
VP & Head of SVP & Head of SVP & Head of Head of Audit
of Credit Sale Budgeting & Control Corporate Secretary & Information Security
Treasury Department Administration Division Credit Division Report Department
Management Division Division Disclosure Division Division

SVP & Head of VP & Senior Head of VP & Head of SVP & Head of SVP & Head of Credit
SVP & Head of VP & Head of Head of Information
Public Investment Foreign Exchange & Subsidiaries Counsel System Infrastructure Data Analytics &
Marketing Division SWIFT Centre Security Audit Department
Division Reserve Department Department Division Research Division

SVP & Head of Product VP & Head of VP & Head of Treasury VP & Head of Litigation SVP & Head of VP & Head of Credit Head of Credit
Development Division Management Accounting Dealing Centre Management Department Strategy & Governance Control Department Audit Department
Department Division
SVP & Head of
SVP & Head of Financial Head of Financial
Digital & Customer
Services Division Audit Department
Experience Division

VP & Head of Trade VP & Head of Head of

Finance Department Service Desk Centre Deposit & Digital Banking
Audit Department

Head of
Compliance Division

263 Branches Nationwide

11
12

BRANCH NETWORK

ACLEDA's network has

263 branches covering all provinces and cities in the Kingdom of Cambodia,
38 branches in the Lao PDR, and 15 branches in the Republic of the
Union of Myanmar.
 13

CORPORATE GOVERNANCE
ACLEDA Bank Plc. recognizes the critical importance of corporate 7 Approval and recognition of the appointment of new Board
governance in supporting the Bank's sustainable growth, enhancing members and Shareholders’ representatives in ACLEDA Bank Plc.
the efficiency of the Bank, creating shareholder value, and securing 8 Acknowledgement of the nationality of ACLEDA Bank Plc.
trust for all stakeholders including Shareholders, customers, staff, 9 Acknowledgement that the name of “Triodos Custody B.V.” being
and the general public. The Board of Directors supports and encourages legal owner of the assets of Triodos Fair Share Fund, has been
the adoption and implementation of good corporate governance changed to “Legal Owner Triodos Funds B.V.”
policies, together with a Code of Conduct and business ethics. 10 Approval of the re-appointment of Dr. In Channy, Mr. Chhay
Soeun, and Mr. Rath Yumeng as Board members of ACLEDA Bank

Shareholders' Meeting Plc. for the next three-year term.

11 Approval of the Annual Report of the Bank for the year 2019.
The Bank holds its Annual General Meeting of Shareholders in 12 Approval of the Bank’s remuneration and nomination policy.
compliance with the law, the Articles of Association, and other 13 Receipt of the report of the Chairman for 2019 and the Cambodia
relevant regulations. The 2020 Annual General Meeting of Shareholders economic outlook report.
was held on April 7, 2020 and two Shareholders’ Extraordinary General 14 Receipt of the report of Group Managing Director for 2019 and
Meetings were held on February 20, 2020 and November 23, 2020 Strategic plans for ACLEDA Bank Plc. and Group.
respectively at the Bank's Headquarters. An additional three 15 Receipt of the progress report on the process of ACLEDA Bank
resolutions were passed by e-mail during the year. The Bank took Plc.’s IPO/listing.
the following actions: 16 Approval to change ACLEDA Bank’s logo to improve its brand and
identity.
Prior to the Meeting 17 Approval of the AFT's investment in AIB in the amount of US$10
The Meeting Notice contains detailed agendas, factual details, million to take up 6,047,046 shares equal to 23.3910% of the total
rationale, and Board recommendations for each agenda item as posted new shares issued.
well as accompanying documents and the 2020 Report of Financial 18 Approval to cease AIB’s investment in AMM.
Statements produced by the external auditor. The Meeting Notice 19 Approval of the selection of Grant Thornton as external auditor
and accompanying documents were prepared in English and were of the Bank for the financial year 2021.
delivered to all Shareholders in advance of the Annual General
Meeting and Extraordinary General Meetings. Following the Meeting
The Minutes of the 2020 Annual General Meeting and Extraordinary
During the Meeting
General Meetings of the Shareholders were circulated to Shareholders
The 2020 Annual General Meeting of Shareholders was chaired by
for their perusal prior to confirmation at the next Annual General
the Chairman of the Board. The Chairman of the meeting allowed
Meeting.
Shareholders full opportunity to ask questions and make
recommendations and provided comprehensive clarification when
requested. Management also clarified and answered related issues.
Shareholders
The Corporate Secretary recorded the Minutes and details of votes The Shareholders are the owners of the Bank. However, except for

for each agenda item. approving certain critical strategic matters the Shareholders have
no direct powers to manage the Bank in any way but delegate this
The decisions made in 2020 were: responsibility to the Board of Directors through the Articles of
1 Approval of the new price range of the Bank’s share for an IPO. Association.
2 Approval of the Special Purpose Consolidated and Separate
Financial Statements for the year ended December 31, 2019 of ACLEDA Financial Trust
ACLEDA Bank Plc. and Subsidiaries, which were issued by KPMG ACLEDA Financial Trust (AFT) succeeded ACLEDA NGO under the
Cambodia Ltd. "Sub-Decree No: 476 Or Nor Kror Bor Kor, dated August 26, 2013 on
3 Approval of the Consolidated and Separate Financial Statements
the Financial Trusts" of the Royal Government of Cambodia, and the
of ACLEDA Bank Plc. for the year ended December 31, 2018 and
"Prakas No: 1041 Sar Hor Vor Bror Kor, dated September 26, 2014 on
December 31, 2019 in accordance with Cambodian International
the Management and Monitoring of Financial Trusts" of the Ministry
Financial Reporting Standards (CIFRS) which were audited by the
of Economy and Finance. The certificate No: 269 Sar Hor Vor Or
external auditor, KPMG.
Ouk Hor, dated August 19, 2015 was also obtained from the Ministry
4 Approval of dividend distribution and transfer of the remaining
balance of the Net Profit After Tax to the General Reserve. of Economy and Finance with its registered office at #61, Preah

5 Approval of amendments to the Subscription and Shareholders’ Monivong Blvd., Sangkat Srah Chork, Khan Daun Penh, Phnom Penh,
Agreement (SSA) and the Memorandum and Articles of Kingdom of Cambodia.
Association (MAoA) of ACLEDA Bank Plc.
6 Approval of the Director Nomination Policy.
14 CORPORATE GOVERNANCE

The purpose and role of AFT are to:

COFIBRED — Compagnie Financière de la
• Create opportunities for employment and income sources to
BRED (BRED's financial company)
contribute to Cambodian economic development;
COFIBRED is a BRED BanquePopulaire's fully owned subsidiary. Given
• Promote and support the advancement of the sciences related
the development of BRED's international activities, it was decided in
to economic development including finance and banking, and
2008 to regroup all subsidiaries and participations within a single
with a focus on financial inclusion and financial literacy;
entity, Cofibred. Cofibred's portfolio is made up of more than 45
• Promote economic and educational opportunities for youth and
subsidiaries and participations in bank, insurance, e-commerce
low-income populations;
and/or financial companies. These subsidiaries and participations
• Contribute to improved financial services through ACLEDA Bank are located worldwide on the five continents.
Plc. and associated entities, in order to stimulate the local
economy; ORIX Corporation
AFT acts as one of the shareholders of ACLEDA Bank Plc. that is
ORIX Corporation (TSE: 8591; NYSE: IX) provides financial services,
established under the laws of the Royal Government of Cambodia,
makes investments, and operates business in six segments, which
in order to encourage adherence of ACLEDA Bank Plc. to the original
consist of corporate financial services, maintenance leasing, real
objective to support Cambodian micro, small and medium
estate, investment and operation, retail, and overseas business.
entrepreneurs and to maintain Cambodian nationality of ACLEDA Bank
Established in 1964 as a leasing company, ORIX has advanced into
Plc. AFT shall pursue directly and exclusively the aforementioned
neighboring fields and regions to evolve its business and expand
objectives. It shall act altruistically and shall not primarily pursue
globally. Through its business activities, ORIX has been constantly
objectives for its own private commercial interests. AFT is non-political
anticipating market needs and working to contribute to society by
and not affiliated with any political party. It may use its financial
developing leading financial services on a global scale and striving
means only for the purposes set out in these statutes. No individual
to offer innovative products that create new value for customers.
may benefit from any disproportionately high remuneration or from
For more details, please visit ORIX's website: www.orix.co.jp/grp/en/.
an expense, which is not consistent with the AFT's purposes.

ASA, Plc. Triodos Sustainable Finance Foundation,

The ACLEDA Staff Association, (ASA, Plc.) was formed to serve as a Triodos Fair Share Fund and Triodos
holding company and vehicle through which the staff of ACLEDA
Microfinance Fund
Bank Plc. and relevant investor(s) can participate in the long-term
growth and increase in value of the stock in ACLEDA Bank Plc. by Triodos Sustainable Finance Foundation (formerly Triodos-Doen
owning a beneficial interest in the shares of ACLEDA Bank Plc. and Foundation), Triodos Fair Share Fund and Triodos Microfinance
to engage in all other activities reasonably incident, in the judgment Fund are three investment funds managed by Triodos Investment
of the Board of Directors and executive management, to the Management. Triodos Investment Management is a 100% owned
accomplishment of the foregoing objectives. subsidiary of Triodos Bank, one of the world's leading sustainable
banks. The funds' focus is on providing access to financial services

Sumitomo Mitsui Banking Corporation

for low-income groups and SMEs in developing countries in order to
contribute to a sustainable inclusive financial sector.
(SMBC)
Triodos Microfinance Fund
SMBC is a top-tier Japanese bank operating globally. Through its
domestic branches (excluding sub-branches and banking agencies) in Triodos Microfinance Fund was launched in 2009 and is an open-end
Japan and overseas branches (including subsidiaries, sub-branches fund with share classes available for institutional investors, high net
and representative offices) all over the world, SMBC provides a worth individuals and private banking clients across Europe. The
broad range of financial services including deposit taking, corporate main focus of this fund is on established microfinance institutions
finance, structured finance, securities investment, money transfer, and SME banks with a proven track record.
foreign currency exchange, corporate bond trustee services, and
Triodos Fair Share Fund (is owned by Legal Owner
custody services, financial futures underwriting, and investment
Triodos Funds B.V.)
trust sales.
Triodos Fair Share Fund, established in 2002 in the Netherlands, is
SMBC is committed to working towards our goal of "Accelerating our one of the first and few funds worldwide that offers the opportunity
Asia-centric Strategy". SMBC has proactively invested its resources to invest in microfinance institutions and SME banks to the general
in Asian countries with a high growth potential. In order to provide public.
ACLEDA Bank's clients with better-integrated financial services, SMBC
has been seconding a senior consultant to the Foreign Corporate Triodos Sustainable Finance Foundation
Unit (FCU) of ACLEDA Bank since 2013. Triodos Sustainable Finance Foundation aims to finance initiatives
that accelerate sustainable development worldwide, with a focus on
SMBC's holding company, Sumitomo Mitsui Financial Group, Inc.
inclusive finance.
(SMFG), is listed on the Tokyo, Nagoya, and New York Stock Exchanges.
For more information on SMBC, please visit SMFG's website at
https://www.smfg.co.jp/english/.
 15

BOARD OF DIRECTORS
The Directors are appointed by the Shareholders for three-year The Board of Directors assumes responsibility for corporate
terms to act on their behalf. The Articles provide that the Board shall governance and for promoting the success of the Bank by directing
consist of ten Directors and that: and supervising its business operations and affairs. It appoints
and may remove the President & Group Managing Director, Group
• The Board of Directors is responsible for determining the strategy Chief Internal Audit Officer, and Head of Compliance Division. It also
of the Bank and for conducting or supervising the conduct of its ensures that the necessary human resources are in place, establishes
business and affairs. Its members shall act in the best interests with management the strategies and financial objectives to be
of the Bank. implemented by management, and monitors the performance of
management both directly and through the Board Committees.
• The powers of the Board of Directors are to be exercised
collectively and no individual Director shall have any power to The Board of Directors established three Committees: Audit,
give directions to the officers or employees of the Bank, to sign Remuneration and Nomination, and Risk Management and IT, and
any contracts, or to otherwise direct the operations of the Bank may establish such other committees as it deems necessary or

unless specifically empowered to do so by a resolution of the desirable to carry on the business and operations of the Bank.

Board of Directors. These Board Committees shall exist at the pleasure of the Board of
Directors and all members of such Committees shall be approved
• Each Director shall have unlimited access to the books and by the Board. The Committees themselves will not exercise any
records of the Bank during ordinary business hours. of the powers of the Board, except insofar as the Board may
formally delegate such powers, but may make recommendations to
The Board of Directors shall elect, by majority vote, one of its the Board for their collective action. Whilst membership on Board
members to serve as Chairman who shall preside over meetings of Committees is restricted to Directors themselves, they may invite
the Board of Directors as well as the Annual General Meeting. members of management and others so as to provide operational
information and explanation when considered necessary. All Board
Committees are chaired by Independent Directors.
16 BOARD OF DIRECTORS

Mr. Chhay Soeun, Chairman

Board Committees: Audit
Cambodian. Born on April 10, 1954. Mr. Soeun joined ACLEDA in January 1993 and
worked there until his retirement on April 10, 2014. His last position at ACLEDA Bank
Plc. was as Executive Vice President & Group Chief Financial Officer. From 1980 to 1992,
he was an accountant and deputy chief accountant at the Kampot Provincial Department
of Commerce.

At present, he is Chairman of the Board of Directors of ACLEDA Bank Plc., Cambodia, a

Board member of ACLEDA Bank Lao Ltd., and a Board member of ACLEDA MFI Myanmar
Co., Ltd.

He obtained his Executive Master’s of Business Administration in Finance and Accounting

from Preston University, California, USA. He is also a Graduate of the Australian Institute
of Company Directors (GAICD).

Dr. In Channy, Director

Cambodian. Born in June 1960. Dr. Channy is President & Group Managing Director of
ACLEDA Bank Plc., a position he has held since it was established as a bank in 2000. He
became a member of the Board of Directors of ACLEDA Bank Plc. in August 2014. He was
one of the founders of the Association of Cambodian Local Economic Development
Agencies (ACLEDA) in January 1993. As President of the Executive Committee he leads
the Executive Management Team which is responsible for overall strategic planning
and running the day-to-day business of ACLEDA Bank Plc. and its Group as well as
implementation of its business plan. He is directly accountable to the Board of Directors.

His other responsibilities within the Group include Chairman of ACLEDA Bank Lao Ltd.
and ACLEDA MFI Myanmar Co. Ltd., Shareholder Representative for ACLEDA Bank Lao
Ltd., ACLEDA Securities Plc., the ACLEDA Institute of Business, and ACLEDA MFI Myanmar
Co., Ltd. He is also the Chairman of ACLEDA Financial Trust.

Outside ACLEDA Bank, he is one the board members of the Entrepreneurship Development
Fund (EDF), a Royal Government of Cambodia established Trust. He is the Chairman of
the Association of Banks in Cambodia. He also represents ACLEDA Bank Plc. as one of
the members of the World Economic Forum.

He completed an Executive Course on Financial Institutions for Private Enterprise

Development (FIPED) at Harvard University, USA in 1998. He holds a Doctorate of
Business Administration and is also a Graduate of the Australian Institute of Company
Directors (GAICD).
 BOARD OF DIRECTORS 17

Mr. Rath Yumeng, Director

Cambodian. Born in 1962. Mr. Yumeng joined ACLEDA Bank in January 1999. From January
1999 to August 2008 he held various positions in the Bank including as Chief
Accountant/Deputy Head of Finance (January 1999-May 2007), Head of Finance Division
(June 2007-August 2008), Head of Treasury Division (September 2008-May 2015) and
Executive Vice President and Group Chief Treasury Officer (June 2015 till the present).

He is responsible for overseeing the Bank’s treasury management and control functions,
which includes being responsible for the Financial Institution Division, Foreign Exchange
and Reserve Department, Treasury Department, and Treasury Dealing Centre. He also
provides technical support to the Bank’s subsidiaries in terms of fund management.

In addition, he holds positions as chair and member of several of the Bank’s management
Committees: Assets and Liabilities Committee (ALM) and member of the Management
Credit Committee (MCC).

From 2001 until September 2014, he was the Shareholder Representative of ASA, Plc., one
of the local shareholders of the Bank. In August 2014, he became a member of the Board
of Directors of the Bank.

He holds a Master's Degree in Finance and Banking from Western University, Phnom
Penh, Cambodia, and is also a Graduate of the Australian Institute of Company Directors
(GAICD).

Drs. Pieter Kooi, Director

Board Committees: Risk Management and IT (Chair), Remuneration
and Nomination, Audit.

Dutch. Born in 1958. Drs. Kooi joined the Board in October 2000. Starting in 1993, he
advised ACLEDA as a microfinance consultant over a period of seven years in its course
from a development program into a commercial bank. From 1999, he worked as a
short-term microfinance consultant on projects in 15 countries located mainly in Africa
and Asia. From September 2002 until December 2005, he was Director of the Microfinance
Unit of UNCDF in New York. From March 2006 till May 2011, Drs. Kooi supported ACLEDA
Bank Plc. as a part-time consultant in the establishment of ACLEDA Bank Lao Ltd., ACLEDA
Training Center Ltd. (currently ACLEDA Institute of Business) and ACLEDA Securities Plc. At
present Drs. Kooi serves on several boards within the ACLEDA Bank Group.

He obtained his Master’s Degree with distinction in Corporate Finance and Sociology
from Erasmus University in Rotterdam, the Netherlands. He is also a Graduate of the
Australian Institute of Company Directors (GAICD).
18 BOARD OF DIRECTORS

Mr. Van Sou Ieng, Director

Board Committees: Remuneration and Nomination (Chair).
Cambodian. Born in 1953. Mr. Van Sou Ieng joined the Board in September 2020. Outside
ACLEDA Bank, he is the President of the Cambodian Federation of Employers and
Business Associations (CAMFEBA), Chairman of the Garment Manufacturers Association
in Cambodia (GMAC), member of the ASEAN Business Advisory Council (ABAC), member
of the ASEAN Federation of Textile Industries (AFTEX), Honorary President of the Cambodian
Equestrian Federation (CEF), Vice Chairman of the National Training Board (NTB),
Co-chair of the Government-Private Sector Working Group, member of the Labor Advisory
Committee (LAC), Vice Chairman of the Labor Dispute Resolution Advisory Committee,
board member of the National Social Security Fund (NSSF), member of the Committee
on the Review of Cambodia's Implementation of the UN Convention Against Corruption,
and a member of the Inception Committee of the National Arbitration Council (NAC).

He is also Vice Chairman of Asia Insurance Cambodia Co., Ltd., Vice Chairman of Asia
Properties Cambodia Ltd., Chairman of PPS Garment Factory, President of PPS Industrial
Estate Holding Co., Ltd., President of the Cambodian Country Club (CCC), President of
Golden Sorya Mall Co., and President of a boutique hotel named La Plantation Resort
and Spa. .

He graduated from the Academie de Creteil at Fontainebleau, majoring in Mathematics

and Physical Sciences, Paris in 1972. He also graduated with a Diploma from the Institut
Superieur de Gestion, 1976, Paris, France.

Mr. Ian S. Lydall, Director

Board Committees: Audit (Chair), Remuneration and Nomination,
Risk Management and IT.

British. Born in 1955. Mr. Lydall joined the Board in August 2015. He was the CEO and then
Chairman of PwC Vietnam, retiring from the firm on June 30, 2015. He contributes to the
Bank by drawing on his experience of financial reporting, corporate governance, risk
management, strategy, and related areas. Mr. Lydall has extensive and in-depth experience
in financial services.
 BOARD OF DIRECTORS 19

Mr. Kenichiro Mori, Director

Board Committees: Risk Management and IT.

Japanese. Born in 1973. Mr. Mori joined the Board in October 2019. He began his career with
Sumitomo Bank (currently Sumitomo Mitsui Banking Corporation (SMBC)) as a Marketing
officer at the Ikebukuro Branch in Tokyo and later held various positions in credit portfolio
management and corporate planning at the bank. In December 2009, Mr. Mori was appointed
to the Office of Special Staff to the Chairman at the Japanese Bankers Association, where he
led efforts to expand sound practices in the Japanese banking sector, through the adoption
of international standards and best practices. In April 2014, Mr. Mori was assigned as Senior
Vice President of Planning Dept., International Banking Unit. In April 2016, he was promoted
to the Head of Strategic Planning Group. Mr. Mori is currently the Joint General Manager of
Planning Department, Asia Pacific Division at SMBC, a position he has held since April 2019.
He graduated from Tokyo University with a Bachelor’s Degree in Engineering in April 1996.

Mr. Stéphane MANGIAVACCA, Director

French. Born in 1975. Mr. Mangiavacca joined the Board in March 2020. He started his
carrier with the French Ministry of Finance, working in China. He then joined the Internal
Audit of BPCE Group where he became Senior Manager of Quantitative Audit. He now
works for BRED Banque Populaire as an Executive Board member, Head of International
and he is also a Board member of several French and international banks of the BRED
Group. He graduated with honors from the Ecole Nationale Superieure des Mines de
Saint-Etienne, with a Diploma in Engineering and also studied at University of New
Brunswick in Canada.

Ms. Mirjam Janssen, Director

Dutch. Born in December 1970. Ms. Janssen joined the Board in January 2020. She is
currently a member of the Board of Directors at Early Dawn Microfinance Myanmar and
Regional Manager Asia of Triodos Investment Management. She obtained her Master's
Degree in Business Communication Studies from the University of Nijmegen, the
Netherlands.
20

EXECUTIVE MANAGEMENT
The President & Group Managing Director is appointed by the Board • Strategic direction — develop policies, goals, strategies, and
of Directors with full responsibility and authority to manage the targets for Board approval.
day-to-day affairs of the Bank within the framework of the policies • Performance — assemble and mobilise resources to implement
and strategic guidelines approved by the Board. However, certain agreed strategies and performance targets.
powers may be retained by the Board and shall be formally recorded • Risk — identify and evaluate risk in the Bank's strategies and
in a "Letter of Reserved Matters". manage exposures.
• Compliance — ensure that the Bank conforms to all corporate,
The President & Group Managing Director appoints and chairs an
legal, and regulatory requirements.
Executive Committee comprising members of senior management
as he deems appropriate (subject to any changes being notified
to the Board in a timely manner). The Terms of Reference and
proceedings of the Executive Committee shall be determined by the
President & Group Managing Director at his discretion under the
general headings of:
 Executive Management 21

Dr. In Channy
President & Group Managing Director

Cambodian. Born June 1960. Dr. Channy is President & Group Man- Representative for ACLEDA Bank Lao Ltd., ACLEDA Securities Plc.,
aging Director of ACLEDA Bank Plc., a position he has held since it ACLEDA Institute of Business, and ACLEDA MFI Myanmar Co., Ltd. He
was established as a bank in 2000. He became a member of the is also the Chairman of ACLEDA Financial Trust.
Board of Directors of ACLEDA Bank Plc. in August 2014. He was one Outside ACLEDA Bank, he is one the board members of the
of the founders of the Association of Cambodian Local Economic Entrepreneurship Development Fund (EDF), the Royal Government
Development Agencies (ACLEDA) in January 1993. As President of established Trust. He is the Chairman of the Association of Banks
the Executive Committee he leads the Executive Management Team in Cambodia. He also represents ACLEDA Bank Plc. as one of the
which is responsible for overall strategic planning and running the members of the World Economic Forum.
day-to-day business of ACLEDA Bank Plc. and its group as well as
He completed an Executive Course on Financial Institutions for Private
implementation of its business plan. He is directly accountable to the
Enterprise Development (FIPED) at Harvard University, USA in 1998.
Board of Directors.
He holds a Doctorate of Business Administration and is also a Graduate
His other responsibilities within the group include Chairman of of the Australian Institute of Company Directors (GAICD).
ACLEDA Bank Lao Ltd. and ACLEDA MFI Myanmar Co. Ltd., Shareholder

• Mr. Mach Theary • Dr. Loeung Sopheap • Mr. Ly Thay • Mr. Rath Yumeng • Dr. In Channy • Dr. So Phonnary • Mrs. Mar Amara • Mrs. Buth Bunseyha
EVP & Group Chief EVP & Group Chief EVP & Group Chief EVP & Group President & Group EVP & Group Chief EVP & Group Chief EVP & Group Chief Legal
Information Officer Risk Officer Administrative Officer Chief Treasury Officer Managing Director Operations Officer Financial Officer Officer and Corporate
Secretary
22 Executive Management

Dr. So Phonnary
Executive Vice President & Group Chief Operations Officer

Cambodian. Born in November 1963. Dr. Phonnary has worked with Dr. Phonnary is Chairwoman of the Portfolio Management Committee.
ACLEDA since August 18, 1993. As Executive Vice President & Group She is a member of management's Assets & Liabilities Committee,
Chief Operations Officer, she is a member of the Bank's Executive Interest & Price Setting Committee, and the Management Credit
Committee and is responsible for leading a group of operations, Committee.
which consists of five heads of divisions and one department, including
She is directly accountable to the President & Group Managing Director.
Operations Division, Marketing Division, Product Development
She holds a Doctorate of Business Administration and is also a Graduate
Division, Corporate Division, Financial Services Division, and Trade
of the Australian Institute of Company Directors (GAICD).
Finance Department. She is responsible for strategic planning for
the Bank, including development and research for new Bank
products/services, and products/services sales growth planning and
implementation. She is responsible for leading, monitoring, controlling,
and evaluating the Bank’s daily business operations.

• Mr. Neth Piseth • Sok Sovady • Mr. Char Sopheap • Mr. Soth Saran • Dr. So Phonnary • Mrs. Sok Sophea • Mrs. Om Sophea
SVP & Head of Financial SVP & Head of SVP & Head of Product SVP & Head EVP & Group Chief SVP & Head of VP & Head of Trade
Services Division Operation Division Development Division of Credit Sale Operations Officer Marketing Division Finance Department
Management Division
 Executive Management 23

Mrs. Mar Amara

Executive Vice President & Group Chief Financial Officer

Cambodian. Born in September 1967. Mrs. Amara joined ACLEDA in June Her other responsibilities within the Group include being Board chair-
1993. As Executive Vice President & Group Chief Financial Officer, she is woman of ACLEDA Securities Plc. and vice chair of the ACLEDA Financial
a member of the Bank's Executive Committee, which is responsible for Trust.
the overall strategic planning and running the day-to-day business of She is a Graduate of the Australian Institute of Company Directors
the Bank as well as the implementation of the business plan. She is a (GAICD) in 2018, and also graduated from the National University of
member of the Bank’s Assets and Liabilities Committee, Executive Risk Management in Phnom Penh in 2006 with a Master's Degree in Finance,
Management Committee, Strategic Plan Development Committee, and having previously obtained a Bachelor's Degree in Management in
the Management Credit Committee. She also leads the work of the Basel 2003. She attended courses on Management Accounting, Financial
Team. She is responsible for the Finance Division, Budgeting & Control Accounting, and Auditing among others at Regent College from 1996 to
Division, Public Investment Division, and Management Accounting 1998 in Phnom Penh.
Department. She is directly accountable to the President & Group
Managing Director.

• Tek Peuochanthala • Mr. Kuoy Veasna • Mrs. Mar Amara • Mrs. Meng Mariane • Mrs. Tauch Chansophea
SVP & Head of Budgeting SVP & Head of Public EVP & Group Chief SVP & Head of VP & Head of Management
& Control Division Investment Division Financial Officer Finance Division Accounting Department
24 Executive Management

Mr. Rath Yumeng

Executive Vice President & Group Chief Treasury Officer

Cambodian. Born in 1962. Mr. Yumeng joined ACLEDA Bank Plc. in From 2001 until September 2014, he was the Shareholder Representative
January 1999. From January 1999 to August 2008 he held various of ASA, Plc., one of the local shareholders of the Bank. In August 2014,
positions in the Bank including as Chief Accountant/Deputy Head he became a member of the Bank’s Board of Directors.
of Finance (January 1999-May 2007), Head of Finance Division (June
He holds a Master's Degree in Finance and Banking from Western
2007-August 2008), Head of Treasury Division (September 2008-May
University, Phnom Penh, Cambodia, and is also a Graduate of the
2015), and Executive Vice President & Group Chief Treasury Officer
Australian Institute of Company Directors (GAICD).
(June 2015 till the present).

He is responsible for leading treasury management and control

functions, which includes oversight of the Financial Institution Division,
Foreign Exchange and Reserve Department, Treasury Department,
and Treasury Dealing Centre. He also provides technical support to
the Bank’s subsidiaries in terms of fund management.

• Mr. Prak Chanveasna • Mrs. Sovan Bopha • Mr. Rath Yumeng • Mr. Vuth Heng • Mr. Than Sarun
VP & Head of Treasury SVP & Head of Financial EVP & Group Chief VP & Senior Head of Foreign VP & Head of
Dealing Centre Institutions Division Treasury Officer Exchange & Reserve Department Treasury Department
 Executive Management 25

Mr. Ly Thay
Executive Vice President & Group Chief Administrative Officer

Cambodian. Born October 1975. Mr. Thay joined ACLEDA in December business plan focused on the day-to-day operations of the Bank.
1997. He worked for ACLEDA Bank Plc. as Accountant (1997-1999); He is responsible for the Human Resources Division, Administration
Internal Auditor (1999-2000); Cashier, Branch Manager, and Office Division, and the SWIFT Centre. He is directly accountable to the
Operations Manager (2000-2004); Operations Department Manager President & Group Managing Director.
(2004-2006); and Senior Vice President & Head of Operations His other responsibilities within the Group include currently serving
Division (2006-2016). as Board Chairperson of the ACLEDA Institute of Business.
As Executive Vice President & Group Chief Administrative Officer, he He obtained a Master’s Degree in Finance from Pannasastra University
is a member of the Bank's Executive Committee and is responsible of Cambodia in 2008.
for overall strategic planning as well as the implementation of the

• Mr. Nay Sok Samnang • Mr. Ly Thay • Mr. Ho Rattanak • Mrs. Khat Phanin
SVP & Head of EVP & Group Chief SVP & Head of Human VP & Head of
Administration Division Administrative Officer Resources Division SWIFT Centre
26 Executive Management

Mrs. Buth Bunseyha

Executive Vice President & Group Chief Legal Officer and
Corporate Secretary

Cambodian. Born in August 1980. Mrs. Bunseyha joined ACLEDA Bank and the Board of Directors. She is responsible for the Legal Division,
in October 2007. As Executive Vice President & Group Chief Legal Corporate Secretary & Disclosure Division, Litigation Management
Officer and Company Department, and Subsidiaries Counsel Department. She is directly

Secretary, she is a member of the Bank's Executive Committee, which accountable to the President & Group Managing Director.

is responsible for the overall strategic planning and running the She obtained a Master's Degree and Bachelor's Degree in Law.
day-to-day business of the Bank as well as the implementation of the Currently, she is studying for a Bachelor's Degree in English at
regulatory compliance plan and correspondence with shareholders Western University.

• Mr. Savan Malyka • Mr. Suos Ousaphea • Mrs. Buth Bunseyha • Mr. Keo Chhorpornpisey • Mr. Yin Virak
VP & Head of Litigation SVP & Head of Legal EVP & Group Chief Legal Officer VP & Head of Subsidiaries SVP & Head of Corporate
Management Department Division and Corporate Secretary Counsel Department Secretary & Disclosure Division
 Executive Management 27

Mr. Mach Theary

Executive Vice President & Group Chief Information Officer

Cambodian. Born November 1965. Mr. Theary worked for several of the Bank’s Executive Committee and member of a number of other
different organizations, including the ANZ Bank in Australia, Monash executive and Board Committees. As Group Chief Information Officer,
University, UNHCR, World Vision Cambodia, and the International he is responsible for directing and managing six divisions, including
Labour Organization, before joining ACLEDA NGO as a consultant for IT security, with a total of about 450 technical staff.
five years. He joined ACLEDA Bank full time in July 2000. Mr. Theary
He was awarded a Bachelor's Degree in Science in 1989 from Monash
was Senior Vice President & Head of Information Technology Division
University in Australia, majoring in Computer Science and Statistics.
of ACLEDA Bank from July 2006 to December 2017. He was then
He then proceeded to do a Graduate Diploma in Business Systems
promoted to be EVP & Group Chief Information Officer and has been
and was awarded a diploma in 1990 by the same university.
chairing the IT Steering Committee ever since. He is currently a member

• Ms. Som Chendamony • Mr. Ouk Sras • Mr. Seng Sokneang • Mr. Mach Theary • Mr. Meang Tay • Mr. Chhay Yaroth • Mr. Kong Danny
VP & Head of Service SVP & Head of Strategy SVP & Head of Digital EVP & Group Chief SVP & Head of SVP & Head of Information SVP & Head of System
Desk Centre & Governance Division & Customer Experience Information Officer Information Tech Security Division Infrastructure Division
28 Executive Management

Dr. Loeung Sopheap

Executive Vice President & Group Chief Risk Officer

Cambodian. Born in March 1967. Dr. Sopheap started working for for the entire ACLEDA Group. He was appointed as a member of the
ACLEDA in December 1997 as an accountant. Since then he has held Board of Directors of ACLEDA Securities Plc. in July 2017.
several positions, and currently is Executive Vice President & Group
He obtained his Doctorate of Business Administration (DBA) from
Chief Risk Officer. He is responsible for credit risk and other risks
Preston University, Phnom Penh, Cambodia in 2012.

• Mr. Ou Dyna • Mr. Soeng Phon • Dr. Loeung Sopheap • Mr. Tep Bunthoeun • Mr. Chheng Vathana
VP & Head of Credit SVP & Head of Credit Division EVP & Group Chief Risk Officer SVP & Head of Risk SVP & Head of Credit Data
Control Department Management Division Analytics & Research Division
 29

COMPLIANCE DIVISION

Mr. Hok Leangkry

Head of Compliance Division

Cambodian. Born in December 1977. Mr. Leangkry has been working He is responsible for leading the Compliance Group, which consists
with ACLEDA since February 2002. As Head of the Compliance of two departments including the AML & CFT Compliance Department
Division, he is responsible for overall strategic planning and running (ACD), and the Regulatory Compliance Department (RCD). The group
the day-to-day compliance activities of the Bank and its subsidiaries. also includes all Compliance Officers at all subsidiaries.
To assure the independence of the Bank’s compliance functions,
He holds two postgraduate degrees, a Master’s Degree in Law
he is required to report directly to the Board Risk Management &
specializing in Private Law from the Royal University of Law and
IT Committee. He is invited to attend Board Risk Management & IT
Economics in 2016, Cambodia, and a Master's Degree in Business
Committee meetings from time to time to provide information and
Administration from Preston University, USA (Cambodia Campus),
explanation on compliance findings and issues pertaining to the
in 2012. He also obtained two Bachelor’s Degrees, one in the Art in
scope and purpose of the Committee.
Teaching English-TESOL from Paññāsāstra University of Cambodia in
2010, and another in Accounting from Norton University in 2001.
30

INTERNAL AUDITOR

Mrs. Kim Sotheavy

Group Chief Internal Audit Officer

Cambodian. Born in October 1965. Mrs. Sotheavy joined ACLEDA in She is responsible for leading the Internal Audit Group, which
September 1994. As Group Chief Internal Audit Officer, she is responsible consists of two divisions and four departments, including Internal
for overall strategic planning and running the day-to-day internal Audit Development Division, Information System Audit Division,
audit activities of the Bank as well as implementation of the internal Financial Audit Department, AML & CFT Audit Department, Credit
audit plan. To guarantee the independence of the internal audit function, Audit Department, and Audit Reporting Department.
she is required to report directly to the Board Audit Committee. She She holds a Master's Degree in Finance and Banking and is also a
is invited to attend Board Audit Committee meetings as secretary of Graduate of the Australian Institute of Company Directors (GAICD).
the Committee and from time to time to provide information and
explanations on various matters pertaining to the scope and purpose
of the Committee.

• Mr. Thath Dynoth • Mr. Sok Hay • Mr. Sok Piseth • Mrs. Kim Sotheavy • Mrs. Nget Nary • Mr. Tum Sokchamreoun • Mr. Chan Boreydolla
Head of Internal Audit Head of Audit Head of Information Group Chief Internal Head of Deposit & Digital Head of Financial Audit Head of Credit Audit
Development Division Reporting Department Security Audit Department Audit Officer Banking Audit Department Department Department
 31

CODE OF CONDUCT
Whilst Directors' conduct is governed by i) the Articles of Association, ii) the Shareholders’ Agreement, and, iii) the relevant laws
and regulations of the Kingdom of Cambodia, the continuing evolution of the Bank requires constant attention to ensure
that its internal standards of corporate behavior are maintained at the highest levels. In March 2005, therefore, the Board
commenced a comprehensive examination of the whole issue of corporate governance to determine the needs of the Bank
going forward. Amongst other things, Directors' Service Agreements, a Directors' Induction Program and Due Diligence Checklist,
and a Directors' Code of Conduct have all been put in place and rules regarding Directors’ remuneration and expenses have
been formalised. From time to time members of the Board and senior management attend external training workshops and
courses such as the International Directors Course provided by the Australian Institute of Company Directors as part of our
commitment to the continual upgrading of our professional skills and competencies.

All employees of the Bank are governed by a strict Code of Ethics which is incorporated into the Collective Labour Agreement
and which covers such matters as: personal behavior; relationships with colleagues, customers and regulators; confidentiality;
conflicts of interest; acceptance of gifts; money laundering and "whistle blowing". This document is regularly reviewed by the
Audit and Compliance, and Risk Committees to ensure that it remains relevant and up-to-date.
32

REPORT OF THE BOARD OF DIRECTORS

The Board met face-to-face in Phnom Penh four times in March, June, • The receipt of updates on the COVID 19 situation.
September, and December and one extraordinary Board meeting was
• The receipt of a report on the impact of the change of tax incentives.
also held in Phnom Penh in May. Directors, who live overseas and
• The approval of the ACLEDA Bank Plc. and its subsidiaries condensed
could not travel to join face-to-face meetings due to COVID-19-related
consolidated and separate interim financial statements for the
travel restrictions, participated in the meetings via Video Conference
three-month period ending March 31, 2020 and independent
Calls. Each meeting normally lasts two days including Committee
auditors’ report on a review of interim financial information.
meetings. In addition, 29 resolutions were passed by e-mail.
• Discussion and approval of Board composition of subsidiaries.

Principal Activities in 2020 • Report on the relevant progress of IT projects.

• The approval and recommendation to Shareholders for final • The approval and selection of Grant Thornton as external auditor
approval of amendments to the Subscription and Shareholders’ of the Bank for the financial year 2021.
Agreement and the Memorandum and Articles of Association. • The approval of the ACLEDA Bank Plc. and its subsidiaries’
• The approval, recognition, and recommendation to Shareholders condensed consolidated and separate interim financial
for approval of the appointment of nominee Board members statements for the six-month period ending June 30, 2020 and
and Shareholders’ representatives in ACLEDA Bank Plc. independent auditors’ report on a review of interim financial
information.
• The approval, recognition, and recommendation to Shareholders
for approval of the appointment of independent directors of • The approval for management to extract information from “the
ACLEDA Bank Plc. ACLEDA Bank Plc. and its subsidiaries condensed consolidated
and separate interim financial statements for the six-month
• The approval of the Special Purpose Consolidated and Separate
period ended June 30, 2020 and independent auditors’ report
Financial Statements for the year ended December 31, 2019 of
on review of interim financial information” to fill in the SERC’s
ACLEDA Bank Plc. and subsidiaries which were issued by KPMG
Quarterly Report Form.
Cambodia Ltd.
• The Approval of strategic plan of ACLEDA Bank’s Group for
• The approval of dividend distribution and transfer of the remaining
2021-2025.
balance of the Net Profit After Tax to the General Reserve.
• The approval of the Budget Plan 2021-2025.
• The approval of the Bank’s policies.
• The approval and recommendation to Shareholders for their
• The approval of the Chairman’s 2019 annual report.
approval of the change in ACLEDA Bank's logo to improve its
• The approval of the GMD’s 2019 annual report.
brand and identity.
• The approval of 2019 annual report of each Board Committee.
• The approval of the creation of a custodian service.
• The approval and recommendation to the Shareholders for final
• The approval and recommendation to Shareholders for their
approval of the 2019 annual report.
approval of the AFT's investment in AIB in the amount of US$10M
• The approval of 2019 inflation rate related to payments to the to take up 6,047,046 shares equal to 23.3910% of total posted new
Bank’s employees from April 1, 2020 onward. shares issued.

• The approval of the re-appointment of Dr. In Channy, Mr. Chhay • The approval and recommendation to Shareholders for their
Soeun, and Mr. Rath Yumeng as Board members for another approval to cease AIB’s investment in AMM.
three-year term.
• The approval of the change in composition of the Board
• The approval of Terms of Reference (TOR) of Board Committees. Committees.

• Discussion on the Board’s annual self-assessment. • The approval of record date and agenda for conducting the
Extraordinary General Meeting (EGM) on November 23, 2020.
• Progress report on the process of ACLEDA Bank Plc.’s IPO listing.
• The approval of the ACLEDA Bank Plc. and its subsidiaries’
• The approval of ACLEDA Bank Plc.’s Consolidated and Separate
condensed, consolidated, and separated interim financial
Financial Statements and Report of the Independent Auditors
statements for the nine-month period ended September 30,
for the year ending December 31, 2018 and 2019 and Management
2020 and the independent auditors’ report on review of interim
Letter in accordance with CIFRS.
financial information.
• The approval of loans borrowed from both local and international
• The approval of guidelines for an increase in Board fees.
lenders.
• The receipt of presentation of issues and strategies of all
subsidiaries.
 REPORT OF THE BOARD OF DIRECTORS 33

Reports of the Board Committees

• Board Audit Committee (BACO)

• Board Remuneration and Nomination Committee (BRENCO)

• Board Risk Management and IT Committee (BRIC)

Board Audit Committee (BACO)

No Name Position Date of Appointment Number of Meetings Attended Total Number of Meetings

1 Mr. Ian S. Lydall Chairman June 26, 2019 22 22

2 Drs. Pieter Kooi Member June 26, 2019 22 22

3 Mr. Chhay Soeun Member June 26, 2019 22 22

Roles and Responsibilities of BACO

The duties of the BACO are as follows:

i. Make recommendations to the Board for Shareholders' approval on the appointment, reappointment, and removal of the external auditors
as well as the remuneration and terms of engagement of the external auditors;
ii. Review and monitor the external auditors' independence and objectivity and the effectiveness of the audit process, taking into consideration
relevant professional and regulatory requirements, and assess the service quality provided by external auditors;
iii. Discuss and review issues in the external auditors' Management Letter and management’s response.
iv. Develop and implement policy on the engagement of the external auditors to supply non-audit services, taking into account relevant
ethical guidance regarding the provision of non-audit services by the external auditors; and to report to the Board, identifying any matters
in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken;
v. Review and monitor management's process to develop and change the accounting estimates and accounting principles to ensure that the
judgments determine the recognized amount estimates and unusual transactions are appropriate and reasonable;
vi. Ensure that the financial and risk-related information is clear and assess the relevance of accounting and valuation methods used for the
establishment of individual and, where applicable, consolidated accounts and financial statements. Assess the relevance of the accounting
methods used to prepare the individual and consolidated accounts, if any;
vii. Ensure that the information provided to the public and NBC is clear, accurate, and reliable;
viii. Assess the quality of internal control procedures, in particular where the systems for measuring and controlling risks are consistent, and
recommend further action where appropriate;
ix. Review the effectiveness of the Bank's system of internal financial controls and report to the Board on an annual basis;
x. Review and monitor the effectiveness of the internal audit functions and ensure that its reporting processes are adequate and timely;
xi. Approve (and amend as necessary during the year) the internal audit plan;
xii. Review and recommend to the BRENCO for appointment and removal of the Group Chief of Internal Audit with subject needing final
approval from the Board;
xiii. Set the annual incentive criteria for the Group Chief Internal Audit Officer and recommend to BRENCO, which will then endorse to the Board
for final approval;
xiv. Propose the annual incentive for the Group Chief Internal Audit Officer and recommend to Board for approval;
xv. Evaluate and grade the annual performance of the Group Chief Internal Audit Officer and recommend to the Board for final approval; then
inform to the President & GMD for performance grading and incentive payment;
xvi. Follow up effective corrective action's implementation, notably by tracking pending and outstanding recommendations issued by Internal
Auditor and further support the work of internal audit;
xvii. Consider other topics as requested by the Board from time to time.

Results of BACO Performance

• Reviewed, approved, and endorsed to the Board of Directors for final approval, the financial audited statements of 2019.
• Reviewed and monitored management’s process of IFRS implementation and development.
• Reviewed and approved the internal control report 2019 for submission to the National Bank of Cambodia.
• Reviewed the internal audit reports and analysed any unusual trends or incidents.
• Reviewed and approved the job description for Group Chief Internal Audit Officer.
• Reviewed and approved the incentive scheme targets for Group Chief Internal Audit Officer and endorsed to the Board for final approval.
34 REPORT OF THE BOARD OF DIRECTORS

• Reviewed and approved the internal audit plan for fiscal year 2021.
• Reviewed and approved TOR of BACO and recommended to the Board for final approval.
• Discussed and selected audit firm as the Bank’s external auditor for the year 2021.
• Reviewed the following policies: Audit Policy, Dividend Policy, Internal Control Policy, and Corporate Disclosure Policy.
• Reviewed and approved 2020 interim financial statement for March, June, and September and endorsed to the Board of Directors for final
approval.

Board Remuneration and Nomination Committee (BRENCO)

No Name Position Date of Appointment Number of Meetings Attended Total Number of Meetings

1 Mr. Van Sou Ieng Chairman September 29, 2020 2 5

2 Drs. Pieter Kooi Member September 29, 2020 5 5

3 Mr. Ian S. Lydall Member June 26, 2019 5 5

Roles and Responsibilities of BRENCO

In performing its duties, the BRENCO will maintain an effective working relationship with the Board and management while refraining from
interfering in any business decisions.

The BRENCO’s responsibility is also to ensure that the Remuneration Policy is consistent with the long term objectives and corporate values of
the Bank and reasonable in light of the Bank’s objectives, compensation for a similar function in other companies, and other relevant factors
with due regard to the interests of the Shareholders and to the financial and commercial needs of the Bank.

The duties of the Committee are as follows:

Director’s Compensation:
i. Recommend to the Board a formal and transparent policy for determining the directors’ fees and expenses, including membership of Board
Committees and such other activities connected with the Board working for the Bank and its subsidiaries. Recommendations should be
made in consultation with the Chairman of the Board and submitted for endorsement by the entire Board;
ii. Review proposals submitted by the President & Group Managing Director for the engagement of directors in extramural work such as
advisory or consulting roles, including their terms and conditions, and make appropriate recommendations to the Board for submission
to Shareholders for final approval;
iii. Cover all aspects of remuneration, including but not limited to directors’ fees, salaries, allowances, expenses, consultancy fees
(where applicable), and benefits in kind, and;
iv. Recommend the remuneration of the directors of the Bank and subsidiaries through the Board of Directors. Approval of the parent Bank
remuneration will be made at the AGM.

Key Senior Management’s Remuneration:

i. Be responsible for reviewing and defining a framework of remuneration for the Group Chief Internal Audit Officer (GCIAO) and Head of
Compliance Division;
ii. Be responsible for recommending to the Board a framework of remuneration and the specific remuneration package for the President &
Group Managing Director. The recommendations should be submitted for endorsement by the Board;
iii. Recommend to the Board the performance targets and incentive plan, including bonus and any other scheme designed to encourage
long-term corporate value creation, for the President & Group Managing Director for the coming year;
iv. Recommend to the Board the performance targets and incentive plan, including bonus and any other scheme designed to encourage
long-term corporate value creation, for the Group Chief Internal Audit Officer, and Head of Compliance Division for the coming year;
v. Consult with the other Board members in evaluating the performance and achievements of the President & Group Managing Director in the
previous year and recommend to the Board the amount of bonus award, salary increase, and other benefits;
vi. Review the adequacy and form of compensation to key executives to ensure that these are realistically commensurate with the
responsibilities and risks involved in being an effective member of the management team;
vii. Cover all aspects of remuneration, including but not limited to salaries, allowances, pensions, bonuses, options, and benefits in kind; and
viii. Review the pay and employment conditions within the industry and those from peer companies to ensure that key executives are
adequately remunerated.
 REPORT OF THE BOARD OF DIRECTORS 35

Pension and Retirement Benefits:

i. Review the employees' pension and retirement benefits plan submitted by management;
ii. Retain competent professional actuaries, if deemed necessary, to ensure that the Bank's long term contingent liability can be reasonably
predicted and provided for;
iii. Recommend a plan, and any future amendments thereto, to the Board of Directors;
iv. Review and approve the audit report prepared by the auditors in connection with the pension and retirement benefits plan; and
v. Satisfy themselves that all relevant laws and regulations have been observed.

Nomination:
i. Having regard for the needs of balanced and effective Boards and regulatory and legal requirements, identify, evaluate, and recommend
to the Board suitable candidates for directorship taking into account personal character and integrity, relevant experience and knowledge,
and independence of mind;
ii. Where required by the Board, conduct preliminary interviews and shortlist candidates;
iii. Recommend candidates for the role of the chair and membership of Board Committees;
iv. Identify, evaluate, and recommend to the Board suitable candidates to be President & Group Managing Director, Group Chief Internal Audit
Officer, and Head of Compliance;
v. Recommend qualifications and procedures for selecting and replacing Board members and senior management; and
vi. Approve the nomination of the President & Group Managing Director, Group Chief Internal Audit Officer, and Head of Compliance for
recommendation to the Board.

Other Duties:
i. Review and guide the evaluation of the effectiveness of the Board of Directors and the Board Committees at least once per year.
ii. Review and update the Corporate Governance Policy at least once a year for approval by the Board.
iii. Any such other matters consistent with these Terms of Reference as the Board of Directors may reasonably request.

Results of BRENCO Performance:

The BRENCO met five times in 2020 in March, June, September, October, and December. The main proceedings were:

• Reviewed and endorsed to the Board for approval an increase in the gross fee of the Chair of the Board and an increase in the gross salary
of the President & Group Managing Director.
• Reviewed and endorsed to the Board for approval annual incentives for Senior Management of the Bank.
• Reviewed and endorsed to the Board for approval of 2020 incentive criteria for Senior Management.
• Reviewed and endorsed the General Meeting Voting Policy to the Board for approval.
• Reviewed and endorsed the Corporate Governance Policy to the Board for approval.
• Interviewed independent director candidates and made recommendations to the Board for approval.
• Endorsed nominee director from ORIX to the Board for approval.
• Reviewed update on succession planning of senior positions of ACLEDA Bank Group.
• Reviewed and endorsed amendments to the TOR of BRENCO and Remuneration and Nomination Policy to the Board for approval.
• Reviewed and endorsed 2019 BRENCO annual report to the Board for approval.
• Reviewed Board composition plan for 2020.
• Endorsed to the Board for final approval the 2019 inflation rate for payment to the Bank’s employees from April 1, 2020 to March 31, 2021.
• Discussed the results of Board annual self-assessment for 2019 and reported to the Board.
• Reviewed proposals of the President & Group Managing Director and recommended to the Board.
• Reviewed and endorsed employees’ pension and retirement benefits plan to the Board for approval.
• Reviewed the actual level and composition of the employment costs for the year to date and reviewed management’s proposals for
employment costs in the budget proposed for the next year.
• Prepared and endorsed guidelines for increase in Board fees to the Board for consideration and approval.
• Reviewed President & GMD, GIAO, and Head of COD performance criteria for 2021.
• Conducted annual review of policies.
• Conducted annual self-assessment of BRENCO.
• Reviewed annual self-appraisal format of the Board.
36 REPORT OF THE BOARD OF DIRECTORS

Board Risk and IT Committee (BRIC)

No Name Position Date of Appointment Number of Meetings Attended Total Number of Meetings

1 Drs. Pieter Kooi Chairman September 29, 2020 12 12

2 Mr. Kenichiro Mori Member September 29, 2020 12 12

3 Mr. Ian S. Lydall Member September 29, 2020 12 12

Roles and Responsibilities of BRIC

The duties of BRIC are as follows:

Risk Management:
i. Will maintain oversight and promotion of the risk management and risk governance of the Bank, including facilitating development of IT
related enterprise risk management expertise. To fulfill this task BRIC will conduct annual review of the adequacy of the risk management
framework outlining the Bank’s high-level policies, which include risk identification, risk assessment, risk treatment and monitoring and
reporting, and division of authority and responsibility of risk management throughout the Bank;
ii. Regularly monitor the implementation of the risk management policy as approved by the Board and, at least once a year, review and
recommend any changes it considers necessary to the Board for approval;
iii. Monitor that credit policies are in place, up to date, appropriate to the business and consistent with sound lending practices and review
any amendments to those policies deemed necessary;
iv. Give input to management’s proposals regarding the risk appetite and risk tolerance and internal targets. Final proposals have to be
endorsed by the Committee for final approval by the Board and advise on any changes deemed appropriate, including oversight of the
strategies for capital and liquidity management as well as for all relevant risks of the Bank, such as credit, market, operational, and
reputational risks;
v. Review and approve management's risk assessment, its plan for risk control or mitigation through appropriate risk management practices,
and ensure that risks are managed within tolerance levels of the Bank. This includes changes in systemic, environmental or operational
conditions that would potentially affect the Bank;
vi. Review the effective risk management practices and internal controls with the aim of achieving data confidentiality, system security,
reliability, resiliency, and recoverability in the Bank;
vii. Review the effectiveness and the results of the implementation of the customer complaint management framework;
viii. Review and advise on stress tests and reverse stress tests conducted by management; and
ix. Review quarterly risk management reports submitted by management;

Compliance:
i. Review and recommend to the BRENCO for appointment and removal of the Head of Compliance Division with subject requiring final
approval from the Board;
ii. a). Set the annual incentive criteria for the Head of Compliance Division and recommend to BRENCO, with subsequent endorsement by
BRENCO to the Board for final approval;
b). Propose the annual incentive of the Head of Compliance Division and recommend to the Board for final approval;
iii. Evaluate and grade the annual performance of the Head of Compliance Division and recommend to the Board for final approval. Then
inform the President & GMD for performance grading and incentive payment;
iv. Review and monitor legal compliance with relevant local and international laws and regulations to mitigate legal risk;
v. Review and monitor the effectiveness of the implementation of anti-money laundering and combating financing of terrorism; including
review the policy and procedure on AML measures in line with changes and developments in its products, services, technology systems,
and conflict of interest policy to ensure that the implementation is carried out effectively;
vi. Review and consider compliance and whistle-blower protection policy and management’s response; and,
vii. Approve (and amend as necessary during the year) the Compliance Division’s annual budget plan.
 REPORT OF THE BOARD OF DIRECTORS 37

Information Technology (IT):

i. Endorse IT governance policies and procedures to the Board for approval;
ii. Ensure that management has put an effective IT governance process in place;
iii. Ascertain that management has implemented processes and practices that ensure that the IT functions deliver value to the business;
iv. Ensure IT investments represent a balance of risks and benefits and that budgets are adequate; and,
v. Continue improvement program and effective monitoring of IT risk.

Results of BRIC Performance:

In September 2020, the BRIC was restructured in accordance with international best practices and job effectiveness. The duties of BRIC have
been further extended to absorb the IT risk, which was previously under the duties of the Board Information Technology Committee that has
now been dissolved.

The BRIC met 12 times at regular and special meetings in 2020, in March, June, July, September, November, and December.

• At each meeting the Group's overall risk profile was presented by the EVP & Group CRO and discussed with the members and participants
to ensure that the key risk indicators fully complied with the internal targets, risk appetite/risk tolerance.
• Assessed and discussed the potential future risks for ACLEDA BANK and its subsidiaries.
• Further refined the risk analysis process and undertook a series of stress test scenarios and reverse stress tests allowing for simultaneous
occurrence of risks including potential contagion effects.
• Assessed the developed credit portfolio by various criteria particularly, the credit quality. The Committee ensured that the provisioning was
in line with NBC rules, CIFRS and CAS.
• Oversight of the IFC's risk management consultancy project to ensure that the project has run effectively and in a timely manner.
• Monitored and discussed the restructuring of credit, refinancing of credit, and credit write-off.
• Analysed the impacts of possible risk scenarios on the balance sheet, income statement, and prudential ratios.
• Reviewed the potential risks that could negatively impact on the high standard of business conduct towards the community and the
environment.
• Reviewed and analysed the development of the banking industry in Cambodia to assess competitive risks.
• Reviewed and discussed the development of the market for digital financial services, small and medium business credit, and real estate &
construction credit, which have been growing quickly while becoming increasingly competitive.
• Discussed strategies to optimally manage these potential risk events in the long-term interest of ACLEDA Bank and its customers.
• Reviewed the liquidity stress testing results and the contingency funding plan for 2021 from management before they were submitted to
the NBC.
• Reviewed and approved management’s funding proposals to support funding needs.
• Reviewed the Compliance Division report and received analyses of any suspicious transactions.
• Reviewed and approved the incentive scheme targets for Compliance Division and endorsed to the Board for final approval.
• Reviewed and approved the Compliance Division’s budget plan for fiscal year 2021.
• Reviewed and approved TOR for BRIC and recommended to the Board for final approval.
• Reviewed and endorsed the following policies: Risk Management Policy, Credit Policy, Environment, Social and Community Policy, Liquidity
Risk Management Framework, Internal Control Policy, Compliance Policy, Whistle Blower's Protection Policy, Anti-Money Laundering and
Combating the Financing of Terrorism Policy, Know Your Customer (KYC)/Customer Due Diligence (CDD) Policy, Related Party Transactions
Policy, Conflict of Interest Policy, Insider Trading Policy, IFRS9 Impairment Policy, Credit Scoring Policy, Information Security Policy, and IT
Governance Policy.
• Conducted an annual self-assessment of its performance relative to the BRIC's purpose, duties, and responsibilities in order to ensure the
effective discharge of its responsibilities.
38

ENVIRONMENTAL AND SOCIAL DATA AT A GLANCE

Absolute amounts/FTE (Full Time Equivalent)1

2020 2019 2018 2017 2016

Environmental Performance Indicators

Materials

Paper in kg/FTE 10.61 10.60 10.64 10.42 10.65

Waste

Waste paper in kg/FTE 1.23 1.03 1.79 2.15 1.92

Energy

Electricity in kWh/FTE 1,922.84 1,679.09 1,646.15 1,673.46 1,660.19

Gasoline in l/FTE 36.27 36.65 38.23 39.76 40.08

Diesel in l/FTE 46.11 43.70 44.97 49.04 51.70

Lubricant in l/FTE 1.25 1.12 1.13 1.27 1.75

Emission of CO2 (Equivalents – in thousands of kg)2

Electricity 12,664 11,067 11,142 11,430 11,138

Gasoline 1,035 1,046 1,121 1,176 1,165

Diesel 1,516 1,438 1,519 1,672 1,732

Water

Water in m3/FTE 20.42 28.21 15.54 15.87 16.14

Business Travel

By car in km/FTE 565.59 514.54 481.82 295.98 230.35

By motorcycle in km/FTE 1,845.04 1,838.73 1,894.90 1,941.86 1,824.89

Social Performance Indicators

Employment

Number of staff 12,013 11,948 12,177 12,456 12,325

Male 7,252 7,132 7,270 7,370 7,236

Female 4,761 4,816 4,907 5,086 5,089

Number of staff (FTE) 11,975 11,984 12,307 12,419 12,197

Training and Education

Training – career development and refresher
programs 7,293 5,077 3,801 6,517 4,687
Training new recruits – induction program 788 947 549 1,179 1,374

Internships for local students 237 768 610 1,025 1,433

Internships for international students 5 - 0 5 1

1 FTE (Full Time Equivalent): average number of full-time co-workers during the year.
2 * CO2 equivalent is referred to the Greenhouse Gas Protocol calculation principles.
 39

ENVIRONMENTAL AND SOCIAL SUSTAINABILITY REPORT

Environmental and social sustainability (ESS) mission statement
ACLEDA Bank is committed to achieving strong, sustainable financial returns, while respecting the environment
and
community within which we live. We subscribe to the concept of triple bottom line ('people, planet, profit')
reporting and are constantly developing indicators for measuring and reporting on our performance and
impacts on the society and the environment.

The key elements of ACLEDA Bank's ESS mission are:

1. To provide a framework of guidelines within which ACLEDA Bank can operate in a sustainable manner so that our impact on the
environment, society and the community in which we operate is managed in a responsible way.
2. To continue to introduce energy efficient systems into our buildings and to manage sensibly our energy requirements wherever we
operate.
3. To honour the society in which we live and actively work to promote an inclusive culture embracing not just shareholders and staff,
customers, and business partners but respect for the individual within our community.
4. To recognize that supporting the community is not just morally sound but good business as well — our 'good health' and prosperity are
mutually interdependent.

Environment
ACLEDA Bank fully subscribes to international conventions, which prohibit the provision of credit to, or otherwise support, any activities that
might harm the environment, be morally repugnant or jeopardize human rights. In particular the Bank has in place policies which forbid
involvement with exploitative forms of forced or child labour, trade in weapons and munitions, gambling, casinos, brothels, regulated wildlife or
wildlife products (CITES rules) and production or trade in radioactive materials or significant volumes of hazardous chemicals. Strict monitoring
processes are in place, which require customer contact staff to certify that any business we write conforms to these principles.

The Bank employs five full time Environmental Officers who regularly undertake training and refresher courses to coordinate ACLEDA's
environmental activities and monitor performance.

In addition, ACLEDA Bank supports renewable energy by providing loans to customers related to biogas and solar energy.

Environmental Performance Indicators

In order to establish baselines for the measurement of our efforts to reduce our environmental impact, during 2005 we introduced a tracking system
for resource usage. The results are given under their respective headings below and will be used to benchmark our future performance.

Paper Usage
In 2020, paper usage increased by 0.09% per co-worker compared to 2019. Moreover, the Bank is continuing increased use of electronic data by
using our system developed by the Bank’s IT Division to send/receive internal information.

Waste paper increased by 16.26% per co-worker compared to 2019.

2020 2019 2018 2017 2016

Materials

Paper in kg/FTE 10.61 10.60 10.64 10.42 10.65

Waste

Waste paper in kg/FTE 1.23 1.03 1.79 2.15 1.92

40 ENVIRONMENTAL AND SOCIAL SUSTAINABILITY REPORT

Energy Consumption
Electricity consumption per co-worker increased by 12.68% in 2020 compared to 2019. Gasoline decreased by 1.05% in 2020 and diesel and
lubricant consumption increased by 5.23% and 10.40% per co-worker compared to 2019.

2020 2019 2018 2017 2016

Energy

Electricity in kWh/FTE 1,922.84 1,679.09 1,646.15 1,673.46 1,660.19

Gasoline in l/FTE 36.27 36.65 38.23 39.76 40.08

Diesel in l/FTE 46.11 43.70 44.97 49.04 51.70

Lubricant in l/FTE 1.25 1.12 1.13 1.27 1.75

Emission of CO2 (Equivalents - in thousands of kg)

Electricity 12,664 11,067 11,142 11,430 11,138

Gasoline 1,035 1,046 1,121 1,176 1,165

Diesel 1,516 1,438 1,519 1,672 1,732

Water
Water consumption per co-worker decreased by 38.15% in 2020 compared to 2019.

2020 2019 2018 2017 2016

Water

Water in m3/FTE 20.42 28.21 15.54 15.87 16.14

Business Travel
In 2020, the total distance travelled by car and motorcycle increased by 9.03% and 0.34% compared to 2019.

2020 2019 2018 2017 2016

Business Travel

By car in km/FTE 565.59 514.54 481.82 295.98 230.35

By motorcycle in km/FTE 1,845.04 1,838.73 1,894.90 1,941.86 1,824.89

Social Sustainability
ACLEDA Bank's corporate culture is built on respect for the society in which we operate and an inclusive perspective on our stakeholders
embracing not just shareholders and staff, customers and business partners but the community at large. In addition to the environmental
programs mentioned above the Bank observes a policy of equality in all dealings with the public in general and customers and staff alike.
Above all, ACLEDA Bank has practiced from the very beginning 'zero tolerance' of corruption both internally and externally and transgressions
are dealt with summarily.

The following are key principles in ACLEDA's corporate social responsibility policy:

Staff
• ACLEDA is an 'equal opportunity' employer. Apart from those jobs which involve a higher physical risk (e.g. guards and messengers)
appointment to all positions at every level is based entirely on merit regardless of gender or physical disability.

• ACLEDA Bank aims to be the most progressive employer in Cambodia providing medical, provident fund and other benefits such as
personal and housing loan schemes and an employee share ownership program for all staff who have completed probation. It provides
comprehensive training both for new recruits as well as experienced staff and encourages those who wish to further develop themselves
through external programs.
 ENVIRONMENTAL AND SOCIAL SUSTAINABILITY REPORT 41

• The Audit and Compliance Committee under the chairmanship of the Board of Directors has been specifically tasked with the responsibility
of setting and monitoring the Bank's moral and ethical standards and respect for human rights.

• In consultation with its staff the Bank has drawn up social policies covering i) Code of Conduct, ii) Human Resources Management, iii)
Health & Safety, iv) External Relations, v) Freedom of Association and the Right to Collective Bargaining. These are now published on Lotus
Notes so that every member of the staff has free (and paperless) access to the most up-to-date versions.

• The staff is represented by a self elected Staff Representative Committee, which excludes management, and a Staff Sports Committee, to
promote healthy recreation and good fellowship. At its headquarters, the Bank provides a clinic under the care of a full time doctor and
two full time nurses. Healthy and safe work practices are part of the training provided to all employees under the doctor's supervision.
A Health and Safety Policy under the direct responsibility of the Executive Vice President & Group Chief Administrative Officer is in place,
which includes a policy supervised by a dedicated committee for the support of our staff who are suffering from HIV/AIDS.

2020 2019 2018 2017 2016

Employment
Number of staff 12,013 11,948 12,177 12,456 12,325
Male 7,252 7,132 7,270 7,370 7,236
Female 4,761 4,816 4,907 5,086 5,089
Number of staff (FTE) 11,975 11,984 12,307 12,419 12,197

Training and Education

Training – career development and refresher
programs 7,293 5,077 3,801 6,517 4,687
Training of new recruits – induction program 988 947 549 1,179 1,374
Internships for local students 237 645 610 1,025 1,433
Internships for international students 5 4 - 5 1

Community
ACLEDA recognizes that playing our part as good citizens in the community in which we abide is vital to our mutual interests and prosperity.
Major initiatives we are taking are:

• Developing and offering appropriate products and services carefully selected and developed for the particular needs of Cambodian society.
In 2006 the Bank launched a housing loan scheme, with interest rates fixed for up to 15 years to enable Cambodians, especially in the lower
wealth segment, to purchase their own homes.

• Expanding outreach: opening up banking services to new communities in new locations by expanding our network in the provinces and
extending online banking services to mobilize savings. The expansion of our 24 hours a day/7 days a week ATM network to all provinces in
2010 has enabled our customers to access their funds at their own convenience, irrespective of the normal opening hours of the Bank or
national holidays. In April 2017 we launched 'ACLEDA mobile (formerly ACLEDA Unity ToanChet) — a real bank in your hand. In 2014 and 2015
we launched 'ACLEDA Internet Bank' and 'ACLEDA E-Commerce Payment Gateway' which enable our customers' access to financial services
and online payments anywhere anytime.

• From December 2020 to January 2021, we conducted an annual survey on our small-sized and medium-sized enterprise loan customers'
living standards that get loans at least twice from ACLEDA Bank to test the impact of our credit services. This involved 2,172 respondents
(female: 51%) randomly selected from our 321,317 active borrowers of whom 70.95% were traders, 16.44% were farmers/workers and 12.38%
were private companies/NGOs/civil servants. The responses indicated that across all sectors there were 78.31% who considered that their
wealth had increased as a result of credit provided by ACLEDA Bank, 6.08% who did not detect any noticeable change while only 15.61% had
the perception that they were worse off than before.

2020 2019 2018 2017 2016

Income Situation

Growth 78.31% 92.40% 90.90% 88.13% 94.13%

Stability 6.08% 3.57% 6.23% 7.46% 3.27%

Reduction 15.61% 4.03% 2.87% 4.41% 2.60%

42 ENVIRONMENTAL AND SOCIAL SUSTAINABILITY REPORT

• Incorporated into our policies are strictures against overselling or encouraging customers to over commit themselves or buy inappropriate
products or services. As a matter of principle, ACLEDA does not impose mandatory savings requirements on its customers.

• Transparency and 'truth in advertising' are strictly enforced when developing, advertising and selling our products and services and full and
detailed information is provided through brochures, our website and other promotional materials.

• ACLEDA practices equality in its lending irrespective of gender or race: 55.41% of our borrowing customers are female.

• Customer confidentiality is inculcated in all our staff during induction training and transgressions are treated as a serious offence.

• Recognizing the particular problem of disability in Cambodia, ACLEDA takes into account the special needs of the disabled when constructing
new, or renovating old offices.

• As a commercial organization ACLEDA does not receive subsidies but may on occasion, and where appropriate, receive financial support to
provide non-commercial services such as workshops for external trainees.

• ACLEDA does not ally itself to any particular political parties or creeds but seeks to cooperate and work in harmony with the elected
government of the day. To this end the Bank regularly participates in meetings with senior officials through industry associations, business
forums, chambers of commerce and other group activities. Individual meetings with officials are conducted with transparency and important
matters are minuted. ACLEDA has strict rules governing 'undue entertainment' or other activities which might be open to question on the
grounds of probity, including the provision of banking services at non-commercial rates ('policy lending').

• In 2020 ACLEDA Bank Plc. provided 237 internships for local students and 5 internships for international students from Vietnam and China.

• In 2020, ACLEDA Bank Plc. took part in important social and humanitarian activities through the following donations:

Education
o Donation to the ACLEDA-Jardines Education Foundation (AJF) to support the construction of two concrete primary school buildings
(Kampong Preah Ent and Pu Cha) in Preah Vihear and Mondulkiri provinces.

Health
o Donation to The Royal Government of Cambodia to support the purchase of Covid-19 vaccines.
o Donation to The Royal Government of Cambodia for the effort to coordinate and combat the COVID-19 pandemic.
o Donation to the Cambodia Kantha Bopha Foundation.

Charity
o Donation to the Cambodian Red Cross on their 157th anniversary of World Red Cross Day on May 8.
o Donation to the Royal Government of Cambodia and the Association of Banks in Cambodia to help flood victims.

Sponsored Events
o Platinum sponsor of the Reverse Innovation (RI) event organized by the Ministry of Economy and Finance and Techo Startup Center.
o Donation to the National Bank of Cambodia to support the 40th Anniversary of the Reintroduction of the Riel.
o Bronze sponsor of the FinTech Festival 2020.

Sport
o Donation to the Association of Bank in Cambodia to support their event Bankers' Cycling / Cycling for Health and Environment on
November 8, 2020 in Siem Reap province.
 43

CREDIT​​ RATINGS
ACLEDA Bank is the first bank in Cambodia to have been assigned ratings by the top international ratings agencies — Standard & Poor's and GIIRS.

Ratings as of Dec 16, 2020 2018 Impact Rating Report

44

PRINCIPAL BRANCHES
Please scan the QR codes below for ACLEDA Bank's Principal Branches.

Kingdom of Cambodia Lao PDR

ACLEDA Bank Plc. ACLEDA Bank Lao Ltd.

The Republic of the Union of

Myanmar
ACLEDA MFI Myanmar Co., Ltd.
 45

CORRESPONDENT BANKS
Principal Correspondents

Currency Name of Bank Location SWIFT/BIC

AUD THE BANK OF NEW YORK MELLON (BNY MELLON) NEW YORK IRVTUS3N
CNY INDUSTRIAL AND COMMERCIAL BANK OF CHINA (HEAD OFFICE) BEIJING ICBKCNBJ
INDUSTRIAL AND COMMERCIAL BANK OF CHINA (BRANCH) SHENZHEN ICBKCNBJSZN
EUR SOCIETE GENERALE PARIS SOGEFRPP
STANDARD CHARTERED BANK AG FRANKFURT SCBLDEFX
GBP STANDARD CHARTERED BANK LONDON SCBLGB2L
JPY SUMITOMO MITSUI BANKING CORPORATION TOKYO, JAPAN SMBCJPJT
SGD UNITED OVERSEAS BANK LIMITED SINGAPORE UOVBSGSG
THB BANGKOK BANK PUBLIC COMPANY LIMITED BANGKOK BKKBTHBK
KRUNG THAI BANK PUBLIC COMPANY LIMITED BANGKOK KRTHTHBK
THANACHART BANK PUBLIC COMPANY LIMITED BANGKOK THBKTHBK
UNITED OVERSEAS BANK (THAI) PUBLIC COMPANY LIMITED BANGKOK UOVBTHBK
THB BANGKOK BANK PUBLIC COMPANY LIMITED BANGKOK BKKBTHBK
USD BANK OF AMERICA, N.A. NEW YORK-NY BOFAUS3N
KEB HANA BANK SEOUL KOEXKRSE
KOOKMIN BANK SEOUL CZNBKRSE
STANDARD CHARTERED BANK NEW YORK-NY SCBLUS33
THE BANK OF NEW YORK MELLON NEW YORK-NY IRVTUS3N
UNITED OVERSEAS BANK LIMITED SINGAPORE UOVBSGSG
WELLS FARGO BANK, N.A. (NEW YORK INTERNATIONAL BRANCH) NEW YORK-NY PNBPUS3NNYC
WOORI BANK SEOUL HVBKKRSE
VND VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT HANOI VBAAVNVX

Correspondent Banks
Please scan the QR code below for our Correspondent Banks
 ACLEDA BANK PLC.
AND ITS SUBSIDIARIES

Consolidated and Separate

Financial Statements
for the year ended 31 December 2020
and
Report of the Independent Auditors
ACLEDA Bank Plc.

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

Contents
Pages

Report of Board of Directors 1–7

Report of the Independent Auditors 8 – 11

Financial statements:

Consolidated financial statements:

Consolidated statement of financial position 12

Consolidated statement of profit or loss and other comprehensive income 13 – 14
Consolidated statement of changes in equity 15 – 16
Consolidated statement of cash flows 17 – 18

Separate financial statements:

Separate statement of financial position 19

Separate statement of profit or loss and other comprehensive income 20
Separate statement of changes in equity 21 – 22
Separate statement of cash flows 23 – 24

Notes to the financial statements 25 – 171

ACLEDA Bank Plc.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020

2020 2019 2020 2019

Note US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)
ASSETS
Cash on hand 5 412,759,051 421,527,238 1,669,610,361 1,717,723,495
Deposits and placements with other banks 6 534,653,146 587,730,531 2,162,671,976 2,395,001,914
Financial investments 7 566,674,523 527,474,976 2,292,198,446 2,149,460,527
Loans and advances, net 8 4,471,300,618 3,846,020,519 18,086,411,000 15,672,533,615
Other assets 9 22,766,913 17,529,833 92,092,163 71,434,070
Statutory deposits 10 360,377,008 587,336,099 1,457,724,997 2,393,394,603
Property and equipment 12 127,546,441 131,159,792 515,925,354 534,476,153
Intangible assets 13 14,690,675 8,998,993 59,423,780 36,670,896
Right-of-use assets 14 29,529,768 32,569,457 119,447,912 132,720,537
Deferred tax assets, net 15 11,195,845 14,814,354 45,287,193 60,368,494

TOTAL ASSETS 6,551,493,988 6,175,161,792 26,500,793,182 25,163,784,304

LIABILITIES AND EQUITY

LIABILITIES
Deposits and placements of other banks and
financial institutions 16 317,009,459 285,175,145 1,282,303,262 1,162,088,716
Deposits from customers 17 4,294,286,048 4,082,722,853 17,370,387,064 16,637,095,626
Other liabilities 18 63,751,108 58,810,875 257,873,232 239,654,316
Borrowings 19 542,398,916 564,971,701 2,194,003,615 2,302,259,682
Subordinated debts 20 167,158,623 139,302,580 676,156,630 567,658,014
Current income tax liabilities 29(a) 30,292,370 30,459,303 122,532,637 124,121,660
Lease liabilities 21 28,617,902 30,915,939 115,759,414 125,982,451
Employee benefits 22 18,354,055 18,341,796 74,242,152 74,742,819
TOTAL LIABILITIES 5,461,868,481 5,210,700,192 22,093,258,006 21,233,603,284

EQUITY
Share capital 23 433,163,019 428,818,154 1,752,144,412 1,747,433,978
Share premiums 23 11,706,215 - 47,351,640 -
Reserves 33 503,094,236 414,748,726 2,048,708,997 1,708,085,266
Retained earnings 141,662,037 120,894,720 559,330,127 474,661,776
TOTAL EQUITY 1,089,625,507 964,461,600 4,407,535,176 3,930,181,020

Non-controlling interests - - - -

TOTAL LIABILITIES AND EQUITY 6,551,493,988 6,175,161,792 26,500,793,182 25,163,784,304

The accompanying notes form an integral part of these financial statements.

12
ACLEDA Bank Plc.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

2020 2019 2020 2019

Note US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)

Interest income calculated using the effective

interest method 24 515,094,476 483,543,466 2,100,040,179 1,959,318,124
Interest expense 25 (150,777,317) (156,872,680) (614,719,121) (635,648,099)
Net interest income 364,317,159 326,670,786 1,485,321,058 1,323,670,025

Fee and commission income 26 45,775,165 48,734,619 186,625,348 197,472,676

Fee and commission expense (1,742,125) (996,897) (7,102,644) (4,039,427)
Net fee and commission income 44,033,040 47,737,722 179,522,704 193,433,249

Allowances for impairment losses on loans and

advances, deposits and placements with
other banks and other receivables 35.1(f) (20,794,031) (23,411,205) (84,777,264) (94,862,203)
Allowance for impairment losses on off-balance
sheet commitments 54,156 87,989 220,794 356,531
Net impairment losses (20,739,875) (23,323,216) (84,556,470) (94,505,672)

Net income after allowance for impairment 387,610,324 351,085,292 1,580,287,292 1,422,597,602

Other incomes 27 18,351,358 17,849,723 74,818,487 72,327,078

General and administrative expenses 28 (225,926,220) (215,412,394) (921,101,199) (872,851,020)

Profit before income tax 180,035,462 153,522,621 734,004,580 622,073,660

Income tax expense 29(b) (38,542,872) (32,662,809) (157,139,291) (132,349,702)

Profit for the year (carried forward to next

page) 141,492,590 120,859,812 576,865,289 489,723,958

13
ACLEDA Bank Plc.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

2020 2019 2020 2019

Note US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)

Profit for the year (brought forward

from previous page) 141,492,590 120,859,812 576,865,289 489,723,958

Other comprehensive income:

Items that will not be reclassified to
profit or loss:
Remeasurement of employee benefit
obligations 169,447 34,908 690,835 141,447

Items that are or may be reclassified

subsequently to profit or loss:
Currency translation differences - - (8,160,026) 7,330,165
Other comprehensive income for the year 169,447 34,908 (7,469,191) 7,471,612

Total comprehensive income for the year 141,662,037 120,894,720 569,396,098 497,195,570

Profit for the year attributable to:

Owners of the Bank 141,492,590 120,859,812 576,865,289 489,723,958
Non-controlling interests - - - -
141,492,590 120,859,812 576,865,289 489,723,958

Total comprehensive income

attributable to:
Owners of the Bank 141,662,037 120,894,720 569,396,098 497,195,570
Non-controlling interests - - - -
141,662,037 120,894,720 569,396,098 497,195,570

The earnings per share attributable to shareholders of Bank during the year are as follows:
Basic earnings per share 30 0.33 0.29 1.32 1.20
Diluted earnings per share 30 0.33 0.29 1.32 1.20

The accompanying notes form an integral part of these financial statements.

14
ACLEDA Bank Plc.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020

Attributable to equity holders of the Parent

Share capital Share premiums Reserves Retained earnings Total Non-controlling interest Total equity
US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000
(Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4)

As at 1 January 2020 428,818,154 1,747,433,978 - - 414,748,726 1,708,085,266 120,894,720 474,661,776 964,461,600 3,930,181,020 - - 964,461,600 3,930,181,020
Profit for the year - - - - - - 141,492,590 576,865,289 141,492,590 576,865,289 - - 141,492,590 576,865,289
Other comprehensive income:
Remeasurement of employee benefit
obligations - - - - - - 169,447 690,835 169,447 690,835 - - 169,447 690,835
Currency translation differences - - - - - (8,160,026) - - - (8,160,026) - - - (8,160,026)
Total comprehensive income for the year - - - - - (8,160,026) 141,662,037 577,556,124 141,662,037 569,396,098 - - 141,662,037 569,396,098

Transaction with owners:

Conversion of retained earnings to share capital - - - - (4,451,864) (18,150,250) 4,451,864 18,150,250 - - - - - -
Dividend paid - - - - - - (32,718,825) (133,394,650) (32,718,825) (133,394,650) - - (32,718,825) (133,394,650)
Transfers from retained earnings to general
reserves - - - - 66,285,795 270,247,186 (66,730,585) (272,060,595) (444,790) (1,813,409) - - (444,790) (1,813,409)
Share issued 4,344,865 17,714,015 11,706,215 47,726,239 - - - - 16,051,080 65,440,254 - - 16,051,080 65,440,254
Transfer from retained earnings to regulatory
reserves - - - - 25,897,174 105,582,778 (25,897,174) (105,582,778) - - - - - -
Currency translation differences - foreign
subsidiaries - - - - 614,405 2,504,929 - - 614,405 2,504,929 - - 614,405 2,504,929
Currency translation differences - (13,003,581) - (374,599) - (11,400,886) - - - (24,779,066) - - - (24,779,066)
Total transactions with owners: 4,344,865 4,710,434 11,706,215 47,351,640 88,345,510 348,783,757 (120,894,720) (492,887,773) (16,498,130) (92,041,942) - - (16,498,130) (92,041,942)

As at 31 December 2020 433,163,019 1,752,144,412 11,706,215 47,351,640 503,094,236 2,048,708,997 141,662,037 559,330,127 1,089,625,507 4,407,535,176 - - 1,089,625,507 4,407,535,176

15
ACLEDA Bank Plc.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

Attributable to equity holders of the Parent

Share capital Reserves Retained earnings Total Non-controlling interest Total equity
US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000
(Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4)

As at 1 January 2019 395,224,105 1,588,010,454 377,798,286 1,529,226,903 79,817,291 309,472,482 852,839,682 3,426,709,839 - - 852,839,682 3,426,709,839
Adjustment on initial application of CIFRS 16,
net of tax - - - - - - - - - - - -
Restated balance at 1 January 2019 395,224,105 1,588,010,454 377,798,286 1,529,226,903 79,817,291 309,472,482 852,839,682 3,426,709,839 - - 852,839,682 3,426,709,839

Profit for the year - - - - 120,859,812 489,723,958 120,859,812 489,723,958 - - 120,859,812 489,723,958
Other comprehensive income:
Remeasurement of employee benefit
obligations - - - - 34,908 141,447 34,908 141,447 - - 34,908 141,447
Currency translation differences - - - 7,330,165 - - - 7,330,165 - - - 7,330,165
Total comprehensive income for the year - - - 7,330,165 120,894,720 489,865,405 120,894,720 497,195,570 - - 120,894,720 497,195,570

Transaction with owners:

Dividends in share capital 33,594,049 136,761,373 - - (33,594,049) (136,761,373) - - - - - -
Dividend paid - - - - (8,418,273) (34,060,333) (8,418,273) (34,060,333) - - (8,418,273) (34,060,333)
Transfers from retained earnings to general
reserves - - 50,210,960 204,408,818 (50,210,960) (204,408,818) - - - - - -
Transfer from regulatory reserves to retained
earnings - - (12,405,991) (50,554,413) 12,405,991 50,554,413 - - - - - -
Acquisition of non-controlling interest in AMM - - 14,279,344 58,188,327 - - 14,279,344 58,188,327 - - 14,279,344 58,188,327
Currency translation differences - foreign
subsidiaries - - (15,133,873) (61,670,532) - - (15,133,873) (61,670,532) - - (15,133,873) (61,670,532)
Currency translation differences - 22,662,151 - 21,155,998 - - - 43,818,149 - - - 43,818,149
Total transactions with owners: 33,594,049 159,423,524 36,950,440 171,528,198 (79,817,291) (324,676,111) (9,272,802) 6,275,611 - - (9,272,802) 6,275,611

As at 31 December 2019 428,818,154 1,747,433,978 414,748,726 1,708,085,266 120,894,720 474,661,776 964,461,600 3,930,181,020 - - 964,461,600 3,930,181,020

The accompanying notes form an integral part of these financial statements.

16
ACLEDA Bank Plc.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

2020 2019 2020 2019

Note US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)

Cash flows from operating activities

Profit for the year 141,492,590 120,859,812 576,865,289 489,723,958
Adjustments for:
Depreciation 12 21,249,218 21,426,470 86,633,062 86,820,056
Amortisation 13 3,667,583 3,537,457 14,952,736 14,333,776
Depreciation on right-of-use assets 14 10,627,120 10,469,819 43,326,768 42,423,707
Adjustments of property and equipment 18,534 47,552 75,563 192,681
Adjustments of intangible assets 290,284 405,017 1,183,488 1,641,129
Provident fund expenses - 229,211 - 928,763
Allowances for impairment losses 8 20,739,875 23,323,216 84,556,470 94,505,672
Retirement benefits 22(a) 1,697,341 1,557,654 6,920,060 6,311,615
Seniority indemnity benefits 22(c) 6,563,719 3,233,915 26,760,282 13,103,824
Income tax expense 29(b) 38,542,872 32,662,809 157,139,291 132,349,702
Currency translation reserves 614,405 (854,529) 2,504,929 (3,462,552)
Net interest income (364,317,159) (326,670,786) (1,485,321,058) (1,323,670,025)
Gains on disposals of property and
equipment, and intangible assets (369,528) (76,481) (1,506,566) (309,901)
Unrealised exchange gains (262,358) (1,098,279) (1,069,635) (4,450,225)
(119,445,504) (110,947,143) (486,979,321) (449,557,820)
Changes in:
Loans and advances (646,063,530) (274,262,158) (2,634,001,012) (1,111,310,264)
Deposits and placements with other banks 181,602,086 (1,127,269) 740,391,705 (4,567,694)
Statutory deposits 43,449,288 (46,761,126) 177,142,747 (189,476,083)
Other assets (5,560,237) 4,933,119 (22,669,086) 19,988,998
Deposits from customers 211,563,195 500,799,381 862,543,146 2,029,239,092
Deposits and placements from other banks
and financial institutions 31,834,314 (3,627,445) 129,788,498 (14,698,407)
Provident fund - 210,110 - 851,366
Career development 1,312,641 1,385,493 5,351,637 5,614,018
Other liabilities 10,301,728 (6,520,957) 42,000,145 (26,422,918)
Net cash (used in)/generated from operations (291,006,019) 64,082,005 (1,186,431,541) 259,660,288

Interest received 515,468,173 481,469,555 2,101,563,741 1,950,914,637

Interest paid (154,011,306) (147,723,120) (627,904,095) (598,574,082)
Income tax paid 29(a) (35,064,652) (19,216,756) (142,958,586) (77,866,295)
Provident fund paid - (430,973) - (1,746,303)
Retirement benefits paid 22(a) (216,840) (195,444) (884,057) (791,939)
Career development paid 22(b) (2,085,315) (1,465,393) (8,501,829) (5,937,772)
Seniority benefits paid 22(c) (6,998,257) (6,225,869) (28,531,894) (25,227,221)
Net cash generated from operating activities 26,085,784 370,294,005 106,351,739 1,500,431,313

17
ACLEDA Bank Plc.

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2020 2019 2020 2019

Note US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)

Cash flows from investing activities

Financial investments 22,946,576 22,407,441 93,553,190 90,794,951
Purchases of property and equipment 12 (17,704,489) (14,830,497) (72,181,202) (60,093,174)
Purchases of intangible assets 13 (9,689,231) (2,027,251) (39,502,995) (8,214,421)
Proceeds from disposals of
property and equipment 408,958 361,117 1,667,322 1,463,246
Net cash (used in)/generated from
investing activities (4,038,186) 5,910,810 (16,463,685) 23,950,602

Cash flows from financing activities

Payments of dividends (32,718,825) (8,418,273) (133,394,650) (34,110,842)
Payment tax on ABL's increase capital (444,790) - (1,813,409) -
Repayments of borrowings (201,163,263) (454,555,076) (820,142,623) (1,841,857,168)
Proceeds from borrowings 178,590,478 229,266,385 728,113,379 928,987,392
Repayments of subordinated debts (7,143,957) (32,000,000) (29,125,913) (129,664,000)
Proceeds from subordinated debts 35,000,000 93,833,667 142,695,000 380,214,019
Proceeds from share issuance 4,344,865 - 17,714,015 -
Proceeds from share premium 11,706,215 - 47,726,239 -
Payments of lease liabilities 21 (11,833,274) (11,282,470) (48,244,258) (45,716,568)
Net cash used in financing activities (23,662,551) (183,155,767) (96,472,220) (742,147,167)

Net (decrease)/increase in cash

and cash equivalents (1,614,953) 193,049,048 (6,584,166) 782,234,748
Cash and cash equivalents
at the beginning of the
year 1,498,720,457 1,305,671,409 6,107,285,862 5,246,187,721
Currency translation difference - - (44,909,932) 78,863,393
Cash and cash
equivalents at the
end of the year 31 1,497,105,504 1,498,720,457 6,055,791,764 6,107,285,862

The accompanying notes form an integral part of these financial statements.

18
ACLEDA Bank Plc.

SEPARATE STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020

2020 2019 2020 2019

Note US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)
ASSETS
Cash on hand 5 400,816,126 410,955,867 1,621,301,230 1,674,645,158
Deposits and placements with other banks 6 507,629,407 558,612,340 2,053,360,951 2,276,345,286
Financial investments 7 566,674,523 527,474,976 2,292,198,446 2,149,460,527
Loans and advances, net 8 4,292,649,159 3,686,578,943 17,363,765,848 15,022,809,193
Other assets 9 20,256,110 15,667,540 81,935,965 63,845,226
Statutory deposits 10 356,753,756 583,195,741 1,443,068,943 2,376,522,645
Investments in subsidiaries 11 91,115,571 91,135,571 368,562,485 371,377,452
Property and equipment 12 90,836,422 92,911,344 367,433,327 378,613,728
Intangible assets 13 13,884,558 7,915,362 56,163,037 32,255,100
Right-of-use assets 14 26,182,172 28,847,850 105,906,886 117,554,989
Deferred tax assets, net 15 12,685,947 14,007,743 51,314,656 57,081,553

TOTAL ASSETS 6,379,483,751 6,017,303,277 25,805,011,774 24,520,510,857

LIABILITIES AND EQUITY

LIABILITIES
Deposits and placements of other banks and
financial institutions 16 296,764,554 274,277,721 1,200,412,621 1,117,681,713
Deposits from customers 17 4,180,268,737 3,982,146,559 16,909,187,041 16,227,247,228
Other liabilities 18 62,408,882 56,597,551 252,443,928 230,635,021
Borrowings 19 507,352,916 518,068,128 2,052,242,545 2,111,127,622
Subordinated debts 20 167,158,623 139,302,580 676,156,630 567,658,014
Current income tax liabilities 29(a) 27,950,334 29,175,560 113,059,101 118,890,407
Lease liabilities 21 25,772,385 27,789,168 104,249,297 113,240,860
Employee benefits 22 17,781,763 17,667,477 71,927,231 71,994,969
TOTAL LIABILITIES 5,285,458,194 5,045,024,744 21,379,678,394 20,558,475,834

EQUITY
Share capital 23 433,163,019 428,818,154 1,752,144,412 1,747,433,978
Share premiums 23 11,706,215 - 47,351,640 -
Reserves 33 510,741,554 425,709,612 2,079,357,802 1,752,368,656
Retained earnings 138,414,769 117,750,767 546,479,526 462,232,389
TOTAL EQUITY 1,094,025,557 972,278,533 4,425,333,380 3,962,035,023

TOTAL LIABILITIES AND EQUITY 6,379,483,751 6,017,303,277 25,805,011,774 24,520,510,857

The accompanying notes form an integral part of these financial statements.

19
ACLEDA Bank Plc.

SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

2020 2019 2020 2019

Note US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)

Interest income calculated using the effective

interest method 24 478,739,341 452,651,289 1,951,820,293 1,834,143,023
Interest expense 25 (139,856,147) (146,483,987) (570,193,511) (593,553,115)
Net interest income 338,883,194 306,167,302 1,381,626,782 1,240,589,908

Fee and commission income 26 42,354,094 46,048,224 172,677,641 186,587,404

Fee and commission expense (1,526,370) (667,992) (6,223,010) (2,706,704)
Net fee and commission income 40,827,724 45,380,232 166,454,631 183,880,700

Allowances for impairment losses for loans and

advances, deposits and placements with other
banks and other receivables 35.1(f) (16,247,676) (21,780,632) (66,241,775) (88,255,121)
Allowances for impairment losses on off-balance
sheet commitments 132,082 (360,354) 538,498 (1,460,154)
Net impairment losses (16,115,594) (22,140,986) (65,703,277) (89,715,275)

Net income after allowance for impairment 363,595,324 329,406,548 1,482,378,136 1,334,755,333

Other incomes 27 16,662,748 16,233,764 67,934,024 65,779,212

General and administrative expenses 28 (208,103,757) (197,413,910) (848,439,017) (799,921,163)

Profit before income tax 172,154,315 148,226,402 701,873,143 600,613,382

Income tax expenses 29(b) (33,812,139) (30,339,623) (137,852,091) (122,936,153)

Profit for the year 138,342,176 117,886,779 564,021,052 477,677,229

Other comprehensive income:

Items that will not be reclassified to profit or
loss:
Remeasurement of employee benefit obligations 72,593 (136,012) 295,962 (551,121)
Currency translation differences - - (7,961,797) 7,153,755
Other comprehensive income during the year 72,593 (136,012) (7,665,835) 6,602,634

Total comprehensive income for the year 138,414,769 117,750,767 556,355,217 484,279,863

Profit attributable to:

Equity holders of the Bank 138,342,176 117,886,779 564,021,052 477,677,229

Total comprehensive income attributable to:

Equity holders of the Bank 138,414,769 117,750,767 556,355,217 484,279,863

The accompanying notes form an integral part of these financial statements.

20
ACLEDA Bank Plc.

SEPARATE STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

Attributable to equity holders of the Bank

Share capital Share premium Reserves Retained earnings Total equity
KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000
US$ (Note 4) (Note 4) (Note 4) (Note 4) (Note 4)

As at 1 January 2020 428,818,154 1,747,433,978 - - 425,709,612 1,752,368,656 117,750,767 462,232,389 972,278,533 3,962,035,023
Profit for the year - - - - - - 138,342,176 564,021,052 138,342,176 564,021,052
Other comprehensive income:
Remeasurement of employee benefit obligations - - - - - - 72,593 295,962 72,593 295,962
Currency translation difference - - - - - (7,961,797) - - - (7,961,797)
Total comprehensive income for the year - - - - - (7,961,797) 138,414,769 564,317,014 138,414,769 556,355,217

Transaction with owners:

Dividend paid - - - - - - (32,718,825) (133,394,650) (32,718,825) (133,394,650)
Transfer from retained earnings to general reserves - - - - 66,949,305 272,952,316 (66,949,305) (272,952,316) - -
Share issued 4,344,865 - 17,714,015 11,706,215 - 47,726,239 - - - - 16,051,080 65,440,254
Transfer from retained earnings to regulatory reserves - - - - 18,082,637 73,722,911 (18,082,637) (73,722,911) - -
Currency translation difference - (13,003,581) - (374,599) - (11,724,284) - - - (25,102,464)
Total transactions with owners: 4,344,865 4,710,434 11,706,215 47,351,640 85,031,942 334,950,943 (117,750,767) (480,069,877) (16,667,745) (93,056,860)

As at 31 December 2020 433,163,019 1,752,144,412 11,706,215 47,351,640 510,741,554 2,079,357,802 138,414,769 546,479,526 1,094,025,557 4,425,333,380

The accompanying notes form an integral part of these financial statements.

21
ACLEDA Bank Plc.

SEPARATE STATEMENT OF CHANGES IN EQUITY (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

Attributable to equity holders of the Bank

Share capital Reserves Retained earnings Total equity
KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000
US$ (Note 4) (Note 4) (Note 4) (Note 4)

As at 1 January 2019 395,224,105 1,588,010,454 389,730,923 1,576,960,188 77,991,011 302,346,542 862,946,039 3,467,317,184
Adjustment on initial application of CIFRS 16, net of
tax - - - - - - - -
Restated balance as at 1 January 2019 395,224,105 1,588,010,454 389,730,923 1,576,960,188 77,991,011 302,346,542 862,946,039 3,467,317,184

Profit for the year - - - - 117,886,779 477,677,229 117,886,779 477,677,229

Other comprehensive income:
Remeasurement of employee benefit obligations - - - - (136,012) (551,121) (136,012) (551,121)
Currency translation difference - - - 7,153,755 - - - 7,153,755
Total comprehensive income for the year - - - 7,153,755 117,750,767 477,126,108 117,750,767 484,279,863

Transaction with owners:

Dividends in share capital 33,594,049 136,761,373 - - (33,594,049) (136,761,373) - -
Dividend paid - - - - (8,418,273) (34,060,333) (8,418,273) (34,060,333)
Transfers from retained earnings to general reserves - - 48,650,597 198,056,580 (48,650,597) (198,056,580) - -
Transfer from regulatory reserves to retained earnings - - (12,671,908) (51,638,025) 12,671,908 51,638,025 - -
Currency translation difference - 22,662,151 - 21,836,158 - - - 44,498,309
Total transaction with owners 33,594,049 159,423,524 35,978,689 168,254,713 (77,991,011) (317,240,261) (8,418,273) 10,437,976

As at 31 December 2019 428,818,154 1,747,433,978 425,709,612 1,752,368,656 117,750,767 462,232,389 972,278,533 3,962,035,023

The accompanying notes form an integral part of these financial statements.

22
ACLEDA Bank Plc.

SEPARATE STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

2020 2019 2020 2019

Note US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)

Cash flows from operating activities

Profit for the year 138,342,176 117,886,779 564,021,052 477,677,229
Adjustments for:
Depreciation charge 12 19,181,151 19,275,787 78,201,553 78,105,489
Amortisation charge 13 3,339,510 3,182,821 13,615,182 12,896,791
Depreciation charge on right-of-use assets 14 9,770,638 9,647,871 39,834,891 39,093,173
Adjustments of property and equipment 18,534 42,797 75,563 173,413
Adjustments of intangible assets 290,284 391,150 1,183,488 1,584,940
Allowances for impairment losses 8 16,115,594 22,140,986 65,703,277 89,715,275
Retirement benefits 22(a) 1,577,677 1,402,077 6,432,189 5,681,218
Seniority indemnity benefits 22(c) 6,378,738 3,171,116 26,006,115 12,849,362
Income tax expense 33,812,139 30,339,623 137,852,091 122,936,153
Net interest income (338,883,194) (306,167,302) (1,381,626,782) (1,240,589,908)
Gains on disposals of property and
equipment, and intangible assets (326,299) (84,637) (1,330,321) (342,949)
Unrealised exchange gains (227,794) (1,019,390) (928,716) (4,130,570)
(110,610,846) (99,790,322) (450,960,418) (404,350,384)
Changes in:
Loans and advances (622,248,079) (248,474,859) (2,536,905,418) (1,006,820,129)
Deposits and placements with other banks 181,359,387 - 739,402,221 -
Statutory deposits 42,047,558 (45,242,469) 171,427,894 (183,322,484)
Other assets (4,910,075) 4,473,609 (20,018,376) 18,127,064
Deposits from customers 198,122,178 480,664,056 807,744,120 1,947,650,755
Deposits and placements of other banks
and financial institutions 22,486,833 (10,286,581) 91,678,818 (41,681,226)
Career development 1,312,641 1,385,493 5,351,637 5,614,018
Other liabilities 11,583,756 (6,460,668) 47,226,973 (26,178,627)
Net cash (used in)/generated from
operations (280,856,647) 76,268,259 (1,145,052,549) 309,038,987

Interest received 479,113,715 452,668,423 1,953,346,616 1,834,212,450

Interest paid (143,620,714) (138,672,994) (585,541,651) (561,902,972)
Income tax paid 29(a) (33,715,569) (17,140,531) (137,458,375) (69,453,432)
Retirement benefits paid 22(a) (143,004) (148,350) (583,027) (601,114)
Career development paid 22(b) (2,085,315) (1,465,393) (8,501,829) (5,937,772)
Seniority benefits paid 22(c) (6,815,248) (6,112,312) (27,785,766) (24,767,088)
Net cash generated from operating
activities 11,877,218 365,397,102 48,423,419 1,480,589,059

23
ACLEDA Bank Plc.

SEPARATE STATEMENT OF CASH FLOWS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2020 2019 2020 2019

Note US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)

Cash flows from investing activities

Financial investments 22,946,576 22,407,441 93,553,190 90,794,951
Purchases of property and equipment 12 (17,093,791) (13,172,435) (69,691,386) (53,374,707)
Purchases of intangible assets 13 (9,603,297) (1,750,656) (39,152,642) (7,093,658)
Investment in subsidiaries 20,000 (7,965,290) 81,540 (32,275,355)
Proceeds from disposals of property and
equipment 348,105 339,449 1,419,224 1,375,447
Net cash used in investing activities (3,382,407) (141,491) (13,790,074) (573,322)

Cash flows from financing activities

Payments of dividends (32,718,825) (8,418,273) (133,394,650) (34,110,842)
Repayments of borrowings (186,213,293) (429,912,785) (759,191,596) (1,742,006,605)
Proceeds from borrowings 175,498,081 194,388,451 715,505,676 787,662,003
Repayments of subordinated debts (7,143,957) (32,000,000) (29,125,913) (129,664,000)
Proceeds from subordinated debt 35,000,000 93,833,667 142,695,000 380,214,019
Proceeds from share issuance 4,344,865 - 17,714,015 -
Proceeds from share premium 11,706,215 - 47,726,239 -
Payment of lease liabilities 21 (10,883,406) (10,452,195) (44,371,646) (42,352,294)
Net cash used in financing activities (10,410,320) (192,561,135) (42,442,875) (780,257,719)

Net (decrease)/increase in cash and cash

equivalents (1,915,509) 172,694,476 (7,809,530) 699,758,018
Cash and cash equivalents
at the beginning of the year 1,459,613,448 1,286,918,972 5,947,924,801 5,170,840,429
Currency translation difference - - (43,727,108) 77,326,354

Cash and cash equivalents at

the end of the year 31 1,457,697,939 1,459,613,448 5,896,388,163 5,947,924,801

The accompanying notes form an integral part of these financial statements.

24
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

1. Background information
Prior to 1 December 2003, ACLEDA Bank Plc. (“the Bank”) was a public limited company formed under
the Laws of the Kingdom of Cambodia to operate as a specialised bank with a Head Office located in
Phnom Penh and 14 branches in the Kingdom of Cambodia. On 1 December 2003, the National Bank of
Cambodia (“NBC”) issued a license for the Bank to become a private commercial bank for a period of
three years commencing 1 December 2003. The Bank’s license was renewed for an indefinite period on
28 November 2006.

The registered office of the Bank is located at No 61, Preah Monivong Boulevard, Sangkat Srah Chork,
Khan Daun Penh, Phnom Penh, the Kingdom of Cambodia.

The Bank operates under the supervision of the National Bank of Cambodia (“NBC”) with special focus on
providing lending and other financial services to the citizenry and small and medium enterprises and to
engage in all other activities which the Board believes support these objectives.

The principal activities of the subsidiaries are disclosed in Note 11 to the financial statements.

As at 31 December 2020, the Bank and its subsidiaries had 13,704 employees (2019: 13,655 employees).

The financial statements were authorised for issue by the Board of Directors on 25 February 2021.

2. Summary of significant accounting policies

The significant accounting policies adopted in the preparation of the financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation

The financial statements of the Group and the Bank have been prepared in accordance with Cambodian
International Financial Reporting Standards (“CIFRSs”). The consolidated financial statements have been
prepared on a historical cost basis.

The preparation of financial statements in conformity with CIFRSs requires the use of certain critical
accounting estimates. It also requires the Directors to exercise judgment in the process of applying the
Group’s and the Bank’s accounting policies. Areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimations are significant to the financial statements are disclosed in Note 3.

25
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(b) Standards issued but not yet adopted

A number of new standards and amendments to standards are effective for annual periods beginning after
1 January 2020 and earlier application is permitted; however, the Group and the Bank have not early adopted
them in preparing these financial statements.

The following amended standards are not expected to have a significant impact on the Group’s and the
Bank’s financial statements.
o Onerous Contracts – Cost of Fulfilling a Contract (Amendments to CIAS 37).
o COVID-19-Related Rent Concessions (Amendment to CIFRS 16).
o Property, Plant and Equipment: Proceeds before Intended Use (Amendments to CIAS 16).
o Reference to Conceptual Framework (Amendments to CIFRS 3).
o Classification of Liabilities as Current or Non-current (Amendments to CIAS 1).

(c) Consolidation

(i) Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power to direct relevant activities of the entity.

The consolidated financial statements include the financial statements of the Bank and all its subsidiaries
made up to the end of the financial year.

Subsidiaries are consolidated from the date on which control is transferred to the Group and deconsolidated
from the date that control ceases.

All material transactions and balances between group companies are eliminated and the consolidated
financial statements reflect external transactions only. Where necessary, the accounting policies of
subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

(ii) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss in control are accounted for as equity
transactions that is, as transactions with the owners in their capacity as owners. For purchases from non-
controlling interest, the difference between any consideration paid and the relevant share of the carrying value
of net assets of the subsidiary acquired is deducted from equity. For disposals to non-controlling interests,
differences between any proceeds received and the relevant share of non-controlling interest are also
recognised in equity.

26
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(c) Consolidation (continued)

(iii) Disposal of subsidiaries

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at
the date when control is lost, with the change in carrying amount recognised in statement of profit or loss.
The fair value is the initial carrying amount for the purposes of subsequently accounting for retained interest
as an associate, joint venture or financial assets. In addition, any amount previously recognised in other
comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the
related assets or liabilities. This may mean that amounts previously recognised in other comprehensive
income are reclassified to statement of profit or loss.

(iv) Investments in subsidiaries

In the Bank’s separate financial statements, investments in subsidiaries are carried at cost less any accumulated
impairment losses. On disposal of investments in subsidiaries, the difference between disposal proceeds and the
carrying amounts of investments are recognised in the statement of profit or loss.

The amounts due from subsidiaries of which the Bank does not expect repayment in foreseeable future are
considered as part of the Bank’s investments in subsidiaries.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (“the functional currency”). The financial
statements are presented in United States Dollars (“US$”), which is the Group’s and the Bank’s functional
and presentation currency.

(ii) Transactions and balances

Transactions in currencies other than US$ are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in currencies other than US$ are recognised in the statement of profit or loss.

27
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(d) Foreign currency translation (continued)

(iii) Group companies

The results and financial position of foreign operations (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the Bank’s presentation currency are translated into
the presentation currency as follows:

a) assets and liabilities for each statement of financial position presented are translated at the closing rate
at the end of reporting period,

b) income and expenses for each statement of profit or loss are translated at average exchange rates
(unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are translated at the rate on the dates of the
transactions); and

c) all resulting exchange differences are recognised as separate component of equity.

On consolidation, exchange differences arising from the translation of any net investment in foreign operations
are recognised in other comprehensive income. When a foreign operation is partially disposed of or sold,
exchange differences are reclassified to the statement of profit or loss as part of gain or loss on sale.

(e) Financial assets and financial liabilities

(i). Recognition and initial measurement

The Group/the Bank initially recognises loans and advances, deposits and placements with other banks,
borrowings and subordinated liabilities on the date on which they are originated. All other financial
instruments (including regular-way purchases and sales of financial assets) are recognised on the trade date,
which is the date on which the Group or the Bank becomes a party to the contractual provisions of the
instrument.

A financial asset or financial liability is measured initially at fair value plus, for an item not at fair value through
profit and loss (“FVTPL”), transaction costs that are directly attributable to its acquisition or issue.

(ii). Classification

On initial recognition, a financial asset is classified as: amortised cost, fair value through other comprehensive
income (“FVOCI”) or FVTPL.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:
• the asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; and

28
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(ii). Classification (continued)

• the contractual terms of the financial asset give rise on specified dates to cash flows that are ‘solely
payment for principal and interest’ (“SPPI”).

A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated
as at FVTPL:
• the asset is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.

On initial recognition of an equity investment that is not held for trading, the Group or the Bank may
irrevocably elect to present subsequent changes in fair value in other comprehensive income (“OCI”). This
election is made on an investment-by-investment basis.

All other financial assets are classified as measured at FVTPL

In addition, on initial recognition, the Group or the Bank may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so
eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Business model assessment

The Group or the Bank makes an assessment of the objective of a business model in which an asset is held
at a portfolio level because this best reflects the way the business is managed and information is provided to
management. The information considered includes:
• the stated policies and objectives for the portfolio and the operation of those policies in practice. In
particular, whether management’s strategy focuses on earning contractual interest revenue, maintaining
a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities
that are funding those assets or realising cash flows through the sale of the assets;
• how the performance of the portfolio is evaluated and reported to the Group’s or the Bank’s management;
• the risks that affect the performance of the business model (and the financial assets held within that
business model) and its strategy for how those risks are managed;
• how managers of the business are compensated (e.g. whether compensation is based on the fair value
of the assets managed or the contractual cash flows collected); and

29
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(ii). Classification (continued)

Business model assessment (continued)

• the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations
about future sales activity. However, information about sales activity is not considered in isolation, but as
part of an overall assessment of how the Group’s or the Bank’s stated objective for managing the
financial assets is achieved and how cash flows are realised.

Financial assets that are held for trading or managed and whose performance is evaluated on a fair value
basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both
to collect contractual cash flows and to sell financial assets.

Assessment of whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated
with the principal amount outstanding during a particular period of time and for other basic lending risks and
costs (e.g. liquidity risk and administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are SPPI, the Group/the Bank considers the contractual
terms of the instrument. This includes assessing whether the financial asset contains a contractual term that
could change the timing or amount of contractual cash flows such that it would not meet this condition.
In making the assessment, the Group/the Bank considers:
• contingent events that would change the amount and timing of cash flows;
• leverage features;
• prepayment and extension terms;
• terms that limit the Group or the Bank’s claim to cash flows from specified assets (e.g. non-recourse
loans); and
• features that modify consideration of the time value of money (e.g. periodical reset of interest rates).
The Group or the Bank holds a portfolio of long-term fixed-rate loans for which the Group or the Bank has
the option to propose to revise the interest rate at periodic reset dates. These reset rights are limited to the
market rate at the time of revision in which the Group or the Bank has an option to either accept the revised
rate or redeem the loan at par without penalty. The Group or the Bank has determined that the contractual
cash flows of these loans are SPPI because the option varies the interest rate in a way that is consideration
for the time value of money, credit risk, other basic lending risks and costs associated with the principal
amount outstanding.

30
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(ii). Classification (continued)

Non-recourse loans

In some cases, loans made by the Group or the Bank that are secured by collateral of the borrower limit the
Group or the Bank’s claim to cash flows of the underlying collateral (non-recourse loans). The Group or the
Bank applies judgment in assessing whether the non-recourse loans meet the SPPI criterion. The Group or
the Bank typically considers the following information when making this judgement:
• whether the contractual arrangement specifically defines the amounts and dates of the cash payments
of the loan;
• the fair value of the collateral relative to the amount of the secured financial asset;
• the ability and willingness of the borrower to make contractual payments, notwithstanding a decline in
the value of collateral;
• whether the borrower is an individual or a substantive operating entity or is a special-purpose entity;
• the Group or the Bank’s risk of loss on the asset relative to a full-recourse loan;
• the extent to which the collateral represents all or a substantial portion of the borrower’s assets; and
• whether the Group or the Bank will benefit from any upside from the underlying assets.

Reclassifications

Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Group
or the Bank changes its business model for managing financial assets.

Financial liabilities

The Group/the Bank classifies its financial liabilities, other than financial guarantees and loan commitments,
as measured at amortised cost or FVTPL.

31
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(iii). Derecognition

Financial assets

The Group or the Bank derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire (see also (iv)), or it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of ownership of the financial asset are
transferred or in which the Group or the Bank neither transfers nor retains substantially all of the risks and
rewards of ownership and it does not retain control of the financial asset.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying
amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received
(including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that
had been recognised in OCI is recognised in profit or loss.

Any cumulative gain/loss recognised in OCI in respect of equity investment securities designated as at FVOCI
is not recognised in profit or loss on derecognition of such securities, as explained in statement of profit or loss
and other comprehensive income. Any interest in transferred financial assets that qualify for derecognition that
is created or retained by the Group or the Bank is recognised as a separate asset or liability.

Financial liabilities

The Group or the Bank derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.

(iv). Modifications of financial assets and financial liabilities

Financial assets

If the terms of a financial asset are modified, then the Group or the Bank evaluates whether the cash flows
of the modified asset are substantially different.

If the cash flows are substantially different, then the contractual rights to cash flows from the original financial
asset are deemed to have expired. In this case, the original financial asset is derecognised (see (iii)) and a new
financial asset is recognised at fair value plus any eligible transaction costs. Any fees received as part of the
modification are accounted for as follows:

• fees that are considered in determining the fair value of the new asset and fees that represent
reimbursement of eligible transaction costs are included in the initial measurement of the asset; and
• other fees are included in profit or loss as part of the gain or loss on derecognition.

32
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(iv). Modifications of financial assets and financial liabilities (continued)

Financial assets (continued)

If cash flows are modified when the borrower is in financial difficulties, then the objective of the modification
is usually to maximise recovery of the original contractual terms rather than to originate a new asset with
substantially different terms. If the Group or the Bank plans to modify a financial asset in a way that would
result in forgiveness of cash flows, then it first considers whether a portion of the asset should be written off
before the modification takes place (see below for write-off policy). This approach impacts the result of the
quantitative evaluation and means that the derecognition criteria are not usually met in such cases.

If the modification of a financial asset measured at amortised cost or FVOCI does not result in derecognition of
the financial asset, then the Group or the Bank first recalculates the gross carrying amount of the financial asset
using the original effective interest rate of the asset and recognises the resulting adjustment as a modification gain
or loss in profit or loss. For floating-rate financial assets, the original effective interest rate used to calculate the
modification gain or loss is adjusted to reflect current market terms at the time of the modification. Any costs or
fees incurred and fees received as part of the modification adjust the gross carrying amount of the modified
financial asset and are amortised over the remaining term of the modified financial asset.

If such a modification is carried out because of financial difficulties of the borrower (see (vii)), then the gain or
loss is presented together with impairment losses. In other cases, it is presented as interest income
calculated using the effective interest rate method (see (Note 2(q))).

Financial liabilities

The Group or the Bank derecognises a financial liability when its terms are modified and the cash flows of the
modified liability are substantially different. In this case, a new financial liability based on the modified terms is
recognised at fair value. The difference between the carrying amount of the financial liability derecognised and
consideration paid is recognised in profit or loss. Consideration paid includes non-financial assets transferred,
if any, and the assumption of liabilities, including the new modified financial liability.

If the modification of a financial liability is not accounted for as derecognition, then the amortised cost of the
liability is recalculated by discounting the modified cash flows at the original effective interest rate and the
resulting gain or loss is recognised in profit or loss. For floating-rate financial liabilities, the original effective
interest rate used to calculate the modification gain or loss is adjusted to reflect current market terms at the
time of the modification. Any costs and fees incurred are recognised as an adjustment to the carrying amount
of the liability and amortised over the remaining term of the modified financial liability by re-computing the
effective interest rate on the instrument.

33
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(v). Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group or the Bank currently has a legally enforceable right to set off the
amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability
simultaneously.

Income and expenses are presented on a net basis only when permitted under CIFRS, or for gains and
losses arising from a group of similar transactions such as in the Group or the Bank’s trading activity.

(vi). Fair value measurement

‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the principal or, in its absence, the most advantageous
market to which the Group or the Bank has access at that date. The fair value of a liability reflects its non-
performance risk.

The fair value of a financial liability with a demand feature (e.g. a demand deposit) is not less than the amount
payable on demand, discounted from the first date on which the amount could be required to be paid.

The Group or the Bank recognises transfers between levels of the fair value hierarchy as of the end of the
reporting period during which the change has occurred.

(vii). Impairment

The Group or the Bank recognises loss allowances for the expected credit loss (“ECL”) on the following
financial instruments that are not measured at FVTPL:
• financial assets that are debt instruments;
• lease receivables;
• financial guarantee contracts issued; and
• loan commitments issued.

No impairment loss is recognised on equity investments.

The Group or the Bank measures loss allowances at an amount equal to lifetime ECL, except for the
following, for which they are measured as 12-month ECL:
• debt investment securities that are determined to have low credit risk at the reporting date; and
• other financial instruments (other than lease receivables) on which credit risk has not increased
significantly since their initial recognition.

34
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(vii). Impairment (continued)

Loss allowances for lease receivables are always measured at an amount equal to lifetime ECL.

The Group or the Bank considers a debt investment security to have low credit risk when its credit risk rating
is equivalent to the globally understood definition of ‘investment grade’. The Group or the Bank does not
apply the low credit risk exemption to any other financial instruments.

12-month ECL are the portion of ECL that result from default events on a financial instrument that are
possible within the 12 months after the reporting date. Financial instruments for which a 12-month ECL is
recognised are referred to as ‘Stage 1 financial instruments’.

Life-time ECL are the ECL that result from all possible default events over the expected life of the financial
instrument. Financial instruments for which a lifetime ECL is recognised but which are not credit-impaired
are referred to as ‘Stage 2 financial instruments’.

Measurement of ECL

ECL are a probability-weighted estimate of credit losses. They are measured as follows:
• financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls
(i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash
flows that the Group or the Bank expects to receive);
• financial assets that are credit-impaired at the reporting date: as the difference between the gross
carrying amount and the present value of estimated future cash flows;
• undrawn loan commitments: as the present value of the difference between the contractual cash flows
that are due to the Group or the Bank if the commitment is drawn down and the cash flows that the
Group or the Bank expects to receive; and
• financial guarantee contracts: the expected payments to reimburse the holder less any amounts that the
Group or the Bank expects to recover.

The key inputs into the measurement of ECL are the term structure of the following variables:
• Probability of default (“PD”);
• Loss given default (“LGD”); and
• Exposure at default (“EAD”).

ECL for exposures in Stage 1 is calculated by multiplying the 12-month PD by LGD and EAD. Lifetime ECL
is calculated by multiplying the lifetime PD by LGD and EAD.

35
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(vii). Impairment (continued)

Measurement of ECL (continued)

Probability of Default (“PD”) provides an estimate of the likelihood that a customer will be unable to meet its
debt obligation or default over a particular time horizon. Financial assets under the general approach, which
required staging will require both 12-month PD and lifetime PD estimation according to historical data using
the migration approach or external credit rating approach.

LGD is the magnitude of the likely loss if there is a default. Loss Given Default (“LGD”) is defined as the
percentage of exposure the Bank might lose in case the customer defaults. These losses are usually shown
as a percentage of Exposure at Default (“EAD”), and depend, amongst others, on the type and amount of
collateral as well as the type of customer and the expected recovery from the customers.

With accurate collateral value, which is updated from time to time, the Bank can consider to take collateral
into LGD calculation for ECL computation. In the event of over-collateralised, a floor LGD shall be applied
for ECL calculation.

EAD is simply the amount outstanding at the point of default. However, EAD is different following the natures
of products:
• Amortised facilities: the current amount allowed under the contract and arising from amortisation
• Revolving facilities: utilisation rate
• Off-balance sheet: credit conversion factors (“CCF”)

As described above, and subject to using a maximum of a 12-month PD for Stage 1 financial assets, the
Group or the Bank measures ECL considering the risk of default over the maximum contractual period
(including any borrower’s extension options) over which it is exposed to credit risk, even if, for credit risk
management purposes, the Group or the Bank considers a longer period. The maximum contractual period
extends to the date at which the Group or the Bank has the right to require repayment of an advance or
terminate a loan commitment or guarantee.

However, for credit card facilities that include both a loan and an undrawn commitment component, the
Group or the Bank measures ECL over a period longer than the maximum contractual period if the Group’s
or the Bank’s contractual ability to demand repayment and cancel the undrawn commitment does not limit
the Group or the Bank’s exposure to credit losses to the contractual notice period. These facilities do not
have a fixed term or repayment structure and are managed on a collective basis. The Group or the Bank
can cancel them with immediate effect but this contractual right is not enforced in the normal day-to-day
management, but only when the Group or the Bank becomes aware of an increase in credit risk at the facility
level. This longer period is estimated taking into account the credit risk management actions that the Group
or the Bank expects to take, and that serve to mitigate ECL. These include a reduction in limits, cancellation
of the facility and/or turning the outstanding balance into a loan with fixed repayment terms.

36
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(vii). Impairment (continued)

Restructured financial assets

If the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a
new one due to financial difficulties of the borrower, then an assessment is made of whether the financial
asset should be derecognised (see (iv)) and ECL are measured as follows.

• If the expected restructuring will not result in derecognition of the existing asset, then the expected cash
flows arising from the modified financial asset are included in calculating the cash shortfalls from the
existing asset.
• If the expected restructuring will result in derecognition of the existing asset, then the expected fair value
of the new asset is treated as the final cash flow from the existing financial asset at the time of its
derecognition. This amount is included in calculating the cash shortfalls from the existing financial asset
that are discounted from the expected date of derecognition to the reporting date using the original
effective interest rate of the existing financial asset.

Credit-impaired financial assets

At each reporting date, the Group or the Bank assesses whether financial assets carried at amortised cost
and debt financial assets carried at FVOCI, and finance lease receivables are credit-impaired (referred to as
‘Stage 3 financial assets’). A financial asset is ‘credit-impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or past due event;
• the restructuring of a loan or advance by the Group or the Bank on terms that the Group or the Bank
would not consider otherwise;
• it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
• the disappearance of an active market for a security because of financial difficulties.

A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered to
be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced
significantly and there are no other indicators of impairment. In addition, a retail loan that is overdue for 90
days or more is considered credit-impaired even when the regulatory definition of default is different.

37
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(vii). Impairment (continued)

Presentation of allowance for ECL in the statement of financial position

Loss allowances for ECL are presented in the statement of financial position as follows:
• financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets;
• loan commitments and financial guarantee contracts: generally, as a provision;
• where a financial instrument includes both a drawn and an undrawn component, and the Group or the
Bank cannot identify the ECL on the loan commitment component separately from those on the drawn
component: the Group or the Bank presents a combined loss allowance for both components. The
combined amount is presented as a deduction from the gross carrying amount of the drawn component.
Any excess of the loss allowance over the gross amount of the drawn component is presented as a
provision; and
• debt instruments measured at FVOCI: no loss allowance is recognised in the statement of financial
position because the carrying amount of these assets is their fair value. However, the loss allowance is
disclosed and is recognised in the fair value reserve.

Write-off

Loans and debt securities are written off (either partially or in full) when there is no reasonable expectation
of recovering a financial asset in its entirety or a portion thereof. This is generally the case when the Group
or the Bank determines that the borrower does not have assets or sources of income that could generate
sufficient cash flows to repay the amounts subject to the write-off. This assessment is carried out at the
individual asset level.

Recoveries of amounts previously written off are included in ‘impairment losses on financial instruments’ in
the statement of profit or loss and OCI.

Financial assets that are written off could still be subject to enforcement activities in order to comply with the
Group or the Bank’s procedures for recovery of amounts due.

Non-integral financial guarantee contracts

The Group or the Bank assesses whether a financial guarantee contract held is an integral element of a
financial asset that is accounted for as a component of that instrument or is a contract that is accounted for
separately. The factors that the Group or the Bank considers when making this assessment include whether:
• the guarantee is implicitly part of the contractual terms of the debt instrument;
• the guarantee is required by laws and regulations that govern the contract of the debt instrument;
• the guarantee is entered into at the same time as and in contemplation of the debt instrument; and
• the guarantee is given by the parent of the borrower or another company within the borrower’s group.

38
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(e) Financial assets and financial liabilities (continued)

(vii). Impairment (continued)

Presentation of allowance for ECL in the statement of financial position (continued)

Non-integral financial guarantee contracts (continued)

If the Group or the Bank determines that the guarantee is an integral element of the financial asset, then any
premium payable in connection with the initial recognition of the financial asset is treated as a transaction cost
of acquiring it. The Group or the Bank considers the effect of the protection when measuring the fair value of
the debt instrument and when measuring ECL.

If the Group or the Bank determines that the guarantee is not an integral element of the debt instrument, then
it recognises an asset representing any prepayment of guarantee premium and a right to compensation for
credit losses. A prepaid premium asset is recognised only if the guaranteed exposure neither is credit-
impaired nor has undergone a significant increase in credit risk when the guarantee is acquired. These
assets are recognised in ‘other assets’. The Group or the Bank presents gains or losses on a compensation
right in profit or loss in the line item ‘impairment losses on financial instruments’.

(f) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, bank balances and deposit placements with original
maturities of three months or less when purchased, and that are readily convertible to known amounts of
cash and subject to an insignificant risk of changes in value.

Cash and cash equivalents are carried at amortised cost in the statement of financial position.

(g) Loans and advances

The ‘Loans and advances’ caption in the statement of financial position include loans and advances
measured at amortised cost; they are initially measured at fair value plus incremental direct transaction costs,
and subsequently at their amortised cost using the effective interest method.

(h) Financial investments

The ‘financial securities’ caption in the statement of financial position includes:

• debt investment securities measured at amortised cost; these are initially measured at fair value plus
incremental direct transaction costs, and subsequently at their amortised cost using the effective interest
method;
• debt securities measured at FVOCI; and
• equity investment securities designated as at FVOCI.

39
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(h) Financial investments (continued)

For debt securities measured at FVOCI, gains and losses are recognised in OCI, except for the following, which
are recognised in profit or loss in the same manner as for financial assets measured at amortised cost:
• interest revenue using the effective interest method;
• ECL and reversals; and
• foreign exchange gains and losses.

When debt security measured at FVOCI is derecognised, the cumulative gain or loss previously recognised in
OCI is reclassified from equity to profit or loss.

The Group or the Bank elects to present in OCI changes in the fair value of certain investments in equity
instruments that are not held for trading. The election is made on an instrument-by-instrument basis on initial
recognition and is irrevocable.

Gains and losses on such equity instruments are never reclassified to profit or loss and no impairment is
recognised in profit or loss. Dividends are recognised in profit or loss unless they clearly represent a recovery
of part of the cost of the investment, in which case they are recognised in OCI. Cumulative gains and losses
recognised in OCI are transferred to retained earnings on disposal of an investment.

(i) Share capital

Ordinary shares are classified as equity. Other shares are classified as equity and/or liability according to the
economic substance of the particular instrument. Distributions to holders of a financial instrument classified
as an equity instrument are charged directly to equity.

(j) Property and equipment

Property and equipment are stated at cost less accumulated depreciation and accumulated impairment
losses. Cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group or the Bank and the Bank and the cost of the item can be measured reliably. The carrying amount of
the replaced part is derecognised. All repairs and maintenance are charged to the statements of profit or loss
during the financial period in which they are incurred.

40
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(j) Property and equipment (continued)

Land is not depreciated. Other property and equipment are depreciated on a straight-line basis to write off
the cost of the assets to their residual values over their estimated useful lives, summarised as follows:

Years
Land improvement 3 - 20
Building and improvement 3 - 30
Leasehold improvements 1-3
Office equipment 1 - 10
Computer equipment 1 - 10
Motor vehicles 3-5

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.

Depreciation on assets under construction commences when the assets are ready for their intended use.

Property and equipment are reviewed for indication of impairment at each statements of financial position
date and whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is
written down to its recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are
included in other income.

(k) Intangible asset

Intangible assets include acquired computer software licenses and related costs. An intangible asset is
recognised only when its cost can be measured reliably and it is probable that the expected future economic
benefits that are attributable to it will flow to the Group and the Bank.

Intangible assets are stated at historical cost less accumulated amortisation and accumulated impairment
losses, if any. Intangible assets are amortised using the straight-line method based on estimated useful lives
over the life of the assets. Useful life of computer software are five years except for license of core banking
system which has useful lives of ten years.

Costs associated with maintaining computer software are recognised as expenses when incurred.

41
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(l) Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and its value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of the impairment at each reporting date. Impairment losses are
recognised in the statement of profit or loss.

(m) Reserves

Reserves comprise of general reserves, regulatory reserves and other reserves.

The general reserves are set up for any overall financial risk. The Board of Directors exercises its discretion
for the use and maintenance of the general reserves. The transfer from retained earnings to general reserves
is subject to the approval of Board of Directors of each entity within the Group.

Regulatory reserves are set up for the variance of provision between impairment in accordance with CIFRSs
and regulatory provision. It is transferred between retained earnings and regulatory reserves.

Other reserves are for currency translation difference of the net investment in foreign operations.

(n) Current and deferred income tax

The tax expense for the year comprises current and deferred tax. Tax is recognised in statement of profit or
loss, except to the extent that it relates to items recognised in other comprehensive income or directly in
equity. In this case, the tax is recognised in other comprehensive income or directly in equity, respectively.

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates
and generates taxable income and includes all taxes based upon the taxable profits.

Deferred income tax is recognised in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred
income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which the temporary differences and unused tax losses or unused tax credits can be utilised.

42
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(o) Employee benefits

(i) Short-term employee benefits

The Group and the Bank recognise a liability and an expense for bonuses. The Group and the Bank recognise a
provision where contractually obliged or where there is a past practice that has created a constructive obligation.

Wages, salaries, bonuses, and other short-term benefits are recognised as an expense in the year in which
the associated services are rendered by employees of the Group and the Bank.

(ii) Post-employment benefits

The Group and the Bank have various post-employment benefit schemes. These benefit plans are below.

Seniority benefits

In accordance with Prakas No. 443 MoLVT dated 21 September 2018 and Notification Letter No. 042 MoLVT
dated 22 March 2019 issued by the Ministry of Labour and Vocational Training (“MoLVT”), the Bank and its
subsidiaries, except for ACLEDA Bank Lao Ltd. and ACLEDA MFI Myanmar Co., Ltd, are required seniority
indemnity to its employees as follows:

• Current Seniority Indemnity: Employees who have worked from 1 month to 6 months (not including
probation period) by June 30, or December 31, will receive seniority indemnity equal to 7.5 days.

• Back Pay Seniority Indemnity: Employees who have worked under permanent contract from 1 month to 6
months in fiscal year will receive payment of seniority indemnity equal to 3 days, in case over 3 months will
receive seniority indemnity equal to 15 days. The maximum seniority to be paid shall not exceed 6 days of
the average base salary of each year that shall be compensated from 2008 to 2018 but shall not exceed
156 days. The payment will be made from December 2021.

The liability was recognised at the present value of defined obligation at the reporting period using the
projected unit credit method to better estimate the ultimate cost to the Group and the Bank of the benefit that
employees have earned in return for their service in the periods from 2008 to 2018. The Group and the Bank
attributes benefit to periods in which the obligation to provide back pay seniority indemnity. That obligation
arises as employees render services in return for back pay seniority indemnity that the Group and the Bank
expects to pay in future reporting periods.

The present value of the back pay seniority indemnity is determined by discounting the estimated future
payments by reference to the Bank’s sixty-months fixed deposit interest rate.

43
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(o) Employee benefits (continued)
(ii) Post-employment benefits (continued)
Retirement benefits

The Bank and its subsidiaries, except ACLEDA MFI Myanmar Co., Ltd, provide an unfunded retirement benefit
plan, which is a defined benefit plan for eligible employees, upon reaching the retirement age, as follows:

• When employees, who have worked for the Group or the Bank for 15 years or more, reach a retirement
age of 58 years and 60 years for unskilled and skilled respectively, are entitled to the retirement benefits
equivalent to 12 months of last salary; or

• When employees, who have worked for the Group or the Bank for 15 years or more, reach the early
retirement age of 55 years and 57 years for unskilled and skilled respectively, are entitled to the retirement
benefits equivalent to 6 months of last salary.

No separate fund is maintained and interest contributed for the retirement benefits.

The liability is recognised in the statement of financial position at the present value of defined obligation at
the reporting period using the projected unit credit method to estimate the ultimate cost to the Group and the
Bank of the benefit that employees have earned in return for their service in the current and prior periods.
The Group and the Bank attributes benefit to periods in which the obligation to provide retirement benefit
arises. That obligation arises as employees render services in return for retirement benefits that the Group
and the Bank expect to pay in future reporting periods.

The present value of the retirement benefit obligations is determined by discounting the estimated future
payments by reference to the Bank’s six years fixed deposit interest rate, as there is no deep high-quality
corporate bond market nor government bonds.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are
recognised in other comprehensive income and directly in the retained earnings in the period in which they
arise. The cost associated with providing these benefits is recognised in other comprehensive income so as
to spread the cost over the period of employment in which the entitlement to the benefit is earned. Past-
service costs are recognised immediately in the statement of profit or loss.

Career development benefits

The Bank provides career development benefits to employees as they reach management position as below.

Management position level Benefits

Level 6 US$1,250
Level 7 US$2,500
Level 8 US$3,375 to US$3,750

44
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(o) Employee benefits (continued)

(ii) Post-employment benefits (continued)

Career development benefits (continued)

They are eligible to receive membership unless they have been working since their date of appointment in a
management position for two years continuously and their performance evaluation has been high (i.e.
evaluation score equal to or higher than 700 and no warning letter). They will automatically be entitled to
membership on the first day of their third year.

The liability is recognised in the statement of financial position at the present value of benefits obligation at
the end of each reporting period using the projected unit credit method. The present value is determined by
discounting the estimated future payments by reference to three years fixed deposit interest rate, as the
period of benefit entitlement is three years.

(p) Provisions

Provisions are recognised when the Group and the Bank have a present legal or constructive obligation as
a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and
the amount of obligation can be reliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognised even if the
likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provisions due to the passage of time is recognised as
interest expense.

(q) Interest

Effective interest rate

Interest income and expense are recognised in profit or loss using the effective interest method. The ‘effective
interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the
expected life of the financial instrument to:
• the gross carrying amount of the financial asset; or
• the amortised cost of the financial liability.

45
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(q) Interest (continued)

Effective interest rate (continued)

When calculating the effective interest rate for financial instruments other than purchased or originated credit-
impaired assets, the Group/the Bank estimates future cash flows considering all contractual terms of the
financial instrument, but not ECL. For purchased or originated credit-impaired financial assets, a credit-
adjusted effective interest rate is calculated using estimated future cash flows including ECL.

The calculation of the effective interest rate includes transaction costs and fees and points paid or received
that are an integral part of the effective interest rate. Transaction costs include incremental costs that are
directly attributable to the acquisition or issue of a financial asset or financial liability.

Amortised cost and gross carrying amount

The ‘amortised cost’ of a financial asset or financial liability is the amount at which the financial asset or
financial liability is measured on initial recognition minus the principal repayments, plus or minus the
cumulative amortisation using the effective interest method of any difference between that initial amount and
the maturity amount and, for financial assets, adjusted for any expected credit loss.

The ‘gross carrying amount of a financial asset’ is the amortised cost of a financial asset before adjusting for
any expected credit loss allowance.

Calculation of interest income and expense

The effective interest rate of a financial asset or financial liability is calculated on initial recognition of a financial
asset or a financial liability. In calculating interest income and expense, the effective interest rate is applied to
the gross carrying amount of the asset (when the asset is not credit- impaired) or to the amortised cost of the
liability. The effective interest rate is revised as a result of periodic re-estimation of cash flows of floating rate
instruments to reflect movements in market rates of interest. The effective interest rate is also revised for fair
value hedge adjustments at the date amortisation of the hedge adjustment begins.

However, for financial assets that have become credit-impaired subsequent to initial recognition, interest
income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the
asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

For financial assets that were credit-impaired on initial recognition, interest income is calculated by applying
the credit-adjusted effective interest rate to the amortised cost of the asset.The calculation of interest income
does not revert to a gross basis, even if the credit risk of the asset improves.

46
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(q) Interest (continued)

Presentation

Interest income calculated using the effective interest method presented in the statement of profit or loss and
OCI includes:
• interest on financial assets and financial liabilities measured at amortised cost;
• interest on debt instruments measured at FVOCI;
• the effective portion of fair value changes in qualifying hedging derivatives designated in cash flow
hedges of variability in interest cash flows, in the same period as the hedged cash flows affect interest
income/expense; and
• the effective portion of fair value changes in qualifying hedging derivatives designated in fair value
hedges of interest rate risk.

Interest expense presented in the statement of profit or loss and OCI includes:

• financial liabilities measured at amortised cost; and

• the effective portion of fair value changes in qualifying hedging derivatives designated in cash flow
hedges of variability in interest cash flows, in the same period as the hedged cash flows affect interest
income/expense.

Interest income and expense on other financial assets and financial liabilities at FVTPL are presented in net
income from other financial instruments at FVTPL.

(r) Fee and commission

Fee and commission income and expense that are integral to the effective interest rate on a financial asset
or financial liability are included in the effective interest rate.

Other fee and commission income – including account servicing fees, investment management fees, sales
commission, placement fees and syndication fees – is recognised as the related services are performed. If
a loan commitment is not expected to result in the draw-down of a loan, then the related loan commitment
fee is recognised on a straight-line basis over the commitment period.

A contract with a customer that results in a recognised financial instrument in the Group’s or the Bank’s
financial statements may be partially in the scope of CIFRS 9 and partially in the scope of CIFRS 15. If this
is the case, then the Group or the Bank first applies CIFRS 9 to separate and measure the part of the contract
that is in the scope of CIFRS 9 and then applies CIFRS 15 to the residual.

47
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(s) Recognition of fee and other income

(i) Dividends

Dividends are recognised when the right to receive payment is established. Usually, this is the ex-dividend
date for quoted equity securities.

The dividends on equity instruments designated as at FVOCI that clearly represent a recovery of part of the
cost of the investment are presented in OCI.

(ii) Training and consultancy services

The Group and the Bank recognise service revenue when it is probable that economic benefits will flow to
the Group or the Bank and the amount of revenue can be reliably measured. Revenue from training services
and consultancy services are recognised when services are delivered.

(t) Leases

At inception of a contract, the Group and the Bank assess whether a contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration.

This policy is applied to contracts entered into (or changed) on or after 1 January 2019.

As a lessee

At commencement or on modification of a contract that contains a lease component, the Group and the
Bank allocate the consideration in the contract to each lease component on the basis of its relative stand-
alone prices.

The Group and the Bank recognise a right-of-use asset and a lease liability at the lease commencement
date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the
underlying asset or the site on which it is located or restoring the underlying asset to the condition required
by the terms and conditions of the lease, unless those costs are incurred to produce inventories, less any
lease incentives received.

48
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(t) Leases (continued)

As a lessee (continued)

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group
and the Bank by the end of the lease term or the cost of the right-of-use asset reflects that the Group and
the Bank will exercise a purchase option. In that case the right-of-use asset will be depreciated over the
useful life of the underlying asset, which is determined on the same basis as those of property and
equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s and the Bank’s incremental borrowing rate. Generally, the Group and the Bank use
its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise of the following:
o fixed payments, including in-substance fixed payments;
o variable lease payments that depend on an index or a rate, initially measured using the index or rate as
at the commencement date;
o amounts expected to be payable under a residual value guarantee; and
o the exercise price under a purchase option that the Group and the Bank are reasonably certain to
exercise, lease payments in an optional renewal period if the Group and the Bank are reasonably certain
to exercise an extension option, and penalties for early termination of a lease unless the Group and the
Bank are reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in
the Group’s and the Bank’s estimate of the amount expected to be payable under a residual value guarantee,
if the Group and the Bank change its assessment of whether it will exercise a purchase, extension or
termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset
has been reduced to zero.

The Group and the Bank present right-of-use assets and lease liabilities separately in the statement of
financial position.

49
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

2. Summary of significant accounting policies (continued)

(t) Leases (continued)

As a lessee (continued)

Short-term leases and leases of low-value assets

The Group and the Bank have elected not to recognise right-of-use assets and lease liabilities for leases of
low-value assets and short-term leases. The Group and the Bank recognise the lease payments associated
with these leases as an expense on a straight-line basis over the lease term.

(u) Contingent assets and contingent liabilities

Contingent assets arise from unplanned or other unexpected events that give rise to the possibility of an inflow of
economic benefits to the Group and the Bank. As this may result in the recognition of income that may never be
realised, contingent assets are not recognised in the Group’s and the Bank’s financial statements.

Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, are
possible obligations that arise from past events whose existence will be confirmed only by the occurrence, or
non-occurrence, of one or more uncertain future events not wholly within the control of the Group and the Bank;
or are present obligations that have arisen from past events but are not recognised because it is not probable
that settlement will require the outflow of economic benefits, or because the amount of the obligations cannot
be reliably measured.

Contingent liabilities are not recognised in the financial statements but are disclosed unless the probability of
settlement is remote.

3. Critical accounting estimates and judgements in applying accounting policies

The Group and the Bank make estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, rarely equal the related actual results. To enhance the information content of the
estimates, certain key variables that are anticipated to have material impact to the Group’s and the Bank’s
results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets
and liabilities within the next financial year are outlined below:

(a) Judgements

Information about judgements made in applying accounting policies that have the most significant effects on
the amounts recognised in the financial statements is included in the following notes.

• Note 2(e)(ii): classification of financial assets: assessment of the business model within which the assets
are held and assessment of whether the contractual terms of the financial asset are SPPI on the principal
amount outstanding.

50
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

3. Critical accounting estimates and judgements in applying accounting policies

(continued)

(a) Judgements (continued)

• Note 35.1(f): establishing the criteria for determining whether credit risk on the financial asset has increased
significantly since initial recognition, determining methodology for incorporating forward-looking information
into measurement of ECL and selection and approval of models used to measure ECL.

(b) Assumptions and estimation uncertainties

• Note 35.1(f): impairment of financial instruments: determining inputs into the ECL measurement model,
including incorporation of forward-looking information.

• Note 35.4: determination of the fair value of financial instruments with significant unobservable inputs.

• Note 22(a)(iv): measurement of defined benefit obligations: key actuarial assumptions.

• Note 32: recognition and measurement of contingencies: key assumptions about the likelihood and
magnitude of an outflow of resources.

• Note 2(e)(vii): impairment of financial instruments: key assumptions used in estimating recoverable cash
flows.

Coronavirus and impact on ECL

The ECL was estimated based on a range of forecast economic conditions as at reporting date. The Novel
Coronavirus (Covid-19) outbreak has spread across mainland China, Cambodia and beyond, causing
disruption to business and economic activity. The impact on GDP and other key indicators will be considered
when determining the severity and likelihood of downside economic scenarios that are used to estimate
ECL. Management estimates that the additional ECL of US$7.4 million recorded as at 31 December 2020
resulting from the overlay has been determined based on possible forward-looking scenarios, considering
the facts, circumstances and forecast of the future economic conditions and supportable information that is
available as at the reporting date.

The calculation of the ECL in this current environment is subject to significant uncertainty. Management
provides its best estimate on the possible outcomes of Covid-19 on the Group and the Bank, however, this
estimate may move materially as events unfold. Consequently, this number should not be seen as firm
guidance or a forecast as to the final financial impacts expected. In the event the impacts are more severe
or prolonged than anticipated in the scenarios, this will have a corresponding impact on the ECL, the financial
position and performance of the Group and the Bank.

51
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

3. Critical accounting estimates and judgements in applying accounting policies

(continued)
(b) Assumptions and estimation uncertainties (continued)

Retirement benefits

The present value of the retirement benefit obligation depends on a number of factors that are determined
by management using a number of assumptions such as salary growth rates, turnover rates and mortality
rates. The assumptions used in determining the net cost for retirement benefits include discount rate. Any
changes in these assumptions will impact the value of retirement benefit obligation.

In the absence of a bond market and government bonds, the management used their six year fixed deposit
interest rate as a discount rate to determine the present value of the estimated future cash outflows expected
to be required to settle the retirement benefit obligation.

Taxes

Taxes are calculated on the basic of current interpretation of the tax regulations enacted as at reporting date.
The management periodically evaluates position taken in tax returns with respect to situations in which
applicable tax regulation is subjected to interpretation. It establishes provisions where appropriate on the
basic of amounts expected to be paid to the tax authorities.

However, these regulations are subject to periodic variation and the ultimate determination of tax liabilities
will be made following inspection by the tax authorities. Where the final tax outcome of these matters is
different from the amounts initially recorded, such differences will impact the taxes liabilities and balances in
the period in which the determination is made.

4. Translation of United States Dollars into Khmer Riel

The financial statements are expressed in United States Dollars (“US$”). The translations of US$ amounts into
Khmer Riel (“KHR”) are included solely for compliance with the Law on Accounting and Auditing.

Assets and liabilities are translated at the closing rate as at the reporting date. The statements of profit or loss
and other comprehensive income and cash flows are translated into KHR using the average rate for the period.
Exchange differences arising from the translation are recognised as “Currency Translation Difference” in the
other comprehensive income.

The Group and the Bank have used the exchange rates:
Closing Average
rate rate
31 December 2020 US$1 = KHR4,045 KHR4,077
31 December 2019 US$1 = KHR4,075 KHR4,052

These convenience translations should not be construed as representations that the United States Dollars
amounts have been, could have been, or could in the future be, converted into Khmer Riels at this or any
other rate of exchange.

52
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

5. Cash on hand
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)
By currency:
In US$ 284,892,098 328,112,584 1,152,388,536 1,337,058,780 283,028,828 326,481,164 1,144,851,609 1,330,410,743
In KHR 103,488,247 73,832,938 418,609,959 300,869,222 103,480,325 73,824,417 418,577,915 300,834,499
In Thai Baht 12,247,160 9,820,413 49,539,762 40,018,183 9,927,044 7,846,913 40,154,893 31,976,170
In Euro 2,967,502 1,697,804 12,003,546 6,918,551 2,965,106 1,640,057 11,993,854 6,683,232
In other currencies 9,164,044 8,063,499 37,068,558 32,858,759 1,414,823 1,163,316 5,722,959 4,740,514
412,759,051 421,527,238 1,669,610,361 1,717,723,495 400,816,126 410,955,867 1,621,301,230 1,674,645,158

6. Deposits and placements with other banks

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)
Balances with local banks:
The National Bank of Cambodia 264,197,563 448,591,990 1,068,679,142 1,828,012,359 264,197,563 448,591,990 1,068,679,142 1,828,012,359
Other banks 10,803,730 1,579,492 43,701,088 6,436,430 3,318,751 452,223 13,424,348 1,842,809
275,001,293 450,171,482 1,112,380,230 1,834,448,789 267,516,314 449,044,213 1,082,103,490 1,829,855,168

Balances with overseas banks:

Bank of Laos 19,771,444 19,037,298 79,975,491 77,576,989 - - - -
Other banks 240,462,853 119,111,707 972,672,240 485,380,206 240,254,636 109,613,368 971,830,003 446,674,475
260,234,297 138,149,005 1,052,647,731 562,957,195 240,254,636 109,613,368 971,830,003 446,674,475
535,235,590 588,320,487 2,165,027,961 2,397,405,984 507,770,950 558,657,581 2,053,933,493 2,276,529,643
Allowance for impairment losses (582,444) (589,956) (2,355,985) (2,404,070) (141,543) (45,241) (572,542) (184,357)
534,653,146 587,730,531 2,162,671,976 2,395,001,914 507,629,407 558,612,340 2,053,360,951 2,276,345,286

53
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

6. Deposits and placements with other banks (continued)

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)

Current 534,653,146 587,730,531 2,162,671,976 2,395,001,914 507,629,407 558,612,340 2,053,360,951 2,276,345,286

Non-current - - - - - - - -
534,653,146 587,730,531 2,162,671,976 2,395,001,914 507,629,407 558,612,340 2,053,360,951 2,276,345,286

a) By account types
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)
Balances with local banks:
Current accounts 270,348,210 449,044,213 1,093,558,509 1,829,855,168 264,481,054 449,044,213 1,069,825,863 1,829,855,168
Fixed deposits 4,653,083 1,127,269 18,821,721 4,593,621 3,035,260 - 12,277,627 -
275,001,293 450,171,482 1,112,380,230 1,834,448,789 267,516,314 449,044,213 1,082,103,490 1,829,855,168

Balances with overseas banks:

Current accounts 260,234,297 137,313,244 1,052,647,731 559,551,469 239,751,958 108,777,608 969,796,670 443,268,753
Savings accounts - 835,761 - 3,405,726 - 835,760 - 3,405,722
Fixed deposits - - - - 502,678 - 2,033,333 -
260,234,297 138,149,005 1,052,647,731 562,957,195 240,254,636 109,613,368 971,830,003 446,674,475

535,235,590 588,320,487 2,165,027,961 2,397,405,984 507,770,950 558,657,581 2,053,933,493 2,276,529,643

Allowance for impairment loss (582,444) (589,956) (2,355,985) (2,404,070) (141,543) (45,241) (572,542) (184,357)
534,653,146 587,730,531 2,162,671,976 2,395,001,914 507,629,407 558,612,340 2,053,360,951 2,276,345,286

54
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

6. Deposits and placements with other banks (continued)

b) By interest rate (per annum)
The Group The Bank
2020 2019 2020 2019

Current accounts Nil Nil Nil Nil

Savings accounts 0.20% - 0.50% 0.00% - 0.50% Nil 0.00% - 0.50%
Fixed deposits 0.12% - 7.50% 1.00% - 8.25% 0.12% - 3.30% 1.00% - 8.25%

7. Financial investments
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
Note US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Unlisted equity securities – at FVOCI:

Credit Bureau Holding (Cambodia) Ltd (a) 153,529 153,529 621,025 625,631 153,529 153,529 621,025 625,631
Total financial investments at FVOCI 153,529 153,529 621,025 625,631 153,529 153,529 621,025 625,631
Unquoted:
Negotiable Certificate of Deposit with NBC (b) 566,520,994 527,321,447 2,291,577,421 2,148,834,896 566,520,994 527,321,447 2,291,577,421 2,148,834,896
Total financial investments at amortised cost 566,520,994 527,321,447 2,291,577,421 2,148,834,896 566,520,994 527,321,447 2,291,577,421 2,148,834,896
566,674,523 527,474,976 2,292,198,446 2,149,460,527 566,674,523 527,474,976 2,292,198,446 2,149,460,527

(a) This represents the Bank’s equity investment in Credit Bureau Holding (Cambodia) Ltd. (“CBC”), directly at 5% and indirectly at 1% through the Association of Banks
in Cambodia (“ABC”).
(b) The Bank has pledged negotiable certificate of deposit (“NCD”) amounting to US$14,374,871 (31 December 2019: US$36,899,080) with the National Bank of
Cambodia (“NBC”) as collateral for settlement clearing facility. The other NCD amounting to US$552,146,123 (31 December 2019: US$490,422,367) with NBC is for
the purpose of earning interest. The terms of the NCD are for a period of less than or equal to three months. As at 31 December 2020, the Bank had yet to utilise the
overdraft on settlement clearing facility.

55
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

8. Loans and advances, net

The Group
2020 2019 2020 2019
Gross carrying ECL ECL Gross carrying ECL Carrying amount Gross carrying ECL
amount allowance Carrying amount Gross amount allowance (*) Carrying amount amount allowance amount allowance (*) Carrying amount
US$ US$ US$ US$ US$ US$ KHR'000 KHR'000 KHR'000 KHR'000 KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4)

Small Loan 2,211,197,272 17,353,773 2,193,843,499 2,008,369,258 9,463,573 1,998,905,685 8,944,292,965 70,196,012 8,874,096,953 8,184,104,726 38,564,060 8,145,540,666
Staff Housing Loan 25,239,763 17,009 25,222,754 33,180,111 916,490 32,263,621 102,094,841 68,801 102,026,040 135,208,952 3,734,697 131,474,255
Public Housing Loan
135,555,361 1,032,605 134,522,756 150,111,757 264,862 149,846,895 548,321,435 4,176,887 544,144,548 611,705,410 1,079,313 610,626,097
Staff Loan 221,923,761 225,841 221,697,920 169,349,467 870,973 168,478,494 897,681,613 913,527 896,768,086 690,099,078 3,549,215 686,549,863
Overdraft Loan 58,036,302 352,950 57,683,352 47,931,865 847,009 47,084,856 234,756,842 1,427,683 233,329,159 195,322,350 3,451,562 191,870,788
Home Improvement Loan 47,780,295 334,644 47,445,651 74,837,579 219,986 74,617,593 193,271,293 1,353,635 191,917,658 304,963,134 896,443 304,066,691
Personal & Others Loan 158,300,284 1,061,972 157,238,312 119,745,789 356,437 119,389,352 640,324,649 4,295,676 636,028,973 487,964,090 1,452,480 486,511,610
Credit Card Loan 25,641,962 667,345 24,974,617 16,891,237 767,318 16,123,919 103,721,736 2,699,411 101,022,325 68,831,791 3,126,821 65,704,970
Trade Loan 9,632,656 21,578 9,611,078 12,462,385 72,255 12,390,130 38,964,094 87,283 38,876,811 50,784,219 294,439 50,489,780
Revolving Loan 33,296,272 23,512 33,272,760 38,731,317 3,825,256 34,906,061 134,683,420 95,106 134,588,314 157,830,117 15,587,918 142,242,199
Medium Loan 1,580,039,237 14,251,318 1,565,787,919 1,207,852,809 15,838,896 1,192,013,913 6,391,258,714 57,646,581 6,333,612,133 4,922,000,197 64,543,501 4,857,456,696

4,506,643,165 35,342,547 4,471,300,618 3,879,463,574 33,443,055 3,846,020,519 18,229,371,602 142,960,602 18,086,411,000 15,808,814,064 136,280,449 15,672,533,615

(*): In 2019, included allowance for impairment loss on off-balance sheet commitments amounting US$207,479. See Note 35.1(f) for the detail movements of ECL allowance.

56
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

8. Loans and advances, net (continued)

The Bank
2020 2019 2020 2019
Gross carrying ECL Carrying ECL Carrying Gross carrying ECL Carrying ECL Carrying
amount allowance amount Gross amount allowance (*) amount amount allowance amount Gross amount allowance (*) amount
US$ US$ US$ US$ US$ US$ KHR'000 KHR'000 KHR'000 KHR'000 KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4)

Small Loan 2,048,936,412 13,343,552 2,035,592,860 1,864,513,590 8,357,249 1,856,156,341 8,287,947,787 53,974,668 8,233,973,119 7,597,892,879 34,055,790 7,563,837,089
Staff Housing Loan 25,108,879 16,907 25,091,972 32,995,773 916,314 32,079,459 101,565,416 68,389 101,497,027 134,457,775 3,733,980 130,723,795
Public Housing Loan 135,084,056 1,016,789 134,067,267 149,985,838 264,595 149,721,243 546,415,007 4,112,912 542,302,095 611,192,290 1,078,225 610,114,065
Staff Loan 214,389,121 209,906 214,179,215 163,227,924 848,346 162,379,578 867,203,994 849,070 866,354,924 665,153,790 3,457,010 661,696,780
Overdraft Loan 57,948,236 351,432 57,596,804 47,931,865 847,009 47,084,856 234,400,615 1,421,542 232,979,073 195,322,350 3,451,562 191,870,788
Home Improvement Loan 44,261,421 294,401 43,967,020 73,114,585 213,423 72,901,162 179,037,448 1,190,852 177,846,596 297,941,934 869,699 297,072,235
Personal & Others Loan 157,228,541 1,083,793 156,144,748 118,408,444 481,072 117,927,372 635,989,448 4,383,941 631,605,507 482,514,409 1,960,366 480,554,043
Credit Card Loan 25,641,962 667,345 24,974,617 16,891,237 767,318 16,123,919 103,721,736 2,699,411 101,022,325 68,831,791 3,126,821 65,704,970
Trade Loan 9,632,656 21,578 9,611,078 12,462,385 72,255 12,390,130 38,964,094 87,283 38,876,811 50,784,219 294,439 50,489,780
Revolving Loan 33,296,272 23,512 33,272,760 38,731,317 3,825,256 34,906,061 134,683,420 95,106 134,588,314 157,830,117 15,587,918 142,242,199
Medium Loan 1,572,330,992 14,180,174 1,558,150,818 1,201,161,387 16,252,565 1,184,908,822 6,360,078,861 57,358,804 6,302,720,057 4,894,732,651 66,229,202 4,828,503,449

4,323,858,548 31,209,389 4,292,649,159 3,719,424,345 32,845,402 3,686,578,943 17,490,007,826 126,241,978 17,363,765,848 15,156,654,205 133,845,012 15,022,809,193

(*) In 2019, included allowance for impairment loss on off-balance sheet commitments amounting US$655,822. See Note 35.1(f) for the detail movements of ECL allowance.

57
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

8. Loans and advances, net (continued)

(a) Loans and advances in gross amount by maturity

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Within one year 1,199,583,002 1,109,302,433 4,852,313,243 4,520,407,415 1,114,810,801 1,028,250,540 4,509,409,690 4,190,120,951
Later than one year but not later than three years 1,669,992,109 1,485,415,071 6,755,118,081 6,053,066,414 1,607,487,035 1,426,804,862 6,502,285,057 5,814,229,813
Later than three years but not later than five years 1,074,597,753 933,058,442 4,346,747,911 3,802,213,151 1,049,075,704 913,087,341 4,243,511,223 3,720,830,915
Later than five years 562,470,301 351,687,628 2,275,192,367 1,433,127,084 552,485,008 351,281,602 2,234,801,856 1,431,472,527
4,506,643,165 3,879,463,574 18,229,371,602 15,808,814,064 4,323,858,548 3,719,424,345 17,490,007,826 15,156,654,206

58
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

8. Loans and advances, net (continued)

During the year, the Group and the Bank recognised the allowance for impairment losses as follows:
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)
Allowance for/(reversal of) impairments on:
Loans and advances 20,852,357 22,600,280 85,015,059 91,576,335 16,204,462 21,462,297 66,065,592 86,965,228
Deposit and placement with other banks (7,786) 523,753 (31,744) 2,122,248 96,083 31,153 391,730 126,232
Other receivables (50,540) 287,172 (206,051) 1,163,620 (52,869) 287,182 (215,547) 1,163,661
20,794,031 23,411,205 84,777,264 94,862,203 16,247,676 21,780,632 66,241,775 88,255,121
Off-balance sheet commitments (54,156) (87,989) (220,794) (356,531) (132,082) 360,354 (538,498) 1,460,154
20,739,875 23,323,216 84,556,470 94,505,672 16,115,594 22,140,986 65,703,277 89,715,275
Movements of impairment losses during the year were as follows:
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

At the beginning of the year 33,443,055 34,188,330 136,280,449 138,462,737 32,845,402 32,845,673 133,845,012 131,865,791
ECL on off-balance sheet commitment (207,479) - (839,253) - (655,822) - (2,652,800) -
Allowance for impairment loss during the year 20,852,357 22,512,291 85,015,059 91,219,804 16,204,462 21,822,651 66,065,592 88,425,382
Written off during the year (18,676,459) (23,994,329) (76,143,923) (97,225,021) (17,158,054) (22,436,319) (69,953,386) (90,911,965)
Currency translation difference (68,927) 736,763 (281,015) 2,985,364 (26,599) 613,397 (108,444) 2,485,484
Exchange differences - - (1,070,715) 837,565 - - (953,996) 1,980,320
At the end of the year 35,342,547 33,443,055 142,960,602 136,280,449 31,209,389 32,845,402 126,241,978 133,845,012

59
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

9. Other assets
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Prepayments and advances 12,866,459 11,368,223 52,044,827 46,325,509 10,782,460 9,913,152 43,615,051 40,396,094
Stationery supplies 2,423,780 1,855,397 9,804,190 7,560,743 2,248,392 1,651,725 9,094,746 6,730,779
Receivable from Western Union 3,755,064 922,302 15,189,234 3,758,381 3,666,021 904,263 14,829,055 3,684,872
Others 3,721,610 3,383,911 15,053,912 13,789,437 3,559,237 3,198,400 14,397,113 13,033,481
22,766,913 17,529,833 92,092,163 71,434,070 20,256,110 15,667,540 81,935,965 63,845,226

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)

Current 17,170,584 17,178,153 69,455,012 70,000,973 15,353,807 15,441,828 62,106,149 62,925,449

Non-current 5,596,329 351,680 22,637,151 1,433,097 4,902,303 225,712 19,829,816 919,777
22,766,913 17,529,833 92,092,163 71,434,070 20,256,110 15,667,540 81,935,965 63,845,226

10. Statutory deposits

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

With the Central Bank (a) 357,000,975 583,195,741 1,444,068,944 2,376,522,645 356,753,756 583,195,741 1,443,068,943 2,376,522,645
With other central bank (b) 3,376,033 3,894,959 13,656,053 15,871,958 - - - -
Others (c) - 245,399 - 1,000,000 - - - -
360,377,008 587,336,099 1,457,724,997 2,393,394,603 356,753,756 583,195,741 1,443,068,943 2,376,522,645

60
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

10. Statutory deposits (continued)

(a) With the Central Bank

(i) Reserve requirement

The reserve requirement represents the minimum reserve which is calculated at 8% for KHR and 12.50%
for other currencies of the total amount of deposits from customers, non-residential banks and financial
institution deposits, and non-residential borrowings. Pursuant to the National Bank of Cambodia’s Prakas
No. B7-018-282 on the maintenance of reserve requirement against commercial banks' deposits and
borrowings, reserve requirements both in KHR and in other currencies bear no interest effect from 29 August
2018.

On 18 March 2020, NBC issued a press release announcing the reduction of the Reserve Requirement Rate
(“RRR”) on KHR from 8% to 7%. For foreign currencies, the RRR is reduced from 12.50% to 7%. in order to
mitigate the impact of the COVID-19 pandemic on Cambodia’s economy.

(ii) Capital guarantee

Pursuant to the National Bank of Cambodia’s Prakas No. B7-01-136 on Bank’s Capital Guarantee dated 15
October 2001; the banks are required to maintain 10% of its registered capital as a statutory deposit with the
Central Bank. The deposit, which is not available for use in the Bank’s day-to-day operations, is refundable
should the Bank voluntarily cease its operations in Cambodia.

(b) With other central bank

These are the statutory deposits of ACLEDA Bank Lao Ltd maintained with the Bank of Lao (“BOL”) in
compliance with BOL’s regulations. These statutory deposits comprise of reserve requirement calculated at
4% of customers’ deposits in local currency and 8% of foreign currency deposits and capital guarantee of
the share capital. These statutory deposits do not bear interest.

(c) Others

In compliance with Securities and Exchange Commission of Cambodia (“SECC”)’s Prakas No. 009 on the
licensing of securities firms and securities representatives, ACLEDA Securities Plc. is required to place a security
deposit into SECC’s bank account maintained with the National Bank of Cambodia amounting to
KHR1,000,000,000 (equivalent to US$247,709) for operating as a securities broker in the Kingdom of Cambodia.

61
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

11. Investments in subsidiaries

The Bank
2020 2019 2020 2019
US$ US$ KHR'000 KHR'000
(Note 4) (Note 4)
Unquoted ordinary shares, at cost
ACLEDA Bank Lao Ltd. (a) 49,389,566 49,389,566 199,780,794 201,262,481
ACLEDA Securities Plc. (b) 2,010,000 2,010,000 8,130,450 8,190,750
ACLEDA Institute of Business (c) 19,805,000 19,805,000 80,111,225 80,705,375
ACLEDA MFI Myanmar Co., Ltd. (d) 19,911,005 19,911,005 80,540,016 81,137,346
ACLEDA Properties Ltd. (e) - 20,000 - 81,500
Total investments in subsidiaries - Non-current 91,115,571 91,135,571 368,562,485 371,377,452

(a) ACLEDA Bank Lao Ltd.

ACLEDA Bank Lao Ltd. (“ABL”) was established in Lao PDR on 13 December 2007 under a preliminary license
from the Bank of Lao PDR (“BOL”). The Bank owned 99.90% of ACLEDA Lao’s shares.

ABL obtained approval from the Bank of Lao PDR for the Capital Injection for the 1st of Year 2020 amounting to
Kip40,000,000,000 (Forty billion Kip) (equivalent to US$4,451,864), resulting in an increase in ABL's registered
capital from Kip300,000,000,000 (Three Hundred billion Kip) (equivalent to US$ 36,409,467) to be
Kip340,000,000,000 (Three Hundred and Forty billion Kip) (equivalent to US$40,861,331) through a conversion
of the retained earnings with approval from the Bank of Lao PDR on 6 May 2020.

ACLEDA Bank Lao’s principal business is providing banking and related financial services in Lao PDR.

(b) ACLEDA Securities Plc.

On 1 March 2010, ACLEDA Securities Plc. (“ACS”) was established in the Kingdom of Cambodia and registered
with the Ministry of Commerce (“MoC”) under the Registration No. Co.0448KH/2010. On 20 October 2010, the
Securities and Exchange Commission of Cambodia (“SECC”) granted a brokerage license to ACLEDA
Securities. The registered share capital of ACLEDA Securities is US$2,010,000, divided into 2,010,000 shares
with par value of US$1 each. ACS is wholly owned by ACLEDA Bank Plc.

ACLEDA Securities’ principal business is providing securities brokerage and other services approved by SECC.

(c) ACLEDA Institute of Business

ACLEDA Institute of Business (“AIB”) (previously known as ACLEDA Training Center Ltd.) was established in
the Kingdom of Cambodia under a primary license from MoC under the Registration No. Co.1332KH/2011
dated 8 June 2011. The registered share capital of AIB is US$17,805,000, divided into 17,805,000 shares with
par value of US$1 each. AIB is wholly owned by ACLEDA Bank Plc. In 2018, AIB increased its share capital
by US$2,000,000 to US$19,805,000. The revised Memorandum and Articles of Association was endorsed
by the Ministry of Commerce (“MoC”) on 14 December 2018.

62
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

11. Investments in subsidiaries (continued)

(d) ACLEDA Institute of Business (continued)

AIB is recognised as the establishment of a private higher education institution under the sub-decree
No. 13 ANKr. BK dated 25 January 2016 from the Royal Government of Cambodia (“RGC”). AIB provides
training and education for Associate’s degree, Bachelor’s degree, and Master’s degree of Business
Administration, majoring in Banking and Finance. AIB can open branches, new colleges, new departments,
new specialties, new levels or classes, new types of education and training, change to a new name and
location by sending relevant documents to request for approval from the Ministry of Education, Youth and
Sport (“MoEYS”).

(e) ACLEDA MFI Myanmar Co., Ltd.

ACLEDA MFI Myanmar Co., Ltd. (“ACLEDA MFI”) was incorporated in the Republic of Union of Myanmar under
the Republic of the Union of Myanmar Companies Law on 6 September 2012 to provide services per the
Registration No. 143715094. The financial year of the statutory financial statements of ACLEDA MFI is from 1
October to 30 September.

ACLEDA MFI is permitted to operate as a deposit-taking microfinance institution providing microfinance services
to lower income segments of the Myanmar market and other activities allowed by the Microfinance Supervisory
Authority at 45 townships in Yangon Region, 28 townships in Bago Region, 3 townships in Mon State and 25
townships in Magway Region.

ACLEDA Bank Plc. acquired 3,600,000 ordinary shares (45%) of ACLEDA MFI from KFW, COFIBRED S.A, and
IFC for a consideration of US$6,193,321 as approved by the Board of Directors of ACLEDA MFI on 25 April 2018.
The approval on the share transfers, appointment of representative of shareholders, and changing the Board
Members are obtained on 27 September 2018 by secretary of Microfinance Business Supervisory Committee,
The Republic of the Union of Myanmar Government.

ACLEDA MFI started its operations on 18 February 2013. The Bank owns 99.99% of common stock
MYR20,140,000,000 of ACLEDA MFI shares (2019: 99.99% of MYR8,000,000,000).

On 23 September 2019, ACLEDA Bank Plc. injected cash capital amounting to US$3,969,923.20, equivalent
MYR6,099,390,000 and on 3 December 2019, injected additional cash capital of US$3,995,366.50 equivalent
MYR6,039,396,000.

63
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

11. Investments in subsidiaries (continued)

(f) ACLEDA Properties Ltd.

ACLEDA Properties Ltd. (“ACLEDA Properties”) was established in the Kingdom of Cambodia with MoC
under the Registration No. Co.0651KH/2015 dated 16 February 2015 with the registered capital of KHR20
million (equivalent to US$5,000) by issuing 5,000 shares at KHR4,000 each. ACLEDA Properties is wholly
owned by ACLEDA Bank Plc. In 2018, ACLEDA Properties increased its share capital by US$15,000 to
US$20,000. The revised Memorandum and Articles of Association was endorsed by MoC on 4 May 2018.

ACLEDA Properties’s principal business is purchasing, selling, renting of movable and immovable assets,
purchasing, selling and supplying office supplies; other businesses permitted by laws aiming to improve the
progress of the ACLEDA Properties, and all other activities reasonably incident to that objective in the
judgment of the Board of Directors.

On 26 April 2019, the Board of Directors of ACLEDA Properties approved to liquidate the Company, and the
Company obtained approval from National Bank of Cambodia and General Department of Taxation (“GDT”)
on 19 June 2019 and 2 December 2019, respectively. The Company filed for the liquidation and is awaiting
the final approval from MoC.

On 19 June 2019, the Bank obtained approval from the NBC through Letter No: B7-019-717 Chhor.Tor,
dated 19 June 2019 on ACLEDA Bank Plc. requests for processing procedure for voluntary dissolution of
ACLEDA Properties Ltd.

On 11 July 2019, ACP requested to the General Department of Taxation (“GDT”) for voluntary dissolution
and liquidation of ACP. On 02 December 2019, ACP obtained Certificate No: 26680 GDT of Tax Situation
for the complete closure of the company from the GDT.

On 10 February 2020, ACP noticed to the MOC on the intention to dissolve and liquidate the company. On
3 September 2020, ACP obtained approval from the MOC on “File Article of Dissolution”.

(g) ACLEDA Bank Plc. (Representative Office)

On 7 April 2016, ACLEDA Bank Plc. received the foreign bank representative office registration certificate
FB/R.O-1/(04)2016 from the central bank of Myanmar and received certificate of incorporation as
representative office from the Ministry of Planning and Finance in the Republic of the Union of Myanmar on
6 May 2016 with permit Nº 58FC/2016-2017 (YGN), the validity of certificate is until 5 May 2021. The
representation office is permit on the following activities:

a. Marketing, promotion, negotiation and documentation for business purposes for customers of ACLEDA
Bank Plc;

b. Referring customer of ACLEDA Bank Plc. to banks operating in Myanmar; and monitoring and
supervising offshore loans granted by ACLEDA Bank Plc.

64
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

12. Property and equipment

The Group
Land Building and Leasehold Office Computer Motor Capital in
2020 Land improvement improvement improvement equipment equipment vehicles progress Total
US$ US$ US$ US$ US$ US$ US$ US$ US$

Cost
As at 1 January 14,542,280 1,747,179 98,787,485 4,963,887 61,119,729 70,923,892 18,205,263 1,658,194 271,947,909
Additions - 4,755 18,875 331,388 4,785,198 6,621,164 1,921,732 4,021,377 17,704,489
Disposals/written off - - - (178,518) (999,004) (1,157,711) (1,032,407) - (3,367,640)
Reclassifications - - - 100,327 121,063 20,790 54,000 (296,180) -
Currency translation difference - - - (12,631) (50,480) (290,420) (47,339) - (400,870)
Adjustments - - - 800 (800) - - (18,534) (18,534)
As at 31 December 14,542,280 1,751,934 98,806,360 5,205,253 64,975,706 76,117,715 19,101,249 5,364,857 285,865,354

Less: Accumulated depreciation

As at 1 January - 427,535 17,527,768 4,267,941 45,436,998 57,210,873 15,917,002 - 140,788,117
Charge for the year - 224,770 4,609,099 360,291 6,986,939 7,787,738 1,280,381 - 21,249,218
Disposals - - - (171,136) (975,097) (1,137,236) (1,027,207) - (3,310,676)
Currency translation difference - (115) (11,694) (14,589) (88,375) (235,903) (57,070) - (407,746)
Adjustments - - - 800 (800) - - - -
As at 31 December - 652,190 22,125,173 4,443,307 51,359,665 63,625,472 16,113,106 - 158,318,913

Carrying value 14,542,280 1,099,744 76,681,187 761,946 13,616,041 12,492,243 2,988,143 5,364,857 127,546,441

In KHR’ 000 equivalent (Note 4) 58,823,523 4,448,464 310,175,401 3,082,072 55,076,886 50,531,123 12,087,038 21,700,847 515,925,354

As at 31 December 2020, the fully depreciated property and equipment with historical costs amounting to US$107,342,671 (2019: US$91,082,789) are still in active use.

65
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

12. Property and equipment (continued)

The Group
Land Building and Leasehold Office Computer Motor Capital in
2019 Land improvement improvement improvement equipment equipment vehicles progress Total
US$ US$ US$ US$ US$ US$ US$ US$ US$

Cost
As at 1 January 14,542,280 1,685,934 98,763,743 4,768,777 57,239,460 64,615,575 18,254,256 776,023 260,646,048
Additions - 66,000 23,742 242,783 5,032,595 7,359,632 669,261 1,436,484 14,830,497
Disposals/written off - - - (219,500) (1,137,585) (1,087,781) (680,729) - (3,125,595)
Reclassifications - - - 205,033 39,119 265,532 9,697 (519,381) -
Currency translation difference - - - (25,334) (53,860) (229,066) (47,222) - (355,482)
Adjustments - (4,755) - (7,872) - - - (34,932) (47,559)
As at 31 December 14,542,280 1,747,179 98,787,485 4,963,887 61,119,729 70,923,892 18,205,263 1,658,194 271,947,909

Less: Accumulated depreciation

As at 1 January - 206,737 12,899,157 4,141,969 39,623,449 50,414,594 15,498,045 - 122,783,951
Charge for the year - 220,858 4,634,160 359,384 7,000,991 8,062,194 1,148,883 - 21,426,470
Disposals/written off - - - (208,623) (1,123,100) (1,081,929) (673,012) - (3,086,664)
Currency translation difference - (60) (5,549) (24,782) (64,342) (183,986) (56,914) - (335,633)
Adjustments - - - (7) - - - - (7)
As at 31 December - 427,535 17,527,768 4,267,941 45,436,998 57,210,873 15,917,002 - 140,788,117

Carrying value 14,542,280 1,319,644 81,259,717 695,946 15,682,731 13,713,019 2,288,261 1,658,194 131,159,792

In KHR’ 000 equivalent (Note 4) 59,259,791 5,377,549 331,133,347 2,835,980 63,907,129 55,880,552 9,324,664 6,757,141 534,476,153

66
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

12. Property and equipment (continued)

The Bank
Land Building and Leasehold Office Computer Motor Capital in
2020 Land improvement improvement improvement equipment equipment vehicles progress Total
US$ US$ US$ US$ US$ US$ US$ US$ US$

Cost
As at 1 January 2,328,344 282,726 76,874,326 4,075,689 58,357,695 63,010,144 16,796,997 1,597,366 223,323,287
Additions - - 18,875 306,764 4,675,924 6,290,587 1,891,851 3,909,790 17,093,791
Disposals/written off - - - (165,474) (929,740) (1,068,364) (941,978) - (3,105,556)
Reclassifications - - - 100,327 70,167 20,790 54,000 (245,284) -
Currency translation difference - - - - - - - - -
Adjustments - - - 800 (800) - - (18,534) (18,534)
As at 31 December 2,328,344 282,726 76,893,201 4,318,106 62,173,246 68,253,157 17,800,870 5,243,338 237,292,988

Less: Accumulated depreciation

As at 1 January - 108,392 16,672,292 3,565,265 43,454,637 52,041,450 14,569,907 - 130,411,943
Charge for the year - 39,175 3,874,782 347,009 6,678,042 6,995,015 1,247,128 - 19,181,151
Disposals - - - (159,341) (924,023) (1,055,872) (940,242) - (3,079,478)
Currency translation difference - (115) (11,694) (1,026) (19,473) (21,042) (3,700) - (57,050)
Adjustments - - - 800 (800) - - - -
As at 31 December - 147,452 20,535,380 3,752,707 49,188,383 57,959,551 14,873,093 - 146,456,566

Carrying value 2,328,344 135,274 56,357,821 565,399 12,984,863 10,293,606 2,927,777 5,243,338 90,836,422

In KHR’ 000 equivalent (Note 4) 9,418,151 547,183 227,967,386 2,287,040 52,523,771 41,637,636 11,842,858 21,209,302 367,433,327

As at 31 December 2020, the fully depreciated property and equipment with historical costs amounting to US$99,652,456 (2019: US$85,190,502) are still in active use.

67
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

12. Property and equipment (continued)

The Bank
Land Building and Leasehold Office Computer Motor Capital in
2019 Land improvement improvement improvement equipment equipment vehicles progress Total
US$ US$ US$ US$ US$ US$ US$ US$ US$

Cost
As at 1 January 2,328,344 282,726 76,858,608 3,825,002 54,612,838 57,668,077 16,783,184 570,488 212,929,267
Additions - - 15,718 188,157 4,750,129 5,991,671 645,569 1,581,191 13,172,435
Disposals/written off - - - (134,631) (1,044,391) (915,136) (641,453) - (2,735,611)
Reclassifications - - - 205,033 39,119 265,532 9,697 (519,381) -
Adjustments - - - (7,872) - - - (34,932) (42,804)
As at 31 December 2,328,344 282,726 76,874,326 4,075,689 58,357,695 63,010,144 16,796,997 1,597,366 223,323,287

Less: Accumulated depreciation

As at 1 January - 66,393 12,775,218 3,388,187 37,782,563 45,767,306 14,109,478 - 113,889,145
Charge for the year - 42,059 3,902,623 308,834 6,721,394 7,197,424 1,103,453 - 19,275,787
Disposals - - - (131,306) (1,039,411) (913,051) (641,453) - (2,725,221)
Currency translation difference - (60) (5,549) (443) (9,909) (10,229) (1,571) - (27,761)
Adjustments - - - (7) - - - - (7)
As at 31 December - 108,392 16,672,292 3,565,265 43,454,637 52,041,450 14,569,907 - 130,411,943

Carrying value 2,328,344 174,334 60,202,034 510,424 14,903,058 10,968,694 2,227,090 1,597,366 92,911,344

In KHR’ 000 equivalent (Note 4) 9,488,002 710,411 245,323,289 2,079,979 60,729,961 44,697,428 9,075,392 6,509,266 378,613,728

68
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

13. Intangible assets

The Group The Bank
2020 Computer software Work in progress Total Computer software Work in progress Total
US$ US$ US$ US$ US$ US$

Cost
As at 1 January 31,080,505 1,659,641 32,740,146 27,573,361 1,572,896 29,146,257
Additions 8,948,687 740,544 9,689,231 8,885,500 717,797 9,603,297
Disposals (880,227) - (880,227) (880,227) - (880,227)
Reclassifications 276,996 (276,996) - 259,286 (259,286) -
Currency translation difference (156,883) - (156,883) - - -
Adjustments - (290,284) (290,284) - (290,284) (290,284)
As at 31 December 39,269,078 1,832,905 41,101,983 35,837,920 1,741,123 37,579,043

Less: Accumulated amortisation

As at 1 January 23,741,153 - 23,741,153 21,230,895 - 21,230,895
Charge for the year 3,667,583 - 3,667,583 3,339,510 - 3,339,510
Disposals (865,291) - (865,291) (865,291) - (865,291)
Currency translation difference (132,137) - (132,137) (10,629) - (10,629)
Adjustments - - - - - -
As at 31 December 26,411,308 - 26,411,308 23,694,485 - 23,694,485

Carrying value 12,857,770 1,832,905 14,690,675 12,143,435 1,741,123 13,884,558

In KHR’ 000 equivalent (Note 4) 52,009,680 7,414,101 59,423,780 49,120,195 7,042,843 56,163,037

As at 31 December 2020, the fully amortised intangible assets with historical costs amounting to US$14,290,466 and US$13,996,797 (2019: US$13,596,110 and US$12,348,410,
respectively) are still in active use by the Group and the Bank, respectively.

69
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

13. Intangible assets (continued)

The Group The Bank
2019 Computer software Work in progress Total Computer software Work in progress Total
US$ US$ US$ US$ US$ US$

Cost
As at 1 January 32,596,750 1,518,857 34,115,607 29,200,608 1,438,832 30,639,440
Additions 558,382 1,468,869 2,027,251 303,948 1,446,708 1,750,656
Disposals (2,854,263) - (2,854,263) (2,852,689) - (2,852,689)
Reclassifications 921,494 (921,494) - 921,494 (921,494) -
Currency translation difference (126,427) - (126,427) - - -
Adjustments (15,431) (406,591) (422,022) - (391,150) (391,150)
As at 31 December 31,080,505 1,659,641 32,740,146 27,573,361 1,572,896 29,146,257

Less: Accumulated amortisation

As at 1 January 22,917,720 - 22,917,720 20,652,904 - 20,652,904
Charge for the year 3,537,457 - 3,537,457 3,182,821 - 3,182,821
Disposals (2,600,357) - (2,600,357) (2,600,357) - (2,600,357)
Currency translation difference (96,662) - (96,662) (4,473) - (4,473)
Adjustments (17,005) - (17,005) - - -
As at 31 December 23,741,153 - 23,741,153 21,230,895 - 21,230,895

Carrying value 7,339,352 1,659,641 8,998,993 6,342,466 1,572,896 7,915,362

In KHR’ 000 equivalent (Note 4) 29,907,859 6,763,037 36,670,896 25,845,549 6,409,551 32,255,100

70
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

14. Right-of-use assets

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Right-of-use assets 29,529,768 32,569,457 119,447,912 132,720,537 26,182,172 28,847,850 105,906,886 117,554,989

The Group and the Bank lease office building and cars for its operations. Information about leases for which the Group or the Bank is a lessee is presented below:
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

At the beginning of the year 32,569,457 30,621,838 132,720,537 123,038,545 28,847,850 26,889,967 117,554,989 108,043,887
Additions during the year 7,966,867 13,068,149 32,480,917 52,952,140 7,404,513 12,239,172 30,188,200 49,593,125
Depreciation for the year (10,627,120) (10,469,819) (43,326,768) (42,423,707) (9,770,638) (9,647,871) (39,834,891) (39,093,173)
Lease termination during the year (426,655) (678,486) (1,739,472) (2,749,225) (311,776) (665,335) (1,271,111) (2,695,937)
Exchange differences 47,219 27,775 192,512 112,544 12,223 31,917 49,833 129,328
Currency translation difference - - (879,814) 1,790,240 - - (780,134) 1,577,759
At the end of the year 29,529,768 32,569,457 119,447,912 132,720,537 26,182,172 28,847,850 105,906,886 117,554,989

71
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

15. Deferred tax assets, net

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Deferred tax assets 32,324,548 28,701,473 130,752,797 116,958,502 31,015,663 27,538,165 125,458,357 112,218,023
Deferred tax liabilities (21,128,703) (13,887,119) (85,465,604) (56,590,008) (18,329,716) (13,530,422) (74,143,701) (55,136,470)
11,195,845 14,814,354 45,287,193 60,368,494 12,685,947 14,007,743 51,314,656 57,081,553

The movements in net deferred tax assets during the year were as follows:

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

At the beginning of the year 14,814,354 11,616,105 60,368,494 46,673,510 14,007,743 10,933,258 57,081,553 43,929,831
Charged/(credited) to profit or loss (3,645,153) 3,198,249 (14,861,291) 12,959,305 (1,321,796) 3,074,485 (5,388,963) 12,457,813
Exchange differences 26,644 - (220,010) 735,679 - - (377,934) 693,909
At the end of the year 11,195,845 14,814,354 45,287,193 60,368,494 12,685,947 14,007,743 51,314,656 57,081,553

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal
authority.

72
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

15. Deferred tax assets, net (continued)

The components and movements of deferred tax assets and liabilities during the year were as follows:
Deferred tax assets of the Group:
Unamortised Unearned Provision for Other Unrealised Accelerated
loan fees revenue loan loss provision Staff bonus exchange loss depreciation Lease Others Total
US$ US$ US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
As at 1 January 2020 6,641,624 - 7,866,254 6,754,038 426,528 656,882 1,188,937 190,389 4,976,821 28,701,473
Credited/(charged) to profit or loss 919,039 50,295 1,560,602 581,216 (165,094) 157,404 413,647 126,820 (20,931) 3,623,075
As at 31 December 2020 7,560,663 50,295 9,426,856 7,335,254 261,434 814,286 1,602,584 317,209 4,955,890 32,324,548
In KHR'000 equivalent (Note 4) 30,582,882 203,444 38,131,633 29,671,102 1,057,501 3,293,787 6,482,452 1,283,111 21,329,685 130,752,797

As at 31 December 2019
As at 1 January 2019 5,806,687 56,087 7,222,846 6,853,483 433,084 594,279 1,213,116 - 324,780 22,504,362
Credited/(charged) to profit or loss 834,937 (56,087) 643,408 (99,445) (6,556) 62,603 (24,179) 190,389 4,652,041 6,197,111
As at 31 December 2019 6,641,624 - 7,866,254 6,754,038 426,528 656,882 1,188,937 190,389 4,976,821 28,701,473
In KHR'000 equivalent (Note 4) 27,064,618 - 32,054,985 27,522,706 1,738,102 2,676,794 4,844,919 775,835 20,280,543 116,958,502

Deferred tax assets of the Bank:

Unamortised Provision for Unrealised Accelerated
loan fees loan loss Other provision Staff bonus exchange loss depreciation Lease Others Total
US$ US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
As at 1 January 2020 6,641,624 7,866,254 6,646,409 416,745 609,664 1,182,635 161,750 4,013,084 27,538,165
Credited/(charged) to profit or loss 919,039 1,560,602 573,834 (155,311) 204,622 418,107 108,419 (151,814) 3,477,498
As at 31 December 2020 7,560,663 9,426,856 7,220,243 261,434 814,286 1,600,742 270,169 3,861,270 31,015,663
In KHR'000 equivalent (Note 4) 30,582,882 38,131,633 29,205,883 1,057,501 3,293,787 6,475,001 1,092,834 15,618,836 125,458,357
As at 31 December 2019
As at 1 January 2019 5,806,687 7,222,846 6,713,298 433,084 593,813 1,203,762 - (913,974) 21,059,516
Credited/(charged) to profit or loss 834,937 643,408 (66,889) (16,339) 15,851 (21,127) 161,750 4,927,058 6,478,649
As at 31 December 2019 6,641,624 7,866,254 6,646,409 416,745 609,664 1,182,635 161,750 4,013,084 27,538,165
In KHR'000 equivalent (Note 4) 27,064,618 32,054,985 27,084,117 1,698,236 2,484,381 4,819,238 659,131 16,353,317 112,218,023

73
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

15. Deferred tax assets, net (continued)

Deferred tax liabilities of the Group:

Accelerated Unrealised
depreciation exchange Others Total
US$ US$ US$ US$
As at 31 December 2020
As at 1 January 2020 - 640,179 13,246,940 13,887,119
Credited to profit or loss 295,901 (640,179) 7,585,822 7,241,585
As at 31 December 2020 295,901 - 20,832,761 21,128,703

In KHR'000 equivalent (Note 4) 1,196,920 - 84,268,518 85,465,604

As at 31 December 2019
As at 1 January 2019 239,665 - 10,648,592 10,888,257
Credited to profit or loss (239,665) 640,179 2,598,348 2,998,862
As at 31 December 2019 - 640,179 13,246,940 13,887,119

In KHR'000 equivalent (Note 4) - 2,608,729 53,981,279 56,590,008

Deferred tax liabilities of the Bank:

Accelerated Unrealised
depreciation exchange Others Total
US$ US$ US$ US$
As at 31 December 2020
As at 1 January 2020 - 639,392 12,891,030 13,530,422
Charged to profit or loss - (639,392) 5,438,686 4,799,294
As at 31 December 2020 - - 18,329,716 18,329,716

In KHR'000 equivalent (Note 4) - - 74,143,701 74,143,701

As at 31 December 2019
As at 1 January 2019 21,127 - 10,105,131 10,126,258
Credited to profit or loss (21,127) 639,392 2,785,899 3,404,164
As at 31 December 2019 - 639,392 12,891,030 13,530,422

In KHR'000 equivalent (Note 4) - 2,605,522 52,530,948 55,136,470

74
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

16. Deposits and placements of other banks and financial institutions

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Current accounts 106,606,626 103,433,585 431,223,802 421,491,859 108,155,568 108,664,584 437,489,273 442,808,180
Savings deposits 47,551,861 47,739,916 192,347,278 194,540,158 46,816,912 46,465,723 189,374,409 189,347,821
Fixed deposits 162,850,972 134,001,644 658,732,182 546,056,699 141,792,074 119,147,414 573,548,939 485,525,712
317,009,459 285,175,145 1,282,303,262 1,162,088,716 296,764,554 274,277,721 1,200,412,621 1,117,681,713

The deposits and placements of other banks and financial institutions are analysed as follows:

a) By maturity

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Within six months 195,717,857 192,616,757 791,678,732 784,913,285 183,717,176 187,268,370 743,135,977 763,118,608
Later than six months but not later than one year 30,105,199 6,614,117 121,775,530 26,952,527 21,860,975 2,809,351 88,427,644 11,448,105
Later than one year but not later than three years 5,648,815 6,194,271 22,849,457 25,241,654 5,648,815 4,450,000 22,849,457 18,133,750
Later than three years 85,537,588 79,750,000 345,999,543 324,981,250 85,537,588 79,750,000 345,999,543 324,981,250
317,009,459 285,175,145 1,282,303,262 1,162,088,716 296,764,554 274,277,721 1,200,412,621 1,117,681,713

75
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

16. Deposits and placements of other banks and financial institutions (continued)
The deposits and placements of other banks and financial institutions are analysed as follows: (continued)

b) By relationship

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Related parties 72,774 - 294,371 - 1,670,695 5,303,651 6,757,961 21,612,378

Non-related parties 316,936,685 285,175,145 1,282,008,891 1,162,088,716 295,093,859 268,974,070 1,193,654,660 1,096,069,335
317,009,459 285,175,145 1,282,303,262 1,162,088,716 296,764,554 274,277,721 1,200,412,621 1,117,681,713

c) By interest (per annum)

The Group The Bank

2020 2019 2020 2019

Current accounts Nil Nil Nil Nil

Savings deposits 0.00% - 1.90% 0.00% - 1.90% 0.00% - 0.50% 0.00% - 0.50%
Fixed deposits 1.00% - 7.95% 0.75% - 7.95% 1.00% - 7.95% 0.75% - 7.95%

76
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

17. Deposits from customers

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Current accounts 525,179,976 489,596,024 2,124,353,003 1,995,103,798 515,353,012 479,925,715 2,084,602,934 1,955,697,289
Savings deposits 1,866,624,777 1,766,834,632 7,550,497,223 7,199,851,125 1,824,684,515 1,732,155,639 7,380,848,863 7,058,534,229
Margin deposits 13,134,176 16,434,050 53,127,742 66,968,754 13,134,176 16,407,246 53,127,741 66,859,527
Fixed deposits 1,889,347,119 1,809,858,147 7,642,409,096 7,375,171,949 1,827,097,034 1,753,657,959 7,390,607,503 7,146,156,183
4,294,286,048 4,082,722,853 17,370,387,064 16,637,095,626 4,180,268,737 3,982,146,559 16,909,187,041 16,227,247,228

The deposits from customers are analysed as follows:

a) By maturity
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Within six months 3,120,269,849 3,023,328,814 12,621,491,539 12,320,064,917 3,048,458,637 2,965,667,840 12,331,015,187 12,085,096,448
Later than six months but not later than one year 618,538,572 642,364,991 2,501,988,524 2,617,637,338 601,304,341 627,119,253 2,432,276,059 2,555,510,956
Later than one year but not later than three years 405,355,305 259,821,698 1,639,662,209 1,058,773,419 387,858,729 239,505,383 1,568,888,559 975,984,436
Later than three years 150,122,322 157,207,350 607,244,792 640,619,952 142,647,030 149,854,083 577,007,236 610,655,388
4,294,286,048 4,082,722,853 17,370,387,064 16,637,095,626 4,180,268,737 3,982,146,559 16,909,187,041 16,227,247,228

77
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

17. Deposits from customers (continued)

The deposits from customers are analysed as follows: (continued)

b) By relationship
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Related parties 18,251,604 6,663,367 73,827,738 27,153,221 19,478,074 10,177,937 78,788,809 41,475,093
Non-related parties 4,276,034,444 4,076,059,486 17,296,559,326 16,609,942,405 4,160,790,663 3,971,968,622 16,830,398,232 16,185,772,135
4,294,286,048 4,082,722,853 17,370,387,064 16,637,095,626 4,180,268,737 3,982,146,559 16,909,187,041 16,227,247,228

c) By interest rate
The Group The Bank
2020 2019 2020 2019

Current accounts Nil Nil Nil Nil

Margin deposits Nil Nil Nil Nil
Savings deposits 0.00% - 15.00% 0.00% - 15.00% 0.00% - 0.50% 0.00% - 0.50%
Fixed deposits 0.50% - 12.00% 0.05% - 13.25% 0.50% - 8.25% 0.05% - 8.25%

78
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

18. Other liabilities

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Accrued annual leave 20,063,310 18,076,954 81,156,089 73,663,588 19,626,620 17,648,290 79,389,678 71,916,782
Accrued bonuses 11,046,280 9,718,649 44,682,203 39,603,495 10,454,999 9,500,000 42,290,471 38,712,500
Fund transfers 16,060,460 16,373,343 64,964,561 66,721,373 16,026,656 15,744,953 64,827,824 64,160,683
Tax payables 1,563,901 1,472,101 6,325,980 5,998,812 1,478,413 1,352,880 5,980,181 5,512,986
Others 15,017,157 13,169,828 60,744,399 53,667,048 14,822,194 12,351,428 59,955,774 50,332,070
63,751,108 58,810,875 257,873,232 239,654,316 62,408,882 56,597,551 252,443,928 230,635,021

16. The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)

Current 44,050,514 40,733,921 178,184,329 165,990,728 42,782,263 38,949,261 173,054,254 158,718,238

Non-current 19,700,594 18,076,954 79,688,903 73,663,588 19,626,619 17,648,290 79,389,674 71,916,783
63,751,108 58,810,875 257,873,232 239,654,316 62,408,882 56,597,551 252,443,928 230,635,021

79
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

19. Borrowings
The Group and the Bank have entered into borrowing agreements with various lenders. The repayments of principal and interest are made either on quarterly, semi-annual or annual basis based
on the repayment schedule for each of the borrowing agreements. The Group and the Bank did not pledged any collaterals for borrowings.

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Unsecured:
Current 124,629,071 183,682,266 504,124,592 748,505,234 104,886,698 166,692,481 424,266,693 679,271,860
Non-current 417,769,845 381,289,435 1,689,879,023 1,553,754,448 402,466,218 351,375,647 1,627,975,852 1,431,855,762
542,398,916 564,971,701 2,194,003,615 2,302,259,682 507,352,916 518,068,128 2,052,242,545 2,111,127,622
The borrowings are analysed as follows:

a) By relationship
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Related parties - 699,680 - 2,851,196 - - - -

Non-related parties 542,398,916 564,272,021 2,194,003,615 2,299,408,486 507,352,916 518,068,128 2,052,242,545 2,111,127,622
542,398,916 564,971,701 2,194,003,615 2,302,259,682 507,352,916 518,068,128 2,052,242,545 2,111,127,622

b) By interest rate
The Group The Bank
2020 2019 2020 2019

Annual interest rates 2.00% - 14.50% 2.50% - 13.00% 2.00% - 8.00% 2.60% - 7.69%

80
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

20. Subordinated debts

These are subordinated debts from non-related parties. The subordinated debts are approved by the National Bank of Cambodia to be included as a Tier II line item in the calculation of the Bank’s
net worth in accordance with the Prakas No. B7-010-182 of the National Bank of Cambodia. The Group and the Bank did not pledge any collaterals for subordinated debts.
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)

Current 11,408,413 7,374,945 46,147,031 30,052,901 11,408,413 7,374,945 46,147,031 30,052,901

Non-current 155,750,210 131,927,635 630,009,599 537,605,113 155,750,210 131,927,635 630,009,599 537,605,113
167,158,623 139,302,580 676,156,630 567,658,014 167,158,623 139,302,580 676,156,630 567,658,014

The subordinated debts are analysed as follows:

a) By relationship
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Related parties - - - - - - - -
Non-related parties 167,158,623 139,302,580 676,156,630 567,658,014 167,158,623 139,302,580 676,156,630 567,658,014
167,158,623 139,302,580 676,156,630 567,658,014 167,158,623 139,302,580 676,156,630 567,658,014

b) By interest rate
The Group The Bank
2020 2019 2020 2019

Annual interest rates 5.38% - 8.48% 7.00% - 8.48% 5.38% - 8.48% 7.00% - 8.48%

81
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

21. Lease liabilities

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)
Undiscounted lease liabilities
Less than one year 10,261,902 10,068,098 41,509,394 41,027,499 9,655,602 9,300,532 39,056,910 37,899,668
One to five years 20,581,294 23,121,979 83,251,334 94,222,064 18,888,896 21,444,212 76,405,584 87,385,164
More than five years 3,816,462 4,760,054 15,437,589 19,397,220 655,929 1,373,972 2,653,233 5,598,936
Total undiscounted lease liabilities 34,659,658 37,950,131 140,198,317 154,646,783 29,200,427 32,118,716 118,115,727 130,883,768

Present value of lease liabilities

Current 10,309,865 9,755,994 41,703,404 39,755,676 9,711,879 9,023,433 39,284,551 36,770,489
Non-current 18,308,037 21,159,945 74,056,010 86,226,775 16,060,506 18,765,735 64,964,746 76,470,371
Total present value of lease liabilities 28,617,902 30,915,939 115,759,414 125,982,451 25,772,385 27,789,168 104,249,297 113,240,860

Amounts recognised in the statement of profit or loss and other comprehensive income:
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Interest on lease liabilities 2,109,253 2,091,046 8,599,425 8,472,918 1,875,776 1,858,700 7,647,538 7,531,453

Amounts recognised in the statement of cash flows:

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)
Total cash outflow for leases payments 11,833,274 11,282,470 48,244,258 45,716,568 10,883,406 10,452,195 44,371,646 42,352,294

82
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

22. Employee benefits

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
Note US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)

Provident fund - 35,903 - 146,305 - - - -

Retirement benefits (a) 11,010,471 9,723,367 44,537,355 39,622,721 10,498,190 9,143,295 42,465,178 37,258,926
Career development benefits (b) 1,307,172 2,083,726 5,287,511 8,491,183 1,307,172 2,083,726 5,287,511 8,491,185
Seniority indemnity benefits (c) 6,036,412 6,498,800 24,417,286 26,482,610 5,976,401 6,440,456 24,174,542 26,244,858
18,354,055 18,341,796 74,242,152 74,742,819 17,781,763 17,667,477 71,927,231 71,994,969
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)
Current 1,307,172 2,083,726 5,287,511 8,491,183 1,307,172 2,083,726 5,287,511 8,491,183
Non-current 17,046,883 16,258,070 68,954,641 66,251,636 16,474,591 15,583,751 66,639,720 63,503,786
18,354,055 18,341,796 74,242,152 74,742,819 17,781,763 17,667,477 71,927,231 71,994,969

(a) Retirement benefits

(i) The amounts recognised in the statement of financial position are determined as follows:
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Present value of defined benefit obligation 11,010,471 9,723,367 44,537,355 39,622,721 10,498,190 9,143,295 42,465,178 37,258,926
Fair value of plan assets - - - - - - - -
Net liability recognised in statement of financial position 11,010,471 9,723,367 44,537,355 39,622,721 10,498,190 9,143,295 42,465,178 37,258,926

83
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

22. Employee benefits (continued)

(a) Retirement benefits (continued)
(ii) The movements in the defined benefit obligation over the year were as follows:
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

At 1 January 9,723,367 8,415,302 39,622,721 33,812,684 9,143,295 7,756,116 37,258,926 31,164,074

Current service cost 827,768 800,914 3,374,810 3,245,304 799,408 729,554 3,259,186 2,956,153
Interest cost 662,553 584,396 2,701,229 2,367,973 637,591 541,818 2,599,459 2,195,447
Benefits paid (216,840) (195,444) (884,057) (791,939) (143,004) (148,350) (583,027) (601,114)
Settlement loss 207,020 172,344 844,021 698,338 140,678 130,705 573,544 529,617
Remeasurement gain arising during the year (169,447) (34,908) (690,835) (141,447) (72,593) 136,012 (295,962) 551,121
Currency translation difference (23,950) (19,237) (97,644) (77,948) (7,185) (2,560) (29,293) (10,373)
Exchange differences - - (332,890) 509,756 - - (317,655) 474,001
At 31 December 11,010,471 9,723,367 44,537,355 39,622,721 10,498,190 9,143,295 42,465,178 37,258,926

(iii) The amounts recognised in the statement of profit or loss are as follows:
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Current service cost 827,768 800,914 3,374,810 3,245,304 799,408 729,554 3,259,186 2,956,153
Interest cost 662,553 584,396 2,701,229 2,367,973 637,591 541,818 2,599,459 2,195,447
Settlement loss 207,020 172,344 844,021 698,338 140,678 130,705 573,544 529,618
1,697,341 1,557,654 6,920,060 6,311,615 1,577,677 1,402,077 6,432,189 5,681,218

84
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

22. Employee benefits (continued)

(a) Retirement benefits (continued)

(iv) The principal assumptions used to determine estimated costs and obligations are as follows:

2020 2019

Salary growth rate 3.46% 3.44%

Inflation rate 1.20% 1.20%
Discount rates 7.00% 7.00%
Mortality rate (*) and staff turnover rate (**)

(*) Mortality rate table is as follows:

2020 2019
Age Mortality rate (% per annum) Mortality rate (% per annum)
Females Males Females Males
18-29 0 - 0.49 0 - 0.42 0 - 0.22 0 - 0.42
30-39 0 - 0.10 0 - 0.32 0 - 0.10 0 - 0.58
40-49 - - - -
50-59 - 0 - 6.67 - -
60 - - - -

(**) Staff turnover rate table is as follows:

2020 2019
Age Staff turnover rate (% per annum) Staff turnover rate (% per annum)
Females Males Females Males
18-29 2.3 - 9.10 4.29 - 9.24 0 - 7.39 4.42 - 7.38
30-39 1.68 - 4.68 2.74 - 5.76 2.31 - 5.26 2.82 - 5.40
40-49 0 - 6.67 0 - 4.38 0 - 14.07 0 - 5.02
50-59 - 0 - 8.33 - 0 - 6.06
60 - - - -

85
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

22. Employee benefits (continued)

(a) Retirement benefits (continued)
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

Impact on defined benefit obligation

Change in assumption Increase in assumption Decrease in assumption
2020 2019 2020 2019 2020 2019

Salary growth rate 1% 1% Increase by 20.80% 20.79% Decrease by 16.67% 16.59%

Discount rate 1% 1% Decrease by 16.61% 16.54% Increase by 20.75% 20.74%
Inflation rate 1% 1% Increase by 20.84% 20.83% Decrease by 16.69% 16.62%
Mortality rate 0.10% 0.10% Decrease by 1.91% 1.91% Increase by 0.09% 0.06%
Staff turnover rate 1% 1% Decrease by 12.73% 12.79% Increase by 7.39% 7.85%

(b) Career development benefits

Movements in career development benefits were as follows:

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

At 1 January 2,083,726 2,165,423 8,491,183 8,700,670 2,083,726 2,165,423 8,491,185 8,700,670

Additions (Note 28) 1,312,641 1,385,493 5,351,637 5,614,018 1,312,641 1,385,493 5,351,637 5,614,018
Benefits paid (2,085,315) (1,465,393) (8,501,829) (5,937,772) (2,085,315) (1,465,393) (8,501,829) (5,937,772)
Currency translation difference (3,880) (1,797) (15,819) (7,281) (3,880) (1,797) (15,821) (7,281)
Exchange differences - - (37,661) 121,548 - - (37,661) 121,550
At 31 December 1,307,172 2,083,726 5,287,511 8,491,183 1,307,172 2,083,726 5,287,511 8,491,185

86
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

22. Employee benefits (continued)

(c) Seniority indemnity benefits
Movements in Seniority indemnity benefits were as follows:

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

At 1 January 6,498,800 9,499,738 26,482,610 38,169,947 6,440,456 9,390,636 26,244,858 37,731,575

Additions (Note 28) 6,563,719 3,233,915 26,760,282 13,103,824 6,378,738 3,171,116 26,006,115 12,849,362
Benefits paid (6,998,257) (6,225,869) (28,531,894) (25,227,221) (6,815,248) (6,112,312) (27,785,766) (24,767,088)
Currency translation difference (27,850) (8,984) (113,544) (36,403) (27,545) (8,984) (112,301) (36,403)
Exchange differences - - (180,168) 472,463 - (178,364) 467,412
At 31 December 6,036,412 6,498,800 24,417,286 26,482,610 5,976,401 6,440,456 24,174,542 26,244,858

87
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

23. Share capital and share premium

As at 31 December 2020, the authorised share capital comprised 433,163,019 ordinary shares (2019: 428,818,154) at par value of US$1 each. All issued shares are fully paid by the
following shareholders and their respective interest in the Bank are:

Share capital
As at 31 December 2020 As at 31 December 2019
Number of % of Number of % of
shares US$ shareholding shares US$ shareholding

ACLEDA Financial Trust 111,492,719 111,492,719 25.7392% 111,492,719 111,492,719 26.0000%

ASA Plc. 107,204,547 107,204,547 24.7492% 107,204,547 107,204,547 25.0000%
SMBC 78,259,310 78,259,310 18.0669% 78,259,310 78,259,310 18.2500%
COFIBRED S.A 52,530,223 52,530,223 12.1271% 52,530,223 52,530,223 12.2500%
ORIX Corporation 52,530,223 52,530,223 12.1271% 52,530,223 52,530,223 12.2500%
Triodos Microfinance Fund 10,938,339 10,938,339 2.5252% 10,938,339 10,938,339 2.5508%
Triodos Fair Share Fund 9,354,157 9,354,157 2.1595% 9,354,157 9,354,157 2.1814%
Triodos Sustainable Finance Foundation 6,508,636 6,508,636 1.5026% 6,508,636 6,508,636 1.5178%
Other investors in CSX 4,344,865 4,344,865 1.0031% - - -
433,163,019 433,163,019 100% 428,818,154 428,818,154 100%

In KHR'000 equivalent (Note 4) 1,752,144,412 1,747,433,978

Share premium

The share premium mainly represents the excess amount received by the Bank over the par value of its shares pursuant to the issuance of shares, net of transaction costs directly
distributable to the issuance.

On 25 May 2020, the Bank was successfully listed on the Cambodia Securities Exchange (“CSX”). The number of new issued shares are 4,344,865 shares with a par value of KHR4,000
(US$0.98) per share, at an offering price of KHR16,200 (US$3.97) per share. The Bank received the proceeds from the IPO amounting to US$17,082,105 and incurred IPO costs of
US$1,031,025, resulting in share premium of US$11,706,215 (KHR47,726,239 thousand).

88
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

24. Interest income calculated using the effective interest method

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)
Loans and advances:
- Interest income 512,683,813 475,961,781 2,090,211,906 1,928,597,137 476,367,776 445,071,958 1,942,151,423 1,803,431,574
Financial Investments 1,464,244 5,582,893 5,969,723 22,621,882 1,464,244 5,576,930 5,969,723 22,597,720

Deposits and placements with other banks:

- Banks outside Cambodia 527,686 1,894,524 2,151,376 7,676,611 534,098 1,912,027 2,177,519 7,747,533
- Banks inside Cambodia 418,733 104,268 1,707,174 422,494 373,223 90,374 1,521,628 366,196
515,094,476 483,543,466 2,100,040,179 1,959,318,124 478,739,341 452,651,289 1,951,820,293 1,834,143,023

89
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

25. Interest expense

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Deposits and placements of other banks

and financial institutions:
Fixed deposits 8,190,938 7,490,473 33,394,454 30,351,397 7,147,400 6,781,482 29,139,950 27,478,565
Savings deposits 38,667 37,923 157,645 153,664 23,553 21,970 96,026 89,022

Deposits from customers:

Fixed deposits 87,880,604 82,093,075 358,289,223 332,641,140 83,847,163 78,679,634 341,844,884 318,809,877
Savings deposits 6,003,502 5,862,572 24,476,278 23,755,142 4,700,755 4,809,851 19,164,978 19,489,516
Current accounts 47,316 48,178 192,907 195,217 47,316 48,178 192,907 195,217

Subordinated debts 12,058,447 7,526,693 49,162,288 30,498,160 12,058,447 7,526,693 49,162,288 30,498,160
Borrowings 34,448,590 51,722,720 140,446,901 209,580,461 30,155,737 46,757,479 122,944,940 189,461,305
Interest expenses on lease 2,109,253 2,091,046 8,599,425 8,472,918 1,875,776 1,858,700 7,647,538 7,531,453
150,777,317 156,872,680 614,719,121 635,648,099 139,856,147 146,483,987 570,193,511 593,553,115

90
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

26. Fee and commission income

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Commission fees 16,297,957 17,728,899 66,446,771 71,837,499 15,848,285 17,489,501 64,613,458 70,867,458
Commission fee collected for assurance agency 4,367,568 7,807,088 17,806,575 31,634,321 4,155,100 7,627,351 16,940,343 30,906,026
ATM Fee 7,260,221 7,254,974 29,599,921 29,397,155 7,178,009 7,156,586 29,264,743 28,998,486
Early loan redemption fees 6,762,569 6,482,079 27,570,994 26,265,384 5,382,843 5,449,183 21,945,851 22,080,090
Deposit fee charged 1,462,641 1,552,286 5,963,187 6,289,863 1,341,315 1,512,200 5,468,541 6,127,434
Fee income from guarantee 1,059,745 633,402 4,320,580 2,566,545 1,057,581 632,494 4,311,758 2,562,866
Training fees 1,101,889 1,053,824 4,492,401 4,270,095 26,417 25,548 107,702 103,520
Others 7,462,575 6,222,067 30,424,919 25,211,814 7,364,544 6,155,361 30,025,245 24,941,524
45,775,165 48,734,619 186,625,348 197,472,676 42,354,094 46,048,224 172,677,641 186,587,404

There were settlement fees amounting to KHR6,073,600 (equivalent to US$1,502) and US$12,169 for operation of cash settlement agent.

27. Other incomes

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Foreign exchange gain 9,834,586 9,383,469 40,095,607 38,021,816 9,820,545 9,339,015 40,038,362 37,841,689
Recovery from loans and advances written off 6,403,750 6,938,680 26,108,089 28,115,531 5,460,909 6,427,702 22,264,126 26,045,049
Gain on disposals of property and equipment 369,528 76,481 1,506,566 309,901 326,299 84,637 1,330,321 342,949
Dividends on financial investments 174,479 - 711,351 - 174,479 - 711,351 -
Others 1,569,015 1,451,093 6,396,874 5,879,830 880,516 382,410 3,589,864 1,549,525
18,351,358 17,849,723 74,818,487 72,327,078 16,662,748 16,233,764 67,934,024 65,779,212

91
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

28. General and administrative expenses

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Salaries and wages 104,491,311 99,255,909 426,011,075 402,184,943 95,451,391 90,560,200 389,155,321 366,949,930
Other employee benefits 35,479,412 32,314,297 144,649,563 130,937,531 34,870,101 31,616,916 142,165,402 128,111,744
Seniority indemnity 6,563,719 3,233,915 26,760,282 13,103,824 6,378,738 3,171,116 26,006,115 12,849,362
Retirement benefits 1,697,381 1,558,012 6,920,222 6,313,065 1,577,677 1,402,382 6,432,189 5,682,452
Career development expense 1,312,641 1,385,493 5,351,637 5,614,018 1,312,641 1,385,493 5,351,637 5,614,018
Depreciation of right-of-use assets 10,627,120 10,472,238 43,326,768 42,433,509 9,770,638 9,648,626 39,834,891 39,096,232
Depreciation charges 21,249,218 21,426,470 86,633,062 86,820,056 19,181,151 19,275,787 78,201,553 78,105,489
Repairs and maintenance 11,581,510 11,538,393 47,217,816 46,753,568 11,053,765 10,730,382 45,066,200 43,479,508
Utilities 5,203,989 5,345,689 21,216,663 21,660,732 4,812,487 4,875,541 19,620,509 19,755,692
Amortisation charges 3,667,583 3,537,457 14,952,736 14,333,776 3,339,510 3,182,821 13,615,182 12,896,791
Communication 3,717,757 4,573,061 15,157,295 18,530,043 2,755,106 3,745,992 11,232,567 15,178,760
Office supplies 5,280,235 5,206,046 21,527,518 21,094,898 4,677,362 4,533,968 19,069,605 18,371,638
Travelling expenses 2,011,396 2,438,327 8,200,461 9,880,101 1,733,487 2,015,788 7,067,426 8,167,973
License fees 1,175,271 1,132,371 4,791,580 4,588,367 1,135,316 1,108,699 4,628,683 4,492,448
Others 11,867,677 11,994,716 48,384,521 48,602,589 10,054,387 10,160,199 40,991,737 41,169,126
225,926,220 215,412,394 921,101,199 872,851,020 208,103,757 197,413,910 848,439,017 799,921,163

There were salaries and wages expenses of ACLEDA Bank's staff who is responsible for operation of cash settlement agent amounting to US$35,701.

Above expenses include costs incurred for operation of cash settlement agent, consisting of the repairs and maintenance amounting to US$8,101, office supplies amounting to US$630,
furniture and fixtures amounting to US$512 and membership fees amounting to US$12,773 (KHR51,666,667).

92
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

29. Taxation
(a) Current income tax liabilities
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

At 1 January 30,459,303 13,810,997 124,121,660 55,492,586 29,175,560 12,901,983 118,890,407 51,840,168

Income tax expense 34,897,719 35,861,058 142,278,000 145,309,007 32,490,343 33,414,108 132,463,128 135,393,966
Income tax paid (35,064,652) (19,216,756) (142,958,586) (77,866,295) (33,715,569) (17,140,531) (137,458,375) (69,453,432)
Currency translation difference - 4,004 - 16,224 - - - -
Exchange difference - - (908,437) 1,170,138 - - (836,059) 1,109,705
At 31 December 30,292,370 30,459,303 122,532,637 124,121,660 27,950,334 29,175,560 113,059,101 118,890,407

(b) Income tax expense

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Current income tax 34,897,719 35,861,058 142,278,000 145,309,007 32,490,343 33,414,108 132,463,128 135,393,966
Deferred tax expense/(benefit) 3,645,153 (3,198,249) 14,861,291 (12,959,305) 1,321,796 (3,074,485) 5,388,963 (12,457,813)
38,542,872 32,662,809 157,139,291 132,349,702 33,812,139 30,339,623 137,852,091 122,936,153

93
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

29. Taxation (continued)

c) Reconciliation between income tax expense and accounting profit
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Profit before income tax 180,035,462 153,522,621 734,004,580 622,073,660 172,154,315 148,226,402 701,873,143 600,613,382

Tax calculated at domestic tax rates applicable to profits

in the respective countries 36,455,146 30,886,544 148,627,630 125,152,276 34,430,863 29,645,280 140,374,628 120,122,675
Effect of non-deductible expense 2,087,726 1,447,340 8,511,661 5,864,622 (618,724) 694,343 (2,522,537) 2,813,478
Utilisation of tax losses - 328,925 - 1,332,804 - - - -
38,542,872 32,662,809 157,139,291 132,349,702 33,812,139 30,339,623 137,852,091 122,936,153

94
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

29. Taxation (continued)

c) Reconciliation between income tax expense and accounting profit (continued)

Having been successfully listed on CSX, the Bank is entitled to a reduction at 50% on the tax on profit
for a period of 3 years after listing (proportion based on percentage of listed shares taking 20.0001% as
a base in accordance with the Prakas No. 183 on the implementation guidance on the incentive on tax
on profit for the IPO enterprise) and waiver of other tax liabilities, including tax on profit and withholding
taxes for the period from year N-3 to N-10, where N is the IPO year (“N-3 to N-10”), in accordance with
the Sub-decree No. 01 of the Royal Government of Cambodia (“RGC”) dated 4 January 2019, and
temporary postponement on the prepayment of profit tax for a period of 3 years after listing in accordance
with Prakas No. 855 of the Ministry of Economy and Finance ("MEF") dated 24 July 2015. The Bank shall
fulfil the forms and summit to GDT through the Securities and Exchange Commission of Cambodia
(“SECC”) in order to be granted tax incentives.

On 28 May 2020, the Bank submitted a letter to the SECC requesting for their assistance in facilitating
with the GDT for the written approval on tax incentive related to the waiver of the tax liabilities for the
period from N-3 to N-10. Subsequently on 20 October 2020, the SECC submitted a letter to the GDT
requesting for written approval for the said tax incentive for the period from N-3 to N-10. The actual
amounts of tax liabilities to be waived will be determined by the GDT. As of the date of these financial
statements, the Bank is awaiting written approval from the GDT.

On 27 October 2020, the Bank submitted a letter to the SECC requesting for their assistance in facilitating
with the GDT for the written approval on temporary postponement on the prepayment of profit tax for the
period of 3 years after listing. On 15 December 2020, GDT approved temporarily postponing on paying
prepayment of profit tax for the Bank from November 2020 until the end of tax incentive period.

In addition, on 6 January 2021, the Bank submitted a letter to the SECC requesting for their assistance
in facilitating with the GDT for the written approval on tax incentive following the Prakas No. 183 on the
implementation guidance on the incentive on tax on profit for the IPO enterprise. As of the date of these
financial statements, the Bank is awaiting response from the SECC.

d) Other tax matters

The Bank’s and its subsidiaries’ tax returns are subject to periodic examination by the respective tax authorities.
Some areas of tax laws and regulations may be open to different interpretation; therefore tax amounts reported
in the financial statements could be changed at a later date, upon final determination by the respective tax
authorities.

95
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

30. Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to equity holders of Bank by the
weighted average numbers of ordinary shares in issue during the respective year.

2020 2019 2020 2019

US$ US$ KHR'000 KHR'000
(Note 4) (Note 4)

Profit attributable to shareholders 141,662,037 120,894,720 569,396,098 497,195,570

Weighted average numbers of shares 431,441,693 413,263,649 431,441,693 413,263,649
Basic earnings per share 0.33 0.29 1.32 1.20
Diluted earnings per share 0.33 0.29 1.32 1.20

Diluted earnings per share are calculated by adjusting the weighted average numbers of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares.

The Bank had no dilutive potential ordinary shares as at each of the year end. As such, the diluted earnings
per share were equivalent to the basic earnings per share.

96
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

31. Cash and cash equivalents

The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Cash on hand (Note 5) 412,759,051 421,527,238 1,669,610,361 1,717,723,495 400,816,126 410,955,867 1,621,301,230 1,674,645,158
Deposits and placements with other banks:
Balances with the National Bank of
Cambodia:
- Current accounts 284,119,485 467,629,288 1,149,263,317 1,905,589,349 264,197,563 448,591,990 1,068,679,142 1,828,012,359
- Negotiable certificate of deposits,
maturities of three months or less 552,146,123 490,000,000 2,233,431,068 1,996,750,000 552,146,123 490,000,000 2,233,431,068 1,996,750,000
Balances with other banks: - -
- Current accounts 246,463,022 118,728,169 996,942,924 483,817,288 240,035,449 109,229,831 970,943,391 445,111,562
- Savings accounts - 835,762 - 3,405,730 - 835,760 - 3,405,722
- Fixed deposits, maturities of three months
or less 1,617,823 - 6,544,094 - 502,678 - 2,033,332 -
1,497,105,504 1,498,720,457 6,055,791,764 6,107,285,862 1,457,697,939 1,459,613,448 5,896,388,163 5,947,924,801

97
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

32. Commitment and contingencies

The Group and the Bank had the contractual amounts of the Group’s and the Bank’s off-balance sheet financial instruments that commit it to extend credit to customers, guarantee and other
facilities as follows:

(a) Loan commitment, guarantee and other financial liabilities

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Unused portion of overdrafts 120,937,607 93,060,063 489,192,620 379,219,757 120,108,962 93,060,063 485,840,751 379,219,757
Bank guarantees 47,038,166 38,432,397 190,269,381 156,612,018 46,831,662 38,405,593 189,434,073 156,502,791
Letters of credit 7,862,818 8,948,350 31,805,099 36,464,526 7,862,818 8,948,350 31,805,099 36,464,526
175,838,591 140,440,810 711,267,100 572,296,301 174,803,442 140,414,006 707,079,923 572,187,074

No material losses are anticipated as a result of these transactions.

98
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

32. Commitments and contingencies (continued)

(b) Capital expenditure commitments

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Not later than 1 year 4,601,832 2,700,631 18,614,410 11,005,071 4,589,155 2,182,187 18,563,132 8,892,412
Later than 1 but not later than 5 years 146,498 - 592,584 - - - - -
4,748,330 2,700,631 19,206,994 11,005,071 4,589,155 2,182,187 18,563,132 8,892,412

The balances of these commitments are related to the purchases of property and equipment and intangible assets at the Bank amounting to US$4,589,155, the construction
contract to build AIB's building and purchases of other equipment amounting to US$12,677, the purchases of computer software at ACLEDA Bank Laos Ltd. amounting to
US$146,498.

(c) Other commitments

On 30 May 2016, the Bank guaranteed to IFC to secure the borrowing obtained by its subsidiary, AIB, amounting to US$13,000,000 maturing on 15 June 2026. The
Bank has made allowance for impairment loss of US$370,448 (2019: US$448,343) with respect to this guarantee.

99
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

33. Reserves

The Group
Transactions with
Currency translation non-controlling Other
General reserves Regulatory reserves reserves interest reserves Total
US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000 KHR'000 US$ KHR'000
(Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4)

As at 1 January 2020 398,373,767 1,623,373,099 38,630,578 157,419,606 (22,255,619) (90,691,647) - - 17,984,208 414,748,726 1,708,085,266
Comprehensive income:

Other comprehensive income -

currency translation difference - - - - - - - - (8,160,026) - (8,160,026)
Total comprehensive income for
the year - - - - - - - - (8,160,026) - (8,160,026)

Transactions with owners:

Conversion of retained earnings to
share capital (4,451,864) (18,150,250) - - - - - - - (4,451,864) (18,150,250)
Transfers from retained earnings to
general reserves 66,285,795 270,247,186 - - - - - - - 66,285,795 270,247,186
Transfer from retained earnings to
regulatory reserves - - 25,897,174 105,582,778 - - - - - 25,897,174 105,582,778
Currency translation difference -
foreign subsidiaries - - - - 614,405 2,504,929 - - - 614,405 2,504,929
Currency translation differences - (13,929,899) - (1,987,626) - 648,007 - - 3,868,632 - (11,400,886)
Total transactions with owners: 61,833,931 238,167,037 25,897,174 103,595,152 614,405 3,152,936 - - 3,868,632 88,345,510 348,783,757

As at 31 December 2020 460,207,698 1,861,540,136 64,527,752 261,014,758 (21,641,214) (87,538,711) - - 13,692,814 503,094,236 2,048,708,997

100
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

33. Reserves (continued)

The Group
Currency translation Transactions with Other
General reserves Regulatory reserves reserves non-controlling interest reserves Total
US$ KHR'000 US$ KHR'000 US$ KHR'000 US$ KHR'000 KHR'000 US$ KHR'000
(Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4)

As at 1 January 2019 348,162,807 1,398,918,155 51,036,569 205,064,934 (7,121,746) (28,615,175) (14,279,344) (57,374,404) 11,233,393 377,798,286 1,529,226,903

Comprehensive income:
Other comprehensive income-
currency translation differences - - - - - - - - 7,330,165 - 7,330,165
Total comprehensive income
for the year - - - - - - - - 7,330,165 - 7,330,165

Transactions with owners:

Transfers from retained earnings
to general reserves 50,210,960 204,408,818 - - - - - - - 50,210,960 204,408,818
Transfer from regulatory reserves
to retained earnings - - (12,405,991) (50,554,413) - - - - - (12,405,991) (50,554,413)
Acquisition of non-controlling
interest in AMM - - - - - - 14,279,344 58,188,327 - 14,279,344 58,188,327
Currency translation differences -
foreign subsidiaries - - - - (15,133,873) (61,670,532) - - - (15,133,873) (61,670,532)
Currency translation differences - 20,046,126 - 2,909,085 - (405,940) - (813,923) (579,350) - 21,155,998
Total transactions with owners: 50,210,960 224,454,944 (12,405,991) (47,645,328) (15,133,873) (62,076,472) 14,279,344 57,374,404 (579,350) 36,950,440 171,528,198

As at 31 December 2019 398,373,767 1,623,373,099 38,630,578 157,419,606 (22,255,619) (90,691,647) - - 17,984,208 414,748,726 1,708,085,266

101
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

33. Reserves (continued)

The Bank
General reserves Regulatory reserves Other reserves Total
US$ KHR'000 US$ KHR'000 KHR'000 US$ KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)

Balance at 1 January 2020 388,464,324 1,582,992,120 37,245,288 151,774,549 17,601,987 425,709,612 1,752,368,656
Comprehensive income:
Other comprehensive income-currency translation difference - - - - (7,961,797) - (7,961,797)
Total comprehensive income for the year - - - - (7,961,797) - (7,961,797)

Transactions with owners:

Transfers from retained earnings to general reserves 66,949,305 272,952,316 - - - 66,949,305 272,952,316
Transfer from retained earnings to regulatory reserves - - 18,082,637 73,722,911 - 18,082,637 73,722,911
Currency translation differences - (13,796,307) - (1,696,001) 3,768,024 - (11,724,284)
Total transactions with owners: 66,949,305 259,156,009 18,082,637 72,026,910 3,768,024 85,031,942 334,950,943

As at 31 December 2020 455,413,629 1,842,148,129 55,327,925 223,801,459 13,408,214 510,741,554 2,079,357,802

As at 1 January 2019 339,813,727 1,365,371,554 49,917,196 200,567,294 11,021,340 389,730,923 1,576,960,188

Comprehensive income:
Other comprehensive income-currency translation difference - - - - 7,153,755 - 7,153,755
Total comprehensive income for the year - - - - 7,153,755 - 7,153,755

Transactions with owners:

Transfers from retained earnings to general reserves 48,650,597 198,056,580 - - - 48,650,597 198,056,580
Transfer from regulatory reserves to retained earnings - - (12,671,908) (51,638,025) - (12,671,908) (51,638,025)
Currency translation differences - 19,563,986 - 2,845,280 (573,108) - 21,836,158
Total transactions with owners: 48,650,597 217,620,566 (12,671,908) (48,792,745) (573,108) 35,978,689 168,254,713

As at 31 December 2019 388,464,324 1,582,992,120 37,245,288 151,774,549 17,601,987 425,709,612 1,752,368,656

102
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

34. Related party transactions and balances

(a) Related parties and relationships

The related parties of and their relationships with the Bank are as follows:

Related parties Relationship

ACLEDA Bank Plc. Holding company
Subsidiaries of the Bank as disclosed in Note 11 Subsidiaries
Shareholders as disclosed in Note 23 Shareholders
Key management personnel The key management personnel are those persons having the authority and responsibility for planning,
directing and controlling the activities of the Group and the Bank either directly or indirectly. The key
management personnel of the Group and the Bank include all Directors of the Group and the Bank and
members of senior management of the Group and the Bank.

103
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

34. Related party transactions and balances (continued)

(b) Related parties balances
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)
i). Loans and advances
Key management personnel 13,988,651 5,835,258 56,584,093 23,778,676 12,996,169 5,266,917 52,569,504 21,462,687
Subsidiaries - - - - 6,440,590 4,975,201 26,052,187 20,273,944
13,988,651 5,835,258 56,584,093 23,778,676 19,436,759 10,242,118 78,621,691 41,736,631

ii). Balances with related parties

Shareholder 412,162 487,356 1,667,195 1,985,976 412,162 487,356 1,667,195 1,985,976
Subsidiaries - - - - 502,678 - 2,033,333 -
412,162 487,356 1,667,195 1,985,976 914,840 487,356 3,700,528 1,985,976

iii). Receivables from/(payables to) related parties

Key management loan
Interest receivables - 12,329 - 50,241 - 10,908 - 44,450
Key management deposit
Interest payables (28,375) (16,830) (114,777) (68,582) (28,375) (16,828) (114,777) (68,574)
Shareholders
Other payables (500) (1,474) (2,023) (6,007) (500) (1,474) (2,023) (6,007)
Subsidiaries
Other receivables - - - - 169,544 163,206 685,806 665,064
Other payables - - - - (2,187) (38,565) (8,846) (157,153)
(28,875) (5,975) (116,800) (24,348) 138,482 117,247 560,160 477,780

104
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

34. Related party transactions and balances (continued)

(b) Related parties balances (continued)

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)
iv). Deposits from related parties
Key management personnel 5,206,782 2,219,783 21,061,433 9,045,616 4,513,852 2,157,137 18,258,531 8,790,333
Shareholders
Current accounts 12,867,384 4,180,078 52,048,568 17,033,818 12,867,384 4,180,078 52,048,568 17,033,818
Saving accounts 99,712 24,678 403,335 100,563 99,712 24,678 403,335 100,563
Fixed deposits 150,500 301,474 608,773 1,228,507 150,500 301,474 608,773 1,228,507
Subsidiaries
Current accounts - - - - 1,637,224 5,777,256 6,622,571 23,542,318
Saving accounts - - - - 180,135 157,520 728,646 641,894
Fixed deposits - 23,445 - 95,539 1,699,962 2,883,445 6,876,346 11,750,039
18,324,378 6,749,458 74,122,109 27,504,043 21,148,769 15,481,588 85,546,770 63,087,472

v). Borrowings from related parties

Shareholders - 699,680 - 2,851,196 - - - -

105
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

34. Related party transactions and balances (continued)

(c) Related parties transactions
The Group The Bank
2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)
i). Interest income from related parties
Loans and advances to key management 1,118,336 188,530 4,559,456 768,260 1,074,031 132,479 4,378,824 539,852
Deposit from shareholder 16,989 - 69,264 - 16,989 - 69,264 -
Deposits with subsidiary - - - - 6,720 23,978 27,397 97,710
Loan to subsidiary - - - - 392,804 229,167 1,601,462 933,856
1,135,325 188,530 4,628,720 768,260 1,490,544 385,624 6,076,947 1,571,418
ii). Fee and commission income from related parties
Shareholders 28,063 28,063 114,413 114,357 28,063 28,063 114,413 114,357
Subsidiaries - - - - 12,288 7,570 50,099 30,848
28,063 28,063 114,413 114,357 40,351 35,633 164,512 145,205

iii). Interest expenses to related parties

Deposits of key management 147,282 136,889 600,469 557,823 135,704 133,304 553,265 543,214
Borrowing from shareholders 44,373 219,350 180,909 893,851 - - - -
Deposits of shareholders 201,670 15,501 822,208 63,167 201,670 15,501 822,208 63,167
Deposits of subsidiaries - - - - 95,393 104,564 388,917 426,098
393,325 371,740 1,603,586 1,514,841 432,767 253,369 1,764,390 1,032,479
iv). Fee and remuneration expenses to related parties
Board of Directors 829,387 1,022,611 3,381,411 4,167,140 527,704 577,284 2,151,449 2,352,432
Key management 7,682,706 7,592,063 31,322,392 30,937,657 5,990,537 5,832,800 24,423,419 23,768,660
Subsidiary - - - - 2,200,796 1,411,007 8,972,645 5,749,854
8,512,093 8,614,674 34,703,803 35,104,797 8,719,037 7,821,091 35,547,513 31,870,946
v). Other commitments
ECL on financial guarantee on AIB’s debt from IFC - 448,343 - 1,826,998 370,448 448,343 1,510,316 1,826,998
106
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management

(a) Introduction and overview

For the purpose of the risk management policy, risk is defined as the possibility that the outcome of an
action or event could adversely affect the ability to meet business objectives or capital of the Bank.

The Bank’s approach to the identification and assessment of key risk and controls is undertaken across all
business areas of the Bank. This risk management process is effected by the Group’s and the Bank’s Board
of Directors, management, and other personnel, applied in strategy setting and across the enterprise,
designed to identify potential events that may affect the entity, and manage risk to be within the risk appetite,
provide reasonable assurance regarding the achievement of objectives.

Changes in certain macro-economic variables represent environmental stresses which may reveal
systemic credit, market risk sensitivities and risk contagion. These stress tests do include worst case
scenarios to test the (combined) risks that could break the Bank and to test what combined set of events
would be needed to break the Bank (reverse stress test).

(b) Objective and principles

The objective of the risk management policy is to set standards for the Bank’s enterprise-wide risk
management in a way that optimally balances managing risk while adding value to the Bank, and this
policy is applicable to all levels of the Bank.

Risk appetite is defined as the amount and type of risk, on a broad level, an organization is willing to
accept in pursuit of long-term shareholder value. Risk tolerance refers to the variation amount of
maximum of risk which can be accepted, taking into account the appropriate measure to reduce the risk.

The Bank’s risk appetite and tolerance statement is prepared in accordance with its business strategy
and the role of the Bank in the financial system.

The Board approves the Bank’s risk appetite and tolerance statement with considering the most
significant risk which the Bank is exposed and provides an outline of the approach to manage these risks.

The risk management policy distinguishes different risk categories in line with the categories identified by
the Basel Accords as issued by the Basel Committee on Banking Supervision. The policy sets risk
tolerance/internal targets per individual risk category.

At all times the Bank shall adhere to the prudential ratios and requirements as stipulated by the superintendent.

At all times, unless specifically mentioned otherwise, the Bank shall adhere to the risk tolerance/internal
targets, as set by the Board in the risk management policy, in order to limit potential loss.

107
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

The Group’s and the Bank’s activities expose it to a variety of financial risks: credit risk, market risk (including currency risk, and interest rate risk), and liquidity risk.
Taking risk is core to the financial business, and the operational risks are an inevitable consequence of being in business.

The Group and the Bank hold the following financial assets and liabilities:

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)
Financial assets
Cash on hand 412,759,051 421,527,238 1,669,610,361 1,717,723,495 400,816,126 410,955,867 1,621,301,230 1,674,645,158
Deposits and placements with other banks 534,653,146 587,730,531 2,162,671,976 2,395,001,914 507,629,407 558,612,340 2,053,360,951 2,276,345,286
Financial investments 566,674,523 527,474,976 2,292,198,446 2,149,460,527 566,674,523 527,474,976 2,292,198,446 2,149,460,527
Loans and advances 4,471,300,618 3,846,020,519 18,086,411,000 15,672,533,615 4,292,649,159 3,686,578,943 17,363,765,848 15,022,809,193
Other assets 6,921,852 5,918,866 27,998,891 24,119,379 6,923,222 5,935,692 28,004,433 24,187,945
Total financial assets 5,992,309,190 5,388,672,130 24,238,890,674 21,958,838,930 5,774,692,437 5,189,557,818 23,358,630,908 21,147,448,109

Financial liabilities
Deposits and placements of other banks and
financial institutions 317,009,459 285,175,145 1,282,303,262 1,162,088,716 296,764,554 274,277,721 1,200,412,621 1,117,681,713
Deposits from customers 4,294,286,048 4,082,722,853 17,370,387,064 16,637,095,626 4,180,268,737 3,982,146,559 16,909,187,041 16,227,247,228
Other liabilities 28,699,228 27,251,397 116,088,377 111,049,443 28,488,959 26,115,905 115,237,839 106,422,313
Lease liabilities 28,617,902 30,915,939 115,759,414 125,982,451 25,772,385 27,789,168 104,249,297 113,240,860
Borrowings 542,398,916 564,971,701 2,194,003,615 2,302,259,682 507,352,916 518,068,128 2,052,242,545 2,111,127,622
Subordinated debts 167,158,623 139,302,580 676,156,630 567,658,014 167,158,623 139,302,580 676,156,630 567,658,014
Total financial liabilities 5,378,170,176 5,130,339,615 21,754,698,362 20,906,133,932 5,205,806,174 4,967,700,061 21,057,485,973 20,243,377,750

Net financial assets 614,139,014 258,332,515 2,484,192,312 1,052,704,998 568,886,263 221,857,757 2,301,144,935 904,070,359

108
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONITNUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk

Credit risk is the risk that a counterparty would fail to meet its obligations in accordance with agreed terms.
While loans are the most obvious source of credit risk, other sources of credit risk exist throughout the activities
of an institution, including in the banking book and the trading book, in both on and off-balance sheets.
Institutions are facing credit risks in various financial instruments other than loans, including acceptance, trade
financing, the commitment and guarantee, interbank transaction, the settlement of transactions, foreign
exchange transactions, bonds, equities and financial derivative instruments.

Principles of the credit risk:

• The Board recognises that the loan book is the main sources of income for the Bank and, conversely,
also constitutes the greatest risk of losses.
• The Board considers that lending to the lower segments of the market of small business loans, provided
the existing policies are implemented properly, carries a credit risk which is smaller than for larger loans
as history has shown that losses due to default on these loans have been minimal. The Board considers
the risk return equation favourable for loans provided to the lower segments in the market and considers
this the core product of the Bank.
• The Board considers that management has freedom to adjust, adapt or develop existing products and
product lines but requires that new product lines need to be approved by the Board.
• The day-to-day responsibility for the credit risk lies with the senior management of the Credit Division
and with branch management and branch credit officers.
• The credit risk is regularly measured by calculating the expected loss taking probability of customer
defaults, exposure in the event of default and severity of loss given default of the customer base where
credit scoring is applied for.
• The Board requires that credit risk is spread across different sectors (like trade, agriculture, services,
industrial, infrastructure etc.) and products to avoid undue over exposure to one particular sector or
industry.
• Systemic risk is the risk of system wide breakdown of the financial sector. The Board requires that credit
risk on counterparty financial institutions should be subject to the same principles of the prudential
assessment and controls as with other forms of lending and prudential position limits should be set to
sufficiently protect the Bank for a systemic risk.

Internal targets of the credit risk:

The internal targets on credit products should be set by the Board Risk Management Committee and
approved by the Board. The internal targets will be in line with the risk appetite of the Board.

The Risk Management Division regularly reviews all internal targets as set and approved by the Board and
advises on any change deemed appropriate.

109
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONITNUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

In order to maintain the credit growth in a prudent and reasonable way and to ensure the maintenance of
portfolio quality, various control limits have been imposed to credit products, which must be strictly complied
with:
• Loan exposure ratio: defined as the aggregate amount of loan assets in arrears > 30 days minus
loan loss reserves divided by the Bank's net worth should be less than 25%.
• Ceilings on lending to sectors and by product to put limits on concentration risk.
• The maximum exposure to a single client or group of clients is up to 5% of the Bank’s net worth.
• Counterparty financial institutions.

(a) Credit risk management

The Boards of Directors has delegated responsibility for oversight of credit risk to its Board of Risk
Management and IT Committee (“BRIC”). Credit Division is responsible for management of the credit risk
based on the following:

• Separation of roles between the persons involved in dealing with the clients that are responsible for the
credit application and the persons involved in the authorisation of the credits.
• Separation of roles between the persons involved in dealing directly with clients and the credit administration.
• Principle of double authorisation to ensure a good balance of the interests of the clients and objectivity
in the risk assessment process.
• Timely and full documentation of the agreements made with the client together with all needed
information, which is relevant in the assessment and control phase of the credit process.
• Careful credit control systems, with periodical reviews, through which timely signals can be derived, for
relevant information regarding risk management.
• Independent control to ensure conformity with approved procedures and regulations in the credit process
(formal control) but also monitoring the quality of risk aspects and credit control (material control).
• The Bank will maintain a diversified loan assets portfolio in terms of industry sector, geographical area,
and currency and loan size.
• Loan analysis will strongly focus on the client’s ability and willingness to repay the loan through character
and cash flow based on assessment and in applying green-lining methodology.
• The Bank’s total exposure to a single client or group of clients (one obligor principle) acting in concert
shall not exceed 5% of the Bank’s net worth. “Exposure” includes the aggregate of (i) the face amount
of the assets of the Borrower with respect to which such Person is the obligor and (ii) any claim of such
Person against the Borrower comprising any commitment to provide funds or credit to, or on behalf of
such Person including, but not limited to, loan guarantees, letters of credit and derivatives.

110
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONITNUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(b) Internal targets and mitigation policies

The Group and the Bank operates and provides loans and advances to individuals or enterprises within the
Kingdom of Cambodia, Lao PDR, and the Republic of the Union of Myanmar. The Group and the Bank
manages limits and controls concentration of credit risk whenever they are identified. Large exposure is
defined by the National Bank of Cambodia as overall exposure to any individual beneficiary which exceeds
10% of the net worth.

The Bank is required, under the conditions of Prakas No. B7-06-226 of the National Bank of Cambodia, to
maintain at all times a maximum ratio of 20% between the Bank’s overall credit exposure to any individual
beneficiary and the Bank’s net worth. The aggregation of large credit exposure must not exceed 300% of
the Bank’s net worth.

The Group and the Bank employs a range of policies and practices to mitigate credit risk. The most traditional
of these is the taking of security in the form of collateral for loans and advances to customers, which is
common practice. The Group and the Bank implements guidelines on the acceptability of specific classes of
collateral or credit risk mitigation. The principal collateral types to secure for loans and advances to customers
are:

• Mortgages over residential properties (land, building and other properties);

• Charges over business assets such as land and buildings;
• Cash in the form of margin deposits.

(c) Maximum exposure to credit risk before collateral held or other credit enhancements

For financial assets reflected in the balance sheet, the exposure to credit risk equals their carrying amount.
For financial guarantees and similar contract granted, it is the maximum amount that the Group and the Bank
would have to pay if the guarantees were called upon. For credit related commitments and contingents that
are irrevocable over the life of the respective facilities, it is generally the full amount of the committed facilities.

111
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONITNUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(c) Maximum exposure to credit risk before collateral held or other credit enhancements (continued)

The Group The Bank

2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR'000 KHR'000 US$ US$ KHR'000 KHR'000
(Note 4) (Note 4) (Note 4) (Note 4)
Credit exposure for on-balance sheet
financial assets:
Cash on hand 412,759,051 421,527,238 1,669,610,361 1,717,723,495 400,816,126 410,955,867 1,621,301,230 1,674,645,158
Deposits and placements with other banks 534,653,146 587,730,531 2,162,671,976 2,395,001,914 507,629,407 558,612,340 2,053,360,951 2,276,345,286
Financial investments 566,674,523 527,474,976 2,292,198,446 2,149,460,527 566,674,523 527,474,976 2,292,198,446 2,149,460,527
Loans and advances 4,471,300,618 3,846,020,519 18,086,411,000 15,672,533,615 4,292,649,159 3,686,578,943 17,363,765,848 15,022,809,193
Other assets 6,921,852 5,918,866 27,998,891 24,119,379 6,923,222 5,935,692 28,004,433 24,187,945
5,992,309,190 5,388,672,130 24,238,890,674 21,958,838,930 5,774,692,437 5,189,557,818 23,358,630,908 21,147,448,109

Credit exposure for off-balance sheet items:

Unused portion of loan commitment 120,937,607 93,060,063 489,192,620 379,219,757 120,108,962 93,060,063 485,840,751 379,219,757
Bank guarantees 47,038,166 38,432,397 190,269,381 156,612,018 46,831,662 38,405,593 189,434,073 156,502,791
Letters of credit 7,862,818 8,948,350 31,805,099 36,464,526 7,862,818 8,948,350 31,805,099 36,464,526
175,838,591 140,440,810 711,267,100 572,296,301 174,803,442 140,414,006 707,079,923 572,187,074

Total maximum credit risk exposure 6,168,147,781 5,529,112,940 24,950,157,774 22,531,135,231 5,949,495,879 5,329,971,824 24,065,710,831 21,719,635,183

The above table represents a worst case scenario of credit risk exposure to the Group and the Bank at 31 December 2020 and 31 December 2019, without taking into account
any collateral held or other credit enhancements attached. For on-balance sheet assets, the exposures set out above are based on net carrying amounts.

112
 ACLEDA Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS (CONITNUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(c) Maximum exposure to credit risk before collateral held or other credit enhancements (continued)

As shown above, 72.49% for the Group and 72.15% for the Bank of total maximum exposure is derived from
loans and advances to customers (2019: 69.56% and 69.17% for the Group and for the Bank).

Management is confident in its ability to continue to control and sustain minimal exposure of credit risk to the
Group resulting from its loans and advances on the followings. Approximately 98.59% of loans and advances
of the Bank are collateralised. According to Credit Operating Manual, loan size must not exceed 75% of
estimated saleable value of the pledged collateral.

(d) Concentration of financial assets with credit risk exposure

A concentration of credit risk exists when a number of counterparties are engaged in similar activities and
have similar economic characteristics that would cause their ability to meet contractual obligations to be
similarly affected by changes in economic or other conditions. The Group and the Bank analysed the
concentration of credit risk by geographic purpose and industry sector as follows:

113
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(d) Concentration of risks of financial assets with credit risk exposure (continued)

(i) Geographical sector

The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements) based on the location of the counterparty as at
31 December 2020 and 31 December 2019 are as follows:

The Group
Cambodia France Germany Lao Singapore USA Myanmar Other Total
US$ US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
Credit exposure for on-balance sheet
financial assets:
Cash on hand 400,829,300 - - 11,624,911 - - 304,840 - 412,759,051
Deposits and placements with other banks 269,022,932 631,569 568,916 20,612,267 263,969 232,975,901 4,823,475 5,754,117 534,653,146
Financial investments 566,674,523 - - - - - - - 566,674,523
Loans and advances 4,286,426,601 - - 140,902,367 - - 43,971,650 - 4,471,300,618
Other assets 6,774,532 - - 147,320 - - - - 6,921,852
5,529,727,888 631,569 568,916 173,286,865 263,969 232,975,901 49,099,965 5,754,117 5,992,309,190

Credit exposure for off-balance sheet items:

Unused portion of loan commitment 120,108,962 - - 828,645 - - - - 120,937,607
Bank guarantees 46,831,662 - - 206,504 - - - - 47,038,166
Letters of credit 7,862,818 - - - - - - - 7,862,818
174,803,442 - - 1,035,149 - - - - 175,838,591

Total maximum credit risk exposure 5,704,531,330 631,569 568,916 174,322,014 263,969 232,975,901 49,099,965 5,754,117 6,168,147,781
In KHR’000 equivalent (Note 4) 23,074,829,230 2,554,697 2,301,265 705,132,547 1,067,755 942,387,520 198,609,358 23,275,403 24,950,157,775

114
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(d) Concentration of risks of financial assets with credit risk exposure (continued)

(i) Geographical sector (continued)

The Group
Cambodia France Germany Lao Singapore USA Myanmar Other Total
US$ US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2019
Credit exposure for on-balance sheet
financial assets:
Cash on hand 410,967,945 - - 9,921,052 - - 638,241 - 421,527,238
Deposits and placements with other banks 448,941,957 2,151,232 706,870 20,994,697 1,234,919 96,971,492 6,636,667 10,092,697 587,730,531
Financial investments 527,474,976 - - - - - - - 527,474,976
Loans and advances 3,682,243,140 - - 127,268,578 - - 36,508,801 - 3,846,020,519
Other assets 5,869,891 - - 48,975 - - - - 5,918,866
5,075,497,909 2,151,232 706,870 158,233,302 1,234,919 96,971,492 43,783,709 10,092,697 5,388,672,130

Credit exposure for off-balance sheet items:

Unused portion of loan commitment 93,060,063 - - - - - - - 93,060,063
Bank guarantees 38,405,593 - - 26,804 - - - - 38,432,397
Letters of credit 8,948,350 - - - - - - - 8,948,350
140,414,006 - - 26,804 - - - - 140,440,810
Total maximum credit risk exposure 5,215,911,915 2,151,232 706,870 158,260,106 1,234,919 96,971,492 43,783,709 10,092,697 5,529,112,940

In KHR’000 equivalent (Note 4) 21,254,841,054 8,766,270 2,880,495 644,909,932 5,032,295 395,158,830 178,418,614 41,127,740 22,531,135,230

115
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(d) Concentration of risks of financial assets with credit risk exposure (continued)

(i) Geographical sector (continued)

The Bank
Cambodia France Germany Lao Singapore USA Myanmar Other Total
US$ US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
Credit exposure for on-balance sheet financial assets:
Cash on hand 400,816,126 - - - - - - - 400,816,126
Deposits and placements with other banks 267,444,421 631,569 568,916 499,861 263,969 232,975,901 46,873 5,197,897 507,629,407
Financial investments 566,674,523 - - - - - - - 566,674,523
Loans and advances 4,292,649,159 - - - - - - - 4,292,649,159
Other assets 6,756,356 - - - - - 166,866 - 6,923,222
5,534,340,585 631,569 568,916 499,861 263,969 232,975,901 213,739 5,197,897 5,774,692,437

Credit exposure for off-balance sheet items:

Unused portion of loan commitment 120,108,962 - - - - - - - 120,108,962
Bank guarantees 46,831,662 - - - - - - - 46,831,662
Letters of credit 7,862,818 - - - - - - - 7,862,818
174,803,442 - - - - - - - 174,803,442

Total maximum credit risk exposure 5,709,144,027 631,569 568,916 499,861 263,969 232,975,901 213,739 5,197,897 5,949,495,879
In KHR’000 equivalent (Note 4) 23,093,487,589 2,554,697 2,301,265 2,021,938 1,067,755 942,387,520 864,574 21,025,493 24,065,710,831

116
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(d) Concentration of risks of financial assets with credit risk exposure (continued)

(i) Geographical sector (continued)

The Bank
Cambodia France Germany Lao Singapore USA Myanmar Other Total
US$ US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2019
Credit exposure for on-balance sheet financial assets:
Cash on hand 410,955,867 - - - - - - - 410,955,867
Deposits and placements with other banks 448,876,239 2,151,232 706,870 - 1,234,919 96,971,492 46,944 8,624,644 558,612,340
Financial investments 527,474,976 - - - - - - - 527,474,976
Loans and advances 3,686,578,943 - - - - - - - 3,686,578,943
Other assets 5,772,701 - - 798 - - 162,193 - 5,935,692
5,079,658,726 2,151,232 706,870 798 1,234,919 96,971,492 209,137 8,624,644 5,189,557,818

Credit exposure for off-balance sheet items:

Unused portion of loan commitment 93,060,063 - - - - - - - 93,060,063
Bank guarantees 38,405,593 - - - - - - - 38,405,593
Letters of credit 8,948,350 - - - - - - - 8,948,350
Forward foreign exchange - - - - - - - - -
140,414,006 - - - - - - - 140,414,006
Total maximum credit risk exposure 5,220,072,732 2,151,232 706,870 798 1,234,919 96,971,492 209,137 8,624,644 5,329,971,824
In KHR’000 equivalent (Note 4) 21,271,796,383 8,766,270 2,880,495 3,252 5,032,295 395,158,830 852,233 35,145,424 21,719,635,182

117
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(d) Concentration of risks of financial assets with credit risk exposure (continued)

(ii) Industry sectors

The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements) at carrying amount as at 31 December 2020
and 31 December 2019 based on the industry sectors of the counterparty are as follows:

The Group
Financial Wholesale and
institutions retail Services Housing Manufacturing Agriculture Other Total
US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
Credit exposure for on-balance sheet financial assets:
Cash on hand 412,759,051 - - - - - - 412,759,051
Deposits and placements with other banks 534,653,146 - - - - - - 534,653,146
Financial investments 566,520,994 - - - - - 153,529 566,674,523
Loans and advances 22,672,936 1,511,327,042 1,086,409,481 160,232,558 130,933,136 888,839,788 670,885,677 4,471,300,618
Other assets 3,787,686 - - - - - 3,134,166 6,921,852
1,540,393,813 1,511,327,042 1,086,409,481 160,232,558 130,933,136 888,839,788 674,173,372 5,992,309,190
Credit exposure for off-balance sheet items:
Unused portion of loan commitment - - - - - - 120,937,607 120,937,607
Bank guarantees - - - - - - 47,038,166 47,038,166
Letters of credit - - - - - - 7,862,818 7,862,818
- - - - - - 175,838,591 175,838,591
Total maximum credit risk exposure 1,540,393,813 1,511,327,042 1,086,409,481 160,232,558 130,933,136 888,839,788 850,011,963 6,168,147,781

In KHR’000 equivalent (Note 4) 6,230,892,974 6,113,317,885 4,394,526,351 648,140,697 529,624,535 3,595,356,942 3,438,298,390 24,950,157,774

118
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(d) Concentration of risks of financial assets with credit risk exposure (continued)

(ii) Industry sectors (continued)

The Group
Financial Wholesale and
institutions retail Services Housing Manufacturing Agriculture Other Total
US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2019
Credit exposure for on-balance sheet financial assets:
Cash on hand 421,527,238 - - - - - - 421,527,238
Deposits and placements with other banks 587,730,531 - - - - - - 587,730,531
Financial investments 527,321,447 - - - - - 153,529 527,474,976
Loans and advances 7,892,238 1,348,508,445 1,042,121,138 183,308,546 103,528,643 751,254,104 409,407,405 3,846,020,519
Other assets 3,996,131 - - - - - 1,922,735 5,918,866
1,548,467,585 1,348,508,445 1,042,121,138 183,308,546 103,528,643 751,254,104 411,483,669 5,388,672,130

Credit exposure for off-balance sheet items:

Unused portion of loan commitment - - - - - - 93,060,063 93,060,063
Bank guarantees - - - - - - 38,432,397 38,432,397
Letters of credit - - - - - - 8,948,350 8,948,350
- - - - - - 140,440,810 140,440,810

Total maximum credit risk exposure 1,548,467,585 1,348,508,445 1,042,121,138 183,308,546 103,528,643 751,254,104 551,924,479 5,529,112,940

In KHR’000 equivalent (Note 4) 6,310,005,409 5,495,171,913 4,246,643,637 746,982,325 421,879,220 3,061,360,474 2,249,092,252 22,531,135,230

119
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(d) Concentration of risks of financial assets with credit risk exposure (continued)

(ii) Industry sectors (continued)

The Bank
Financial Wholesale and
institutions retail Services Housing Manufacturing Agriculture Other Total
US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
Credit exposure for on-balance sheet financial assets:
Cash on hand 400,816,126 - - - - - - 400,816,126
Deposits and placements with other banks 507,629,407 - - - - - - 507,629,407
Financial investments 566,520,994 - - - - - 153,529 566,674,523
Loans and advances 22,672,936 1,433,948,336 1,056,238,093 159,289,851 124,058,057 848,241,547 648,200,339 4,292,649,159
Other assets 3,832,887 - - - - - 3,090,335 6,923,222
1,501,472,350 1,433,948,336 1,056,238,093 159,289,851 124,058,057 848,241,547 651,444,203 5,774,692,437

Credit exposure for off-balance sheet items:

Unused portion of loan commitment - - - - - - 120,108,962 120,108,962
Bank guarantees - - - - - - 46,831,662 46,831,662
Letters of credit - - - - - - 7,862,818 7,862,818
- - - - - - 174,803,442 174,803,442

Total maximum credit risk exposure 1,501,472,350 1,433,948,336 1,056,238,093 159,289,851 124,058,057 848,241,547 826,247,645 5,949,495,879

In KHR’000 equivalent (Note 4) 6,073,455,656 5,800,321,019 4,272,483,086 644,327,447 501,814,841 3,431,137,058 3,342,171,724 24,065,710,831

120
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(d) Concentration of risks of financial assets with credit risk exposure (continued)

(ii) Industry sectors (continued)

The Bank
Financial Wholesale and
Services Housing Manufacturing Agriculture Other Total
institutions retail
US$ US$ US$ US$ US$ US$ US$ US$
As at 31 December 2019
Credit exposure for on-balance sheet financial assets:
Cash on hand 410,955,867 - - - - - - 410,955,867
Deposits and placements with other banks 558,612,340 - - - - - - 558,612,340
Financial investments 527,321,447 - - - - - 153,529 527,474,976
Loans and advances 7,892,238 1,277,549,332 1,014,175,262 181,800,701 97,393,627 715,961,507 391,806,276 3,686,578,943
Other assets 4,127,246 - - - - - 1,808,446 5,935,692
1,508,909,138 1,277,549,332 1,014,175,262 181,800,701 97,393,627 715,961,507 393,768,251 5,189,557,818

Credit exposure for off-balance sheet items:

Unused portion of loan commitment - - - - - - 93,060,063 93,060,063
Bank guarantees - - - - - - 38,405,593 38,405,593
Letters of credit - - - - - - 8,948,350 8,948,350
- - - - - - 140,414,006 140,414,006

Total maximum credit risk exposure 1,508,909,138 1,277,549,332 1,014,175,262 181,800,701 97,393,627 715,961,507 534,182,257 5,329,971,824

In KHR’000 equivalent (Note 4) 6,148,804,737 5,206,013,528 4,132,764,193 740,837,857 396,879,030 2,917,543,141 2,176,792,697 21,719,635,183

121
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(e) Write-off policy

It can be written off under the judgment of the Management Credit Committee (MCC) in case when the
Bank loses control on its contractual rights over that facility or when all or part of the facility is deemed
uncollectable; this is particularly the case when there is no realistic prospect of recovery for the counterparty
or when the Bank has lost control over its contractual rights on the facility due to any decision of a court of
law. Circumstances where a facility should be written off also include, but are not limited to:
a) All forms of securities or collateral have been called and realized but proceeds failed to cover the
entire outstanding amount of the facility;
b) The Bank is unable to collect, or there is no longer reasonable assurance that the Bank will collect
all amounts due according to the contractual terms of the facility’s agreement;
c) The counterparty has become bankrupt or is undergoing other forms of financial restructuring the
consequence of which it is unlikely that it may service the facility;
d) The facility has been classified under loss category.

(f) Credit quality of financial assets

CIFRS 9 introduces the concept of ECL of which the Bank expects to experience on an account over either
a 12-month horizon (Stage 1) or a lifetime horizon (Stage 2 & 3). The change in approach to provisioning
introduced by CIFRS 9 is designed to:
• Ensure a timely recognition of credit losses, which is more reflective than the previous Incurred Loss
Model;
• Distinguish between financial instruments that have significantly deteriorated in credit quality and those
that have not; and
• Provide a better estimate of ECLs given the macroeconomic environment.

The Group and the Bank apply a three-stage approach based on the change in credit quality since initial
recognition:

3-Stage Stage 1 Stage 2 Stage 3

approach Performing Underperforming Nonperforming
Recognition of expected credit 12 months Lifetime Lifetime
losses expected credit losses expected credit losses expected credit losses
No significant increase in Credit risk
Criterion Credit impaired assets
credit risk increased significantly
Basis of calculation of profit revenue On gross carrying amount On gross carrying amount On net carrying amount

122
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Recognition of ECL

Financial assets will be classified and recognised into three different categories which are:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income;
c) Financial assets measured at fair value through profit and loss.

Financial assets and debts that are measured at amortised cost or through other comprehensive income will
be subjected to impairment assessment.

The Bank measured ECL by using the general approach and the simplified approach.

The general approach consists of segregating the customers into three different stages according to the
staging criteria by assessing the credit risk. 12-month ECL will be computed for stage 1, while lifetime ECL
will be computed for stage 2 and stage 3. At each reporting date, the Bank will assess credit risk of each
account as compared to the risk level at origination date.

Below is a table showing a summary of credit risk status and period for ECL calculation by stages:

Long-term facilities (more than one year)

Stages Credit Risk Status Grades DPD Default Indicator

No significant increase in
1 Normal 0 ≤ DPD < 30 Performing
credit risk
Credit risk increased
2 Special Mention 30 ≤ DPD < 90 Underperforming
significantly
Substandard 90 ≤ DPD < 180
3 Credit impaired assets Doubtful 180 ≤ DPD <360 Nonperforming
Loss DPD ≥ 360

Short-term facilities (one year or less)

Stages Credit Risk Status Grades DPD Default Indicator

No significant increase in
1 Normal 0 ≤ DPD ≤ 14 Performing
credit risk
Credit risk increased
2 Special Mention 15 ≤ DPD ≤ 30 Underperforming
significantly
Substandard 31 ≤ DPD ≤ 60
3 Credit impaired assets Doubtful 61 ≤ DPD ≤ 90 Nonperforming
Loss DPD ≥ 91

123
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Recognition of ECL (continued)

The Bank will use the day past due (“DPD”) information and NBC’s classification for staging criteria. Also,
the Bank will incorporate credit scoring or more forward looking elements in the future when information is
more readily available. Upon the implementation of credit scoring system, it the risk level drops by two or
more notches as compared to the risk level at origination, the accounts have to be classified under stage 2.

As for financial assets that are short term in nature, simplified approach will be adopted where no staging
criteria is required. In this case, it will be either performing (stage1) or non-performing (stage 3).

Credit classification for financial assets

The Bank followed the mandatory loan classification and provisioning as required by the National Bank of
Cambodia’s Prakas No.B7-017-344 dated 1 December 2017 and Circular No. B7-018-001 Sor Ror Chor
Nor dated 16 February 2018 on Credit Risk Grading and Impairment Provisioning. Loans and advances,
other financial assets are classified into five classifications as described below:

PAYMENT EXPERIENCED

CLASSES/CRITERIA As for facilities, which As for facilities that have

have an original term of an original term of one
more than one year year or less

1- NORMAL
Timely repayment of an outstanding facility - Punctual - Punctual
classified in this class is not in doubt. Repayment
is steadily made according with the contractual
terms and the facility does not exhibit any
potential weakness in repayment capacity,
business, cash flow and financial position of the
counterparty.

124
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Credit classification for financial assets (continued)

PAYMENT EXPERIENCED

CLASSES/ CRITERIA As for facilities, which have As for facilities that have an
an original term of more original term of one year or
than one year less

2- SPECIAL MENTION
A facility in this class is currently protected - When any facility is past due - When any facility is past due
and may not be past due but it exhibits from 30 days to 89 days. for maximum 30 days.
potential weaknesses that, if not corrected - When interest payments for - When interest payments for
in a timely manner, may adversely affect 30 to 89 days have been maximum 30 days have
repayment by the counterparty at a future capitalized, refinanced, or been capitalized, refinanced,
date, and warrant close attention by the rolled over into a new facility. or rolled over into a new
Bank. Examples of such weaknesses facility.
include, but are not limited to a declining - In case of overdrafts, excess
trend in the operations of the counterparty of the approval limit is for
or in its financial position, adverse maximum 30 days, or the
economic and market conditions that all current account has been
might affect its profitability and its future inactive for maximum 30
repayment capacity, or deteriorating days, or the net inflows on the
conditions on the collateral. This class has current account have not
clearly its own rational and should not be been enough to cover
used as a compromise between Normal capitalized interests for
and Substandard. maximum 30 days.

125
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Credit classification for financial assets (continued)

PAYMENT EXPERIENCED

CLASSES/CRITERIA As for facilities, which have As for facilities that have an

an original term of more than original term of one year or
one year less
3- SUB-STANDARD
A facility in this class exhibits noticeable - When any facility is past due - When any facility is past due for
weakness and is not adequately from 90 days to 179 days. maximum 60 days.
protected by the current business or - When interest payments for - When interest payments for
financial position of the counterparty 90 to 179 days have been maximum 60 days have been
and his repayment capacity. In capitalized, refinanced, or rolled capitalized, refinanced, or rolled
essence, the primary source of over into a new facility. over into a new facility.
repayment is not sufficient to service the - In case of overdrafts, excess of
debt and the Bank must look to the approval limit is for maximum
secondary sources such as the 60 days, or the current account
realization of the collateral, in relation has been inactive for maximum
with the counterparty. Factors leading to 60 days.
a Substandard classification include: - The overdraft that has had no
▪ Inability of the counterparty to meet net inflow for 60 days must be
the contractual repayments’ terms, modified into a term loan.
▪ Unfavourable economic and market
conditions that would affect the
business and profitability of the
counterparty in the future,
▪ Weakened financial condition
and/or inability of the counterparty to
generate enough cash flow to
service the payments.
▪ Difficulties experienced by the
counterparty in repaying other
facilities granted by the bank or by
other institutions when the
information is available.
▪ Breach of financial covenants by the
counterparty.

126
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Credit classification for financial assets (continued)

PAYMENT EXPERIENCED

CLASSES/CRITERIA As for facilities, which have As for facilities that have an

an original term of more original term of one year or
than one year less
4- DOUBTFUL
A facility classified in this category - When any facility is past due - When any facility is past due
faces similar but more severe from 180 days to 359 days. for maximum 90 days.
weaknesses than one classified as - When interest payment for - When interest payment for
Substandard such that its full 180 to 359 days have been maximum 90 days have been
collection on the basis of existing capitalized or rolled over into a capitalized or rolled over into a
facts, conditions or collateral value is new facility. new facility.
highly questionable or improbable. - In case of overdrafts, excess of
The prospect of loss is high, even if the approval limit is for
the exact amount remains maximum 90 days, or the
undetermined for now. current account has been
inactive for maximum 90 days.
5- LOSS
A facility is classified Loss when it is - When any facility is past due - When any facility is past due
not collectable, and little or nothing from 360 days. for maximum 180 days.
can be done to recover the - When interest payment for - When interest payment for
outstanding amount from the 360 days or more have been maximum 180 days have been
counterparty. capitalized or rolled over into a capitalized or rolled over into a
new facility. new facility.
- In case of overdrafts, excess of
the approval limit is for
maximum 180 days, or the
current account has been
inactive for maximum 180 days.

With regard to facilities with repayments on a quarterly, semi-annual or longer basis, facilities must be
classified as Substandard or worse depending on the situation of the counterparty as soon as a default
occurs. For the purpose of the Table above, the default will be considered as having occurred 5 working
days after the payment due date. The classification as substandard will be allowed only in case where the
counterparty has clearly demonstrated that its inability to pay in due time is only temporary.

127
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Credit classification for financial assets (continued)

Facilities that are classified Substandard, Doubtful or Loss will be considered as "non-performing" facilities.
Other facilities will be considered as "performing".

The following table sets out information about the credit quality of financial assets measured at amortised
cost. Unless specifically indicated, for financial assets, the amounts in the table represent gross carrying
amounts. For loan commitments and financial guarantee contracts, the amounts in the table represent the
amounts committed or guaranteed, respectively.

2020 2019
Stage 2: Stage 3:
Loans and advances at
Stage 1: Lifetime ECL not Lifetime ECL
amortised cost
12-month ECL credit impaired credit impaired Total Total
US$ US$ US$ US$ US$
The Group
Normal 4,372,663,965 - 2,598,060 4,375,262,025 3,828,981,539
Special mention 963 25,757,483 711,864 26,470,310 2,815,219
Substandard - - 32,985,705 32,985,705 8,860,402
Doubtful - - 50,125,889 50,125,889 9,084,696
Loss - - 21,799,236 21,799,236 29,721,718
4,372,664,928 25,757,483 108,220,754 4,506,643,165 3,879,463,574
ECL allowance (11,905,500) (3,303,698) (20,133,349) (35,342,547) (33,235,577)
Carrying amount 4,360,759,428 22,453,785 88,087,405 4,471,300,618 3,846,227,997

In KHR’000 equivalent (Note 4) 17,639,271,886 90,825,560 356,313,553 18,086,411,000 15,673,379,088

The Bank
Normal 4,198,757,317 - - 4,198,757,317 3,671,937,563
Special mention 963 23,944,531 - 23,945,494 2,163,641
Substandard - - 31,773,683 31,773,683 8,241,134
Doubtful - - 48,178,299 48,178,299 8,004,588
Loss - - 21,203,755 21,203,755 29,077,419
4,198,758,280 23,944,531 101,155,737 4,323,858,548 3,719,424,345
ECL allowance (10,839,155) (2,906,941) (17,463,293) (31,209,389) (32,189,580)
Carrying amount 4,187,919,125 21,037,590 83,692,444 4,292,649,159 3,687,234,765

In KHR’000 equivalent (Note 4) 16,940,132,861 85,097,052 338,535,936 17,363,765,848 15,025,481,666

128
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Credit classification for financial assets (continued)

2020 2019
Stage 2: Stage 3:
Financial investments at
Stage 1: Lifetime ECL not Lifetime ECL
amortised cost
12-month ECL credit impaired credit impaired Total Total
US$ US$ US$ US$ US$
The Group
Normal 566,520,994 - - 566,520,994 527,321,447
Special mention - - - - -
Substandard - - - - -
Doubtful - - - - -
Loss - - - - -
Total gross carrying amount 566,520,994 - - 566,520,994 527,321,447
ECL allowance - - - - -
Carrying amount – fair value 566,520,994 - - 566,520,994 527,321,447

In KHR’000 equivalent (Note 4) 2,291,577,421 - - 2,291,577,421 2,148,834,897

The Bank
Normal 566,520,994 - - 566,520,994 527,321,447
Special mention - - - - -
Substandard - - - - -
Doubtful - - - - -
Loss - - - - -
Total gross carrying amount 566,520,994 - - 566,520,994 527,321,447
ECL allowance - - - - -
Carrying amount – fair value 566,520,994 - - 566,520,994 527,321,447

2,291,577,421 - - 2,291,577,421 2,148,834,897

In KHR’000 equivalent (Note 4)

129
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Credit classification for financial assets (continued)

2020 2019
Stage 2: Stage 3:
Cash and deposit and placement
Stage 1: Lifetime ECL not Lifetime ECL
with other banks
12-month ECL credit impaired credit impaired Total Total
US$ US$ US$ US$ US$
The Group
Normal 1,308,371,649 - - 1,308,371,649 1,597,183,824
Special Mention - - - - -
Substandard - - - - -
Doubtful - - - - -
Loss - - - - -
1,308,371,649 - - 1,308,371,649 1,597,183,824
ECL allowance (582,444) - - (582,444) (589,956)
Carrying amount 1,307,789,205 - - 1,307,789,205 1,596,593,868

In KHR’000 equivalent (Note 4) 5,290,007,334 - - 5,290,007,334 6,506,120,012

The Bank
Normal 1,265,340,832 - - 1,265,340,832 1,552,809,189
Special Mention - - - - -
Substandard - - - - -
Doubtful - - - - -
Loss - - - - -
1,265,340,832 - - 1,265,340,832 1,552,809,189
ECL allowance (141,543) - - (141,543) (45,241)
Carrying amount 1,265,199,289 - - 1,265,199,289 1,552,763,948

In KHR’000 equivalent (Note 4) 5,117,731,124 - - 5,117,731,124 6,327,513,088

130
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Credit classification for financial assets (continued)

2020 2019
Stage 2: Stage 3:
Other Receivables Stage 1: Lifetime ECL not Lifetime ECL
12-month ECL credit impaired credit impaired Total Total
US$ US$ US$ US$ US$
The Group
Normal 6,921,852 - - 6,921,852 5,918,866
Special mention - - - - -
Substandard - - - - -
Doubtful - - - - -
Loss - - - - -
6,921,852 - - 6,921,852 5,918,866
ECL allowance (199,393) - - (199,393) (295,027)
Carrying amount 6,722,459 - - 6,722,459 5,623,839

In KHR’000 equivalent (Note 4) 27,192,347 - - 27,192,347 22,917,144

The Bank
Normal 6,923,222 - - 6,923,222 5,935,692
Special mention - - - - -
Substandard - - - - -
Doubtful - - - - -
Loss - - - - -
6,923,222 - - 6,923,222 5,935,692
ECL allowance (197,045) - - (197,045) (295,009)
Carrying amount 6,726,177 - - 6,726,177 5,640,683

In KHR’000 equivalent (Note 4) 27,207,386 - - 27,207,386 22,985,783

131
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(f) Credit quality of financial assets (continued)

Credit classification for financial assets (continued)

2020 2019
Stage 2: Stage 3:
Financial guarantee contracts Stage 1: Lifetime ECL not Lifetime ECL
12-month ECL credit impaired credit impaired Total Total
US$ US$ US$ US$ US$
The Group
Normal 44,810,466 - - 44,810,466 38,788,330
Special mention - - - - -
Substandard - - - - -
Doubtful - - - - -
Loss - - - - -
Total gross carrying amount 44,810,466 - - 44,810,466 38,788,330
ELC allowance (154,907) - - (154,907) (207,479)
Carrying amount – fair value 44,655,559 - - 44,655,559 38,580,851

In KHR’000 equivalent (Note 4) 180,631,736 - - 180,631,736 157,216,968

The Bank
Normal 57,603,962 - - 57,603,962 51,788,330
Special mention - - - - -
Substandard - - - - -
Doubtful - - - - -
Loss - - - - -
Total gross carrying amount 57,603,962 - - 57,603,962 51,788,330
ECL allowance (525,324) - - (525,324) (655,822)
Carrying amount – fair value 57,078,638 - - 57,078,638 51,132,508

In KHR’000 equivalent (Note 4) 230,883,091 - - 230,883,091 208,364,970

132
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL

Significant increase in credit risk

The Bank considers that a significant increase in credit risk occurs no later than when an asset is more than
or equal to 30 days past due for long-term facilities or more than or equal to 15 days past due for short-term
facilities. Days past due are determined by counting the number of days since the earliest elapsed due date
in respect of which full payment has not been received. Due dates are determined without considering any
grace period that might be available to the borrower.

If there is evidence that there is no longer a significant increase in credit risk relative to initial recognition, then
the loss allowance on an instrument returns to being measured as 12-month ECL. Some qualitative
indicators of an increase in credit risk, such as delinquency, may be indicative of an increased risk of default
that persists after the indicator itself has ceased to exist. In these cases, the Bank determines a probation
period during which the financial asset is required to demonstrate good behaviour to provide evidence that
its credit risk has declined sufficiently. When contractual terms of a loan have been modified, evidence that
the criteria for recognising lifetime ECL are no longer met includes a history of up-to-date payment
performance against the modified contractual terms.

The Bank monitors the effectiveness of the criteria used to identify significant increases in credit risk by
regular reviews to confirm that:

• the criteria are capable of identifying significant increases in credit risk before an exposure is in default;
• the criteria do not align with the point in time when an asset becomes 30 or 15 days past due;
• the average time between the identification of a significant increase in credit risk and default appears
reasonable;
• exposures are not generally transferred directly from 12-month ECL measurement to credit- impaired;
and
• there is no unwarranted volatility in loss allowance from transfers between 12-month PD (Stage 1) and
lifetime PD (Stage 2).

133
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Definition of default

The Bank considers a financial asset to be in default, aligning the NBC Prakas on Credit Risk Grading &
Impairment Provisioning as stated in Article 17 and Article 19, when:

1) The default definition / NPL definition for long-term facilities where original tenure is more than a year
as follow:

Day Past Due Classification Default Indicator

0 ≤ DPD <30 Normal
Not Default / Performing
30 ≤ DPD < 90 Special Mention
90 ≤ DPD < 180 Substandard
180 ≤ DPD <360 Doubtful Default / Non-performing
DPD ≥ 360 Loss

2) The default definition / NPL definition for short-term facilities where original tenure is less than or
equal to a year as follow:

Day Past Due Classification Default Indicator

0 ≤ DPD ≤ 14 Normal
Not Default / Performing
15 ≤ DPD ≤ 30 Special Mention
31 ≤ DPD ≤ 60 Substandard
61 ≤ DPD ≤ 90 Doubtful Default / Non-performing
DPD ≥ 91 Loss

3) In addition to the classification according to day past due information, the Bank also perform manual
classification when there is a sign of deterioration in the credit profile, the Bank might classify the
loan into substandard, doubtful or loss even though the DPD is less than 90 days for long term and
less than 30 days for short term.

Incorporation of forward-looking information

The Group incorporates forward-looking information into both the assessment of whether the credit risk of
an instrument has increased significantly since its initial recognition and the measurement of ECL.

The Group formulates three economic scenarios: a base case, which is the median scenario assigned a
55% probability of occurring, and two less likely scenarios, 20% for one upside and 25% for one downside,
each assigned a 20% probability of occurring. The base case is aligned with information used by the Group
for other purposes such as strategic planning and budgeting.

134
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Incorporation of forward-looking information (continued)

External information considered includes economic data and forecasts published by governmental bodies
and monetary authorities in the countries where the Group operates, supranational organisations such as
the International Monetary Fund, and selected private-sector and academic forecasters.

The Group has identified and documented key drivers of credit risk and credit losses for each portfolio of
financial instruments in accordance with each country and, using an analysis of historical data, has estimated
relationships between macro-economic variables and credit risk and credit losses.

The economic scenarios of the Bank’s portfolio used as at 31 December 2020 included the following key
indicators for Cambodia for the years ending 31 December 2019 to 2022:

Exposure 2018 2019 2020 2021 2022

1- Small Loan
- Domestic Private Sector Credit to GDP (%)
Base 62.08% 63.76% 64.37% 50.87% 50.87%
Upside 35.79% 37.46% 38.07% 24.57% 24.57%
Downside 88.38% 90.06% 90.67% 77.17% 77.17%
- FDI (% of GDP)
Base 10.69% 10.62% 10.68% 11.20% 11.20%
Upside 13.35% 13.28% 13.34% 13.86% 13.86%
Downside 8.03% 7.96% 8.02% 8.54% 8.54%
2- Medium Loan
- Cambodia Commodity Imports Total Imports (in KHR billion)
Base 4,311 4,337 4,337 3,263 3,263
Upside 2,835 2,862 2,862 1,788 1,788
Downside 5,787 5,813 5,813 4,739 4,739
- Nominal GDP (in KHR billions)
Base 9.45% 9.40% 9.40% 9.52% 9.52%
Upside 12.97% 12.92% 12.91% 13.04% 13.04%
Downside 5.94% 5.89% 5.88% 6.01% 6.01%
3- Revolving
- US 1 Year Treasury Yield Curve Rates
Base 0.96743
Upside (0.37254)
Downside 2.30741
- Current account balance/GDP
Base 0.17000
Upside 14.24917
Downside (13.90917)

135
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Incorporation of forward-looking information (continued)

Exposure 2018 2019 2020 2021 2022
4- Trade Loan
- FDI Net Inflow (USD)
Base 1,956,347,705
Upside 2,435,773,490
Downside 1,476,921,919
- Nominal GDP (in KHR billions)
Base 74,100
Upside 92,739
Downside 55,460
5- Credit Card
- Interest rate fixed deposit 12 months (%)
Base -11.92% -11.90% -11.79% 1.20% 1.20%
Upside 4.55% 4.57% 4.67% 17.66% 17.66%
Downside -28.38% -28.36% -28.25% -15.26% -15.26%
- Domestic Private Sector Credit to GDP (%)
Base 62.08% 63.76% 64.37% 48.90% 48.90%
Upside 35.50% 37.17% 37.78% 22.31% 22.31%
Downside 88.67% 90.35% 90.96% 75.49% 75.49%
6- Personal Loan & Other
- GDP at Current Price, Industry (YOY,%)
Base 17.12% 17.40% 17.41% 15.88% 15.88%
Upside 21.42% 21.69% 21.70% 20.18% 20.18%
Downside 12.82% 13.10% 13.11% 11.59% 11.59%
- Interest rate fixed deposit 12 months (%)
Base 1.39% 1.53% 1.40% 0.79% 0.79%
Upside 8.98% 9.13% 8.99% 8.39% 8.39%
Downside -6.21% -6.07% -6.20% -6.81% -6.81%
- Total Unemployment Cambodia (ILO Est)
Base 5.19% 1.41% 4.35% 9.18% 9.18%
Upside -85.63% -89.41% -86.47% -81.64% -81.64%
Downside 96.01% 92.23% 95.16% 100.00% 100.00%
7- Home Improvement Loan
- Current account balance/GDP
Base -8.01% -8.00% -7.97% -1.05% -1.05%
Upside 12.23% 12.24% 12.28% 19.19% 19.19%
Downside -28.26% -28.24% -28.21% -21.30% -21.30%
- Nominal GDP (in KHR billions)
Base 9.45% 9.40% 9.40% 9.82% 9.82%
Upside 13.75% 13.70% 13.69% 14.11% 14.11%
Downside 5.16% 5.11% 5.10% 5.53% 5.53%

136
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Incorporation of forward-looking information (continued)

Exposure 2018 2019 2020 2021 2022

8- Overdraft
- Crude Oil Brent (USD)
Base 21.61%
Upside -31.67%
Downside 74.90%
- Interest rate fixed deposit 12 months (%)
Base -0.60%
Upside 7.21%
Downside -8.41%
- Interest rate loans 12 months (%)
Base -19.87%
Upside -67.51%
Downside 27.76%
9- Staff Loan
- US 1 Year Treasury Yield Curve Rates
Base 1.448000 1.493200 1.514680 0.231905 0.231905
Upside 1.138767 1.183967 1.205447 (0.077328) (0.077328)
Downside 1.757233 1.802433 1.823913 0.541137 0.541137
10- Public Housing Loan
- GDP at Current Price, Industry (YOY,%)
Base 16.59% 16.48% 16.36% 15.88% 15.88%
Upside 20.89% 20.77% 20.65% 20.18% 20.18%
Downside 12.29% 12.18% 12.06% 11.59% 11.59%
- Crude Oil Brent (USD)
Base 21.61% 23.81% 24.38% -12.39% -12.39%
Upside -30.02% -27.82% -27.25% -64.02% -64.02%
Downside 73.24% 75.45% 76.01% 39.24% 39.24%
- Total Unemployment Cambodia (ILO Est)
Base 3.33% 6.56% 6.73% 9.18% 9.18%
Upside -87.49% -84.26% -84.09% -81.64% -81.64%
Downside 94.15% 97.38% 97.55% 100.00% 100.00%
11- Staff Housing Loan
- USDKHR BGN Currency
Base 4,072.57036 4,079.59914 4,085.50377 4,050.81903 4,050.81903
Upside 3,995.78516 4,002.81395 4,008.71857 3,974.03384 3,974.03384
Downside 4,149.35556 4,156.38434 4,162.28896 4,127.60423 4,127.60423
- FDI (% of GDP)
Base 10.69% 10.62% 10.68% 11.24% 11.24%
Upside 13.34% 13.27% 13.33% 13.89% 13.89%
Downside 8.04% 7.97% 8.03% 8.59% 8.59%

137
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Incorporation of forward-looking information (continued)

Exposure 2018 2019 2020 2021 2022

12- Guarantee
- Domestic Private Sector Credit to GDP (%)
Base 62.08%
Upside 35.79%
Downside 88.38%
- FDI (% of GDP)
Base 10.69%
Upside 13.35%
Downside 8.03%
13- Import Loan
- FDI Net Inflow (USD)
Base 1,956,347,704.70
Upside 2,435,773,490.17
Downside 1,476,921,919.23
- Nominal GDP (in KHR billions)
Base 74,099.53
Upside 92,739.47
Downside 55,459.58

Predicted relationships between the key indicators and default and loss rates on various portfolios of financial
assets have been developed based on analysing available historical data over the past 7 years.

Modified financial assets

The contractual terms of a loan may be modified for a number of reasons, including changing market
conditions, customer retention and other factors not related to a current or potential credit deterioration of the
customer. An existing loan whose terms have been modified may be derecognised and the renegotiated loan
recognised as a new loan at fair value in accordance with the accounting policy set out in Note 2(f)(iv).

When the terms of a financial asset are modified and the modification does not result in derecognition, the
determination of whether the asset’s credit risk has increased significantly reflects comparison of:
• its remaining lifetime PD at the reporting date based on the modified terms; with
• the remaining lifetime PD estimated based on data on initial recognition and the original contractual terms.

138
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Modified financial assets (continued)

When modification results in derecognition, a new loan is recognised and allocated to Stage 1 (assuming it is not credit-impaired at that time).

The revised terms usually include extending the maturity, changing the timing of interest payments and amending the terms of loan covenants.

Loss allowance

During the year, the allowance for/(reversal of) impairment loss recognised on the profit or loss were as follows:
The Group The Bank
Type 2020 2019 2020 2019 2020 2019 2020 2019
US$ US$ KHR’000 KHR’000 US$ US$ KHR’000 KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)

Deposit and placements with banks (7,786) 523,753 (31,744) 2,122,247 96,083 31,153 391,730 126,232
Loans and advances to customers 20,852,357 22,600,278 85,015,059 91,576,326 16,204,462 21,462,295 66,065,592 86,965,219
Other assets (50,540) 287,174 (206,051) 1,163,630 (52,869) 287,184 (215,547) 1,163,670
20,794,031 23,411,205 84,777,264 94,862,203 16,247,676 21,780,632 66,241,775 88,255,121
Financial guarantee contracts (54,156) (87,989) (220,794) (356,531) (132,082) 360,354 (538,498) 1,460,154

Total 20,739,875 23,323,216 84,556,470 94,505,672 16,115,594 22,140,986 65,703,277 89,715,275

139
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Loss allowance (continued)

The following tables show balance of the loss allowance by class of financial instrument:

2020 2019
Loans and advances at amortised cost Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
US$ US$ US$ US$ US$ US$ US$ US$
The Group
As at 1 January 24,627,422 344,453 8,263,701 33,235,576 14,976,248 862,530 18,061,054 33,899,832
Allowance for impairment loss during the year (12,721,922) 2,959,245 30,615,034 20,852,357 9,651,174 (518,077) 13,467,181 22,600,278
Written off during the year - - (18,676,459) (18,676,459) - - (23,994,329) (23,994,329)
Currency translation difference - - (68,927) (68,927) - - 729,796 729,796

At 31 December 11,905,500 3,303,698 20,133,349 35,342,547 24,627,422 344,453 8,263,702 33,235,577

In KHR’000 equivalent (Note 4) 48,157,748 13,363,458 81,439,397 142,960,602 100,356,745 1,403,646 33,674,586 135,434,977

140
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Loss allowance (continued)

The following tables show balance of the loss allowance by class of financial instrument: (continued)

2020 2019
Loans and advances at amortised cost Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
at amortised cost US$ US$ US$ US$ US$ US$ US$ US$

The Bank
As at 1 January 24,066,137 286,202 7,837,241 32,189,580 14,137,285 818,920 17,600,970 32,557,175
Allowance for impairment loss during the year (13,226,982) 2,620,739 26,810,704 16,204,462 9,928,852 (532,718) 12,066,161 21,462,295
Written off during the year - - (17,158,054) (17,158,054) - - (22,436,319) (22,436,319)
Currency translation difference - - (26,599) (26,599) 606,429 606,429
At 31 December 10,839,155 2,906,941 17,463,293 31,209,389 24,066,137 286,202 7,837,241 32,189,580

In KHR’000 equivalent (Note 4) 43,844,382 11,758,576 70,639,020 126,241,978 98,069,508 1,166,273 31,936,757 131,172,538

141
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Measurement of ECL (continued)

Loss allowance (continued)

The following tables show balance of the loss allowance by class of financial instrument: (continued)
2020 2019
Cash and deposit and placement with other banks Stage 1 Stage 2 Stage 3 Total Total
US$ US$ US$ US$ US$
The Group
At 1 January 589,956 - - 589,956 69,999
Allowance for impairment loss during the year (7,786) - - (7,786) 523,753
Currency translation difference 274 - - 274 (3,796)
At 31 December 582,444 - - 582,444 589,956

In KHR’000 equivalent (Note 4) 2,355,986 - - 2,355,986 2,404,071

The Bank
At 1 January 45,241 - - 45,241 14,059
Loss allowance during the year 96,083 - - 96,083 31,153
Currency translation difference 219 - - 219 29
At 31 December 141,543 - - 141,543 45,241

In KHR’000 equivalent (Note 4) 572,541 - - 572,541 184,357

2020 2019
Other assets - other receivables Stage 1 Stage 2 Stage 3 Total Total
US$ US$ US$ US$ US$
The Group
At 1 January 295,027 - - 295,027 7,858
Loss allowance during the year (50,540) - - (50,540) 287,174
Currency translation difference (45,094) - - (45,094) (5)
At 31 December 199,393 - - 199,393 295,027

In KHR’000 equivalent (Note 4) 806,545 - - 806,545 1,202,235

The Bank
At 1 January 295,009 - - 295,009 7,830
Loss allowance during the year (52,869) - - (52,869) 287,184
Currency translation difference (45,095) - - (45,095) (5)
At 31 December 197,045 - - 197,045 295,009

In KHR’000 equivalent (Note 4) 797,047 - - 797,047 1,202,162

142
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(g) Amounts arising from ECL (continued)

Measurement of ECL (continued)

Loss allowance (continued)

2020 2019
Financial guarantee contracts Stage 1 Stage 2 Stage 3 Total Total
US$ US$ US$ US$ US$
The Group
At 1 January 207,479 - - 207,479 288,498
Reversal of allowance for impairment loss during the year (54,156) - - (54,156) (87,989)
Currency translation difference 1,584 - - 1,584 6,970
At 31 December 154,907 - - 154,907 207,479

In KHR’000 equivalent (Note 4) 626,599 - - 626,599 845,476

The Bank
At 1 January 655,822 - - 655,822 288,498
Loss allowance during the year (132,082) - - (132,082) 360,354
Currency translation difference 1,584 - - 1,584 6,970
At 31 December 525,324 - - 525,324 655,822

In KHR’000 equivalent (Note 4) 2,124,936 - - 2,124,936 2,672,474

(h) COVID-19 Outbreak and Impact on ECL

The COVID-19 outbreak on the economic growth resulting the economic variables that are used in the
models are out of the bounds for which CIFRS 9 models have been built and recalibrated to operate.
Furthermore, the current government support programs and regulatory on loan restructuring, designed to
mitigate the adverse impact of COVID-19 and related economic consequences, have partially been factored
into the modelling. This results CIFRS 9 models under the current economic conditions could not measure
the accurate outcomes. Hence, the post-model overlays based on a sensitive analysis and ACLEDA Bank's
senior management's judgment are necessary to reflect ECL in a way to avoid underestimation or
overestimation in these conditions.

Models will be recalibrated over time in order to overcome observed impacts of Covid-19. Therefore, we
anticipate significant post-model adjustments over 2020 and for the foreseeable future when the economy
resumes positive GDP growth.

The Group and the Bank also perform the identification and periodic review of customers experiencing
increases in credit risk and credit impairment, particularly where those customers have accepted payment
deferrals and other reliefs designed to address short-term liquidity issues, or have extended those deferrals,
given limitations in the available credit information on these customers.

143
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.1 Credit risk (continued)

(h) COVID-19 Outbreak and Impact on ECL (continued)

Economic forecasts are subject to high degree of uncertainty in the current environment. This have resulted
the forecasts and economic models may not be applicable. This requires a greater reliance on the forecast
by the National Bank of Cambodia, Ministry of Economics and Finance, World Bank, or Asia Development
Bank to incorporate into the analysis and assessment of ECL outcomes.

The Group and the Bank also generate three economic scenarios to reflect economic conditions, starting
with baseline, good, and bad. Each scenario is consistent with a probability of 55%, 20% and 25%, according
to the decision of ACLEDA Bank’s senior management since COVID-19 outbreak in Mar-2020.

35.2 Market risk

The Group and the Bank take on exposure to market risk, which is the risk of changes in the level or volatility
of market rates or prices such as interest rates, credit spreads, foreign currency exchange rates, commodity
prices and equity prices that could adversely affect the Group’s and the Bank’s future earnings, capital, or ability
to meet business objectives.

The primary categories of market risk for the Group and the Bank are:

(i) Interest rate risk: can lead to losses when there is an imbalance between assets and liabilities on which
interest rates change periodically or at different intervals.

(ii) Foreign exchange rate risk: can lead to losses when there is an imbalance between assets and liabilities
in any particular currency.

The Board Risk Management and IT Committee (“BRIC”) is established by the board of directors to assist the
Board in the effective discharge of its responsibilities for risk management and to regularly review
management's ability to assess and manage the Bank's risks. The market risk is managed based on the
following principles and internal targets.

144
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)

Principles of the market risk:

• In line with sound banking principles the Group and the Bank will actively manage currencies and interest
rate risk positions to hedge positions by matching assets and liabilities.
• The Group and the Bank shall not engage in activities to derive income from proprietary trading or
speculation on the movements of exchange rates, interest rates or value of securities.
• The position limits as set by the central banks are meant to limit the adverse impact of market risk and
are not meant to create an opportunity for proprietary trading.
• The day to day responsibility for market risk lies with the senior management of the treasury group.

Internal targets of the market risk:

• The regulatory limits on foreign exchange currency mismatch per currency and cumulative should be
observed at all times.
• The Bank will have, at all times, internal targets that are lower than the regulatory limits to allow for a
safety margin to ensure permanent full compliance with regulatory limits.
• Setting the level of the internal targets is at the discretion of the Assets and Liabilities Committee
("ALCO") and needs to be both 1) stated and motivated in the ALCO minutes and 2) formally approved
by the President & Group Managing Director.

Internal targets of the market risk: (continued)

• Relevant divisions and departments should regularly assess and monitor the perceived risks of non-
compliance to the targets. Any breaches of internal targets should be reported to the ALCO and
President & Group Managing Directors.
• Any change in level of internal targets will need to be reported by e-mail to the Chair of the Board Risk
Management and IT Committee ("BRIC") on the same day the change has been made.
• At all time, the Bank will have a contingency plan to be executed when it is perceived by the President &
Group Managing Director that the safety margin may not be sufficient and there is a risk that the
regulatory limit on foreign exchange currency mismatch could be reached. Such contingency plan should
be sufficient to ensure that the regulatory limits on foreign exchange currency mismatch will not be
breached.

As of 31 December 2020 and 31 December 2019, the Group and the Bank did not have financial instruments
carried at fair value. The Group uses derivative financial instruments such as foreign exchange contract and
interest rate swaps to hold its risk exposures.

145
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)

(i) Interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because
of the changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument
will fluctuate because of the changes in the market interest rates. Interest margins may increase as a result of
changes but may reduce losses in the event that unexpected movements arise.

The management of the Group and the Bank at this stage does not have a policy to set limits on the level of
mismatch of interest rate repricing that may be undertaken; however, the management regularly monitors
the mismatch.

The Group’s and the Bank’s interest rate risk arise from borrowings. Borrowings issued at variable rates
expose the Group and the Bank to cash flow interest rate risk. The Group and the Bank manage cash flow
interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic
effect of converting borrowings from floating rates to fixed rates and recognising the interest expense based
on that fixed interest rate. The Group and the Bank raise borrowings at floating rates and swaps them into
fixed rate that are lower than those available if the Group and the Bank borrowed at fixed rates directly. Under
the interest rate swaps, the Group agreed with other parties to exchange, at specified intervals (primarily
semi-annually), the difference between fixed contract rates and floating rate interest amounts calculated by
reference to the agreed notional amounts.

The table below summarises the Group’s and the Bank’s exposure to interest rate risks. It includes the financial
instruments at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.

146
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)

(i) Interest rate risk (continued)

The Group
Up to 1 1-3 3 - 12 1-5 Over 5 Non-interest
month months months years years bearing Total
US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
Financial assets
Cash on hand - - - - - 412,759,051 412,759,051
Deposits and placements with other banks 234,738,355 4,076,310 - - - 295,838,481 534,653,146
Financial investments 566,138,442 - 372,497 - - 163,584 566,674,523
Loans and advances
- Performing 114,672,830 239,865,582 845,044,589 2,744,589,864 454,249,545 - 4,398,422,410
- Non performing - - - - - 108,220,753 108,220,753
- Loss allowance - - - - - (35,342,545) (35,342,545)
Other assets - - - - - 6,921,852 6,921,852
Total financial assets 915,549,627 243,941,892 845,417,086 2,744,589,864 454,249,545 788,561,176 5,992,309,190

Financial liabilities
Deposits and placements of other banks and financial institutions 68,526,232 8,347,174 40,716,070 18,855,000 71,556,029 109,008,954 317,009,459
Deposits from customers 1,998,279,203 254,562,597 923,043,532 532,634,286 21,296,683 564,469,747 4,294,286,048
Other liabilities - - - - - 28,699,228 28,699,228
Lease liabilities 1,722,414 1,483,344 7,104,107 16,334,766 1,973,271 - 28,617,902
Borrowings 1,784,756 74,857,377 121,085,450 332,042,951 5,860,858 6,767,524 542,398,916
Subordinated debts - - 10,973,591 98,753,000 56,997,210 434,822 167,158,623
Total financial liabilities 2,070,312,605 339,250,492 1,102,922,750 998,620,003 157,684,051 709,380,275 5,378,170,176

Net interest sensitivity gap (1,154,762,978) (95,308,600) (257,505,664) 1,745,969,861 296,565,494 79,180,901 614,139,014
In KHR’000 equivalent (Note 4) (4,671,016,246) (385,523,287) (1,041,610,411) 7,062,448,088 1,199,607,423 320,286,745 2,484,192,312

Unused portion of overdrafts - - - - - 120,937,607 120,937,607

Guarantees, acceptances and other financial facilities - - - - - 54,900,984 54,900,984
Net interest sensitivity gap - - - - - 175,838,591 175,838,591
In KHR’000 equivalent (Note 4) - - - - - 711,267,100 711,267,100

147
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)
(i) Interest rate risk (continued)
The Group
Up to 1 1-3 3 - 12 1-5 Over 5 Non-interest
month months months years years bearing Total
US$ US$ US$ US$ US$ US$ US$
As at 31 December 2019
Financial assets
Cash on hand - - - - - 421,527,238 421,527,238
Deposits and placements with other banks 101,015,402 1,127,269 - - - 485,587,860 587,730,531
Financial investments 177,298,469 330,089,942 19,933,035 - - 153,530 527,474,976
Loans and advances
- Performing 113,123,281 228,380,504 767,798,648 2,417,544,191 305,180,685 - 3,832,027,309
- Non performing - - - - - 48,075,664 48,075,664
- Loss allowance (*) - - - - - (34,082,454) (34,082,454)
Other assets - - - - - 5,918,866 5,918,866
Total financial assets 391,437,152 559,597,715 787,731,683 2,417,544,191 305,180,685 927,180,704 5,388,672,130
Financial liabilities
Deposits and placements of other banks and financial institutions 69,219,725 9,732,929 16,835,620 15,794,271 70,150,000 103,442,600 285,175,145
Deposits from customers 1,906,967,792 270,961,829 983,609,388 400,528,294 15,795,723 504,859,827 4,082,722,853
Other liabilities - - - - - 27,251,397 27,251,397
Lease liabilities 1,058,400 1,354,080 7,343,514 18,337,639 2,822,306 - 30,915,939
Borrowings 26,053,241 33,059,455 134,562,903 367,062,751 4,233,351 - 564,971,701
Subordinated debts - - 81,243,447 25,964,271 32,094,862 - 139,302,580
Total financial liabilities 2,003,299,158 315,108,293 1,223,594,872 827,687,226 125,096,242 635,553,824 5,130,339,615

Net interest sensitivity gap (1,611,862,006) 244,489,422 (435,863,189) 1,589,856,965 180,084,443 291,626,880 258,332,515
In KHR’000 equivalent (Note 4) (6,568,337,674) 996,294,395 (1,776,142,495) 6,478,667,132 733,844,105 1,188,379,536 1,052,704,999
Unused portion of overdrafts - - - - - 93,060,063 93,060,063
Guarantees, acceptances and other financial facilities - - - - - 47,380,747 47,380,747
Net interest sensitivity gap - - - - - 140,440,810 140,440,810
In KHR’000 equivalent (Note 4) - - - - - 572,296,301 572,296,301

(*) Included provision for off balance sheet commitment.

148
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)

(i) Interest rate risk (continued)

The Bank
Up to 1 1-3 3 - 12 1-5 Over 5 Non-interest
month months months years years bearing Total
US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
Financial assets
Cash on hand - - - - - 400,816,126 400,816,126
Deposits and placements with other banks 234,700,199 3,000,000 - - - 269,929,208 507,629,407
Financial investments 566,138,442 - 372,497 - - 163,584 566,674,523
Loans and advances
- Performing 105,939,266 220,918,625 787,952,910 2,656,562,739 451,329,271 - 4,222,702,811
- Non performing - - - - - 101,155,737 101,155,737
- Loss allowance - - - - - (31,209,389) (31,209,389)
Other assets - - - - - 6,923,222 6,923,222
Total financial assets 906,777,907 223,918,625 788,325,407 2,656,562,739 451,329,271 747,778,488 5,774,692,437

Financial liabilities
Deposits and placements of other banks and financial institutions 67,683,651 6,356,000 22,429,557 18,855,000 71,556,029 109,884,317 296,764,554
Deposits from customers 1,955,317,026 246,232,704 896,537,310 511,760,130 17,564,763 552,856,804 4,180,268,737
Other liabilities - - - - - 28,488,959 28,488,959
Lease liabilities 1,620,943 1,443,572 6,647,364 15,123,119 937,387 - 25,772,385
Borrowings 193,560 71,157,818 107,238,207 318,846,331 3,753,850 6,163,150 507,352,916
Subordinated debts - - 10,973,591 98,753,000 56,997,210 434,822 167,158,623
Total financial liabilities 2,024,815,180 325,190,094 1,043,826,029 963,337,580 150,809,239 697,828,052 5,205,806,174

Net interest sensitivity gap (1,118,037,273) (101,271,469) (255,500,622) 1,693,225,159 300,520,032 49,950,436 568,886,263
In KHR’000 equivalent (Note 4) (4,522,460,769) (409,643,092) (1,033,500,016) 6,849,095,768 1,215,603,529 202,049,515 2,301,144,935

Unused portion of overdrafts - - - - - 120,108,962 120,108,962

Guarantees, acceptances and other financial facilities - - - - - 54,694,480 54,694,480
Net interest sensitivity gap - - - - - 174,803,442 174,803,442
In KHR’000 equivalent (Note 4) - - - - - 707,079,923 707,079,923

149
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)
(i) Interest rate risk (continued)
The Bank
Up to 1 1-3 3 - 12 1-5 Over 5 Non-interest
month months months years years bearing Total
US$ US$ US$ US$ US$ US$ US$
As at 31 December 2019
Financial assets
Cash on hand - - - - - 410,955,867 410,955,867
Deposits and placements with other banks 100,430,774 - - - - 458,181,566 558,612,340
Financial investments 177,298,469 330,089,942 19,933,035 - - 153,530 527,474,976
Loans and advances
- Performing 104,137,506 210,501,398 713,611,636 2,339,892,203 305,551,912 - 3,673,694,655
- Non performing - - - - - 45,729,690 45,729,690
- Loss allowance (*) - - - - - (32,845,402) (32,845,402)
Other assets - - - - - 5,935,692 5,935,692
Total financial assets 381,866,749 540,591,340 733,544,671 2,339,892,203 305,551,912 888,110,943 5,189,557,818
Financial liabilities
Deposits and placements of other banks and financial institutions 67,367,305 7,631,767 6,405,050 14,050,000 70,150,000 108,673,599 274,277,721
Deposits from customers 1,875,484,798 265,335,713 960,119,470 376,717,663 11,928,271 492,560,644 3,982,146,559
Other liabilities - - - - - 26,115,905 26,115,905
Lease liabilities 1,001,066 1,336,787 6,685,580 16,988,942 1,776,793 - 27,789,168
Borrowings 25,698,680 28,185,890 122,807,911 341,375,647 - - 518,068,128
Subordinated debts - - 81,243,447 25,964,271 32,094,862 - 139,302,580
Total financial liabilities 1,969,551,849 302,490,157 1,177,261,458 775,096,523 115,949,926 627,350,148 4,967,700,061

Net interest sensitivity gap (1,587,685,100) 238,101,183 (443,716,787) 1,564,795,680 189,601,986 260,760,795 221,857,757
In KHR’000 equivalent (Note 4) (6,469,816,783) 970,262,321 (1,808,145,907) 6,376,542,396 772,628,093 1,062,600,240 904,070,360
Unused portion of overdrafts - - - - - 93,060,063 93,060,063
Guarantees, acceptances and other financial facilities - - - - - 47,353,943 47,353,943
Net interest sensitivity gap - - - - - 140,414,006 140,414,006
In KHR’000 equivalent (Note 4) - - - - - 572,187,074 572,187,074

(*) Included provision for off balance sheet commitment.

150
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)

(i) Interest rate risk (continued)

Fair value sensitivity analysis for fixed-rate instruments

The Group and the Bank do not account for any fixed-rate financial assets or financial liabilities at fair value
through profit or loss. Therefore, a change in interest rates at the reporting date would not affect statement
of profit or loss.

Cash flow sensitivity analysis for variable-rate instruments

Statement of profit or loss is sensitive to higher/lower interest expenses from borrowings as a result of
changes in interest rates. The change of 25 basis points (“bp”) in interest rates of borrowings at the reporting
date would not have material effect on statement of profit or loss of the Group and the Bank.

(ii) Foreign exchange risk

The Group operates in Cambodia, Lao PDR, and Republic of the Union of Myanmar and transacts in many
currencies. It is exposed to various currency risks, primarily with respect to Khmer Riel, Euro, Thai Baht, LAK,
JPY, AUD, VND, CAD, Kyat and others.

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the Group's and the Bank’s functional currency.

Management monitors their foreign exchange risk against functional currencies. To manage their foreign
exchange risk arising from future commercial transactions and recognised assets and liabilities, the Group use
forward contracts.

The table below summarises the Group's and the Bank’s exposure to foreign currency exchange rate risk at 31
December 2020 and 31 December 2019. Included in the table are the financial instruments at carrying amount
by currency in US$ equivalent.

151
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)

(ii) Foreign exchange risk (continued)

The Group
In US$ equivalent
KHR USD THB EUR AUD LAK Others Total
As at 31 December 2020
Financial assets
Cash on hand 103,488,247 284,892,098 12,247,160 2,967,502 226,620 7,446,734 1,490,690 412,759,051
Deposits and placements with other banks 78,882,898 431,103,914 4,323,331 1,200,340 78,488 15,945,738 3,118,437 534,653,146
Financial investments 32,362,619 534,311,904 - - - - - 566,674,523
Loans and advances 605,355,296 3,653,522,729 27,594,434 - - 140,856,509 43,971,650 4,471,300,618
Other assets 112,607 6,661,885 23,341 - - 124,019 - 6,921,852
Total financial assets 820,201,667 4,910,492,530 44,188,266 4,167,842 305,108 164,373,000 48,580,777 5,992,309,190

Financial liabilities
Deposits and placements of other banks and financial institutions 34,696,856 260,231,181 272,131 - - 21,809,291 - 317,009,459
Deposits from customers 731,620,195 3,415,853,729 39,841,991 3,824,001 - 94,515,122 8,631,010 4,294,286,048
Other liabilities 1,156,153 27,287,797 34,800 112,286 - 96,196 11,996 28,699,228
Lease liabilities - 27,913,335 141,356 - - 410,237 152,974 28,617,902
Borrowings 40,101,721 477,440,120 - - - 10,910,412 13,946,663 542,398,916
Subordinated debts - 167,158,623 - - - - - 167,158,623
Total financial liabilities 807,574,925 4,375,884,785 40,290,278 3,936,287 - 127,741,258 22,742,643 5,378,170,176

Net on-balance sheet position 12,626,742 534,607,745 3,897,988 231,555 305,108 36,631,742 25,838,134 614,139,014
In KHR’000 equivalent (Note 4) 51,075,171 2,162,488,329 15,767,361 936,640 1,234,162 148,175,396 104,515,253 2,484,192,312

Unused portion of overdrafts 2,331,747 116,705,275 1,071,940 - - 828,645 - 120,937,607

Guarantees, acceptances and other financial facilities 5,551,196 45,784,145 2,810,817 349,515 - 205,141 200,170 54,900,984
Credit commitment 7,882,943 162,489,420 3,882,757 349,515 - 1,033,786 200,170 175,838,591
In KHR’000 equivalent (Note 4) 31,886,504 657,269,704 15,705,752 1,413,788 - 4,181,664 809,688 711,267,100

152
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)

(ii) Foreign exchange risk (continued)

The Group
In US$ equivalent
KHR USD THB EUR AUD LAK Others Total
As at 31 December 2019
Financial assets
Cash on hand 73,832,938 328,112,584 9,820,413 1,697,804 259,264 6,253,302 1,550,933 421,527,238
Deposits and placements with other banks 134,547,685 425,145,989 9,133,078 2,857,189 - 14,830,882 1,215,708 587,730,531
Financial investments 49,132 527,425,844 - - - - - 527,474,976
Loans and advances 490,616,838 3,163,835,145 27,858,301 - - 127,201,433 36,508,802 3,846,020,519
Other assets 137,705 5,729,950 2,418 - - 48,793 - 5,918,866
Total financial assets 699,184,298 4,450,249,512 46,814,210 4,554,993 259,264 148,334,410 39,275,443 5,388,672,130

Financial liabilities
Deposits and placements of other banks and financial institutions 28,342,365 240,639,132 371,838 - - 15,821,810 - 285,175,145
Deposits from customers 592,801,497 3,358,536,818 41,962,783 4,009,451 96 79,724,173 5,688,035 4,082,722,853
Other liabilities 3,647,241 21,854,120 609,168 1,022,705 - 104,186 13,977 27,251,397
Lease liabilities - 30,062,178 131,805 - - 417,690 304,266 30,915,939
Borrowings 65,414,272 464,694,714 - - - 17,950,971 16,911,744 564,971,701
Subordinated debts - 139,302,580 - - - - - 139,302,580
Total financial liabilities 690,205,375 4,255,089,542 43,075,594 5,032,156 96 114,018,830 22,918,022 5,130,339,615

Net on-balance sheet position 8,978,923 195,159,970 3,738,616 (477,163) 259,168 34,315,580 16,357,421 258,332,515
In KHR’000 equivalent (Note 4) 36,589,111 795,276,878 15,234,860 (1,944,439) 1,056,110 139,835,989 66,656,490 1,052,704,999

Unused portion of overdrafts 1,498,045 91,495,024 66,994 - - - - 93,060,063

Guarantees, acceptances and other financial facilities 4,229,904 42,756,751 43,550 70,000 - - 280,542 47,380,747
Credit commitment 5,727,949 134,251,775 110,544 70,000 - - 280,542 140,440,810
In KHR’000 equivalent (Note 4) 23,341,392 547,075,983 450,467 285,250 - - 1,143,209 572,296,301

153
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)

(ii) Foreign exchange risk (continued)

The Bank
In US$ equivalent
KHR USD THB EUR AUD LAK Others Total
As at 31 December 2020
Financial assets
Cash on hand 103,480,325 283,028,828 9,927,044 2,965,106 226,023 3,227 1,185,573 400,816,126
Deposits and placements with other banks 78,882,898 426,153,616 613,723 1,200,340 78,488 - 700,342 507,629,407
Financial investments 32,362,619 534,311,904 - - - - - 566,674,523
Loans and advances 605,355,297 3,659,699,428 27,594,434 - - - - 4,292,649,159
Other assets 111,994 6,811,221 7 - - - - 6,923,222
Total financial assets 820,193,133 4,910,004,997 38,135,208 4,165,446 304,511 3,227 1,885,915 5,774,692,437

Financial liabilities
Deposits and placements of other banks and financial institutions 34,696,856 261,794,286 273,412 - - - - 296,764,554
Deposits from customers 731,889,478 3,411,404,278 33,150,980 3,824,001 - - - 4,180,268,737
Other liabilities 1,150,276 27,196,955 29,335 112,286 - - 107 28,488,959
Lease liabilities - 25,772,385 - - - - - 25,772,385
Borrowings 40,101,721 467,251,195 - - - - - 507,352,916
Subordinated debts - 167,158,623 - - - - - 167,158,623
Total financial liabilities 807,838,331 4,360,577,722 33,453,727 3,936,287 - - 107 5,205,806,174

Net on-balance sheet position 12,354,802 549,427,275 4,681,481 229,159 304,511 3,227 1,885,808 568,886,263
In KHR’000 equivalent (Note 4) 49,975,174 2,222,433,327 18,936,591 926,948 1,231,747 13,053 7,628,095 2,301,144,935

Unused portion of overdrafts 2,331,747 116,705,275 1,071,940 - - - - 120,108,962

Guarantees, acceptances and other financial facilities 5,551,196 45,782,782 2,810,817 349,515 - - 200,170 54,694,480
Credit commitment 7,882,943 162,488,057 3,882,757 349,515 - - 200,170 174,803,442
In KHR’000 equivalent (Note 4) 31,886,504 657,264,191 15,705,752 1,413,788 - - 809,688 707,079,923

154
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.2 Market risk (continued)

(ii) Foreign exchange risk (continued)

The Bank
In US$ equivalent
KHR USD THB EUR AUD LAK Others Total
As at 31 December 2019
Financial assets
Cash on hand 73,824,417 326,481,164 7,846,913 1,640,057 255,318 1,533 906,465 410,955,867
Deposits and placements with other banks 134,547,685 416,769,673 3,254,084 2,857,189 - - 1,183,709 558,612,340
Financial investments 49,132 527,425,844 - - - - - 527,474,976
Loans and advances 490,616,838 3,168,103,804 27,858,301 - - - - 3,686,578,943
Other assets 110,416 5,822,858 2,418 - - - - 5,935,692
Total financial assets 699,148,488 4,444,603,343 38,961,716 4,497,246 255,318 1,533 2,090,174 5,189,557,818

Financial liabilities
Deposits and placements of other banks and financial institutions 28,342,365 242,258,492 3,676,864 - - - - 274,277,721
Deposits from customers 592,856,864 3,355,015,800 30,264,348 4,009,451 96 - - 3,982,146,559
Other liabilities 3,646,652 21,433,839 11,342 1,022,705 - 181 1,186 26,115,905
Lease liabilities - 27,789,168 - - - - - 27,789,168
Borrowings 65,414,272 452,653,856 - - - - - 518,068,128
Subordinated debts - 139,302,580 - - - - - 139,302,580
Total financial liabilities 690,260,153 4,238,453,735 33,952,554 5,032,156 96 181 1,186 4,967,700,061

Net on-balance sheet position 8,888,335 206,149,608 5,009,162 (534,910) 255,222 1,352 2,088,988 221,857,757
In KHR’000 equivalent (Note 4) 36,219,966 840,059,653 20,412,335 (2,179,758) 1,040,030 5,509 8,512,626 904,070,360

Unused portion of overdrafts 1,498,045 91,495,024 66,994 - - - - 93,060,063

Guarantees, acceptances and other financial facilities 4,229,904 42,729,947 43,550 70,000 - - 280,542 47,353,943
Credit commitment 5,727,949 134,224,971 110,544 70,000 - - 280,542 140,414,006
In KHR’000 equivalent (Note 4) 23,341,392 546,966,757 450,467 285,250 - - 1,143,208 572,187,074

155
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. FINANCIAL RISK MANAGEMENT (continued)

35.2 Market risk (continued)

(ii) Foreign exchange risk (continued)

Sensitivity analysis

The Group and the Bank is exposed to changes in US dollar and other foreign currencies exchange rate.
Due to a reasonably possible strengthening (weakening) of the US dollar against foreign currencies, the
Group and the Bank’s exposure to other foreign exchange movement is not material.

(iii) Price risk

The Group and the Bank is not exposed to securities price risk because it does not hold any investment held
and classified on the statement of financial position at fair value.

35.3 Liquidity risk

Liquidity risk is the risk that the Bank is unable to meet its obligations or payment or offset positions in a given
economic and financial context and specific market situation. Typically, it is the risk of loss arising from
situation where 1) the Bank has not enough cash and/or cash equivalents to meet the needs of depositors,
borrowers, and contingent liabilities, 2) the sale of illiquid assets lower than market price, and 3) illiquid assets
would not be sold at the desired time due to a lack of buyers.

The objective of the Group’s liquidity risk management is to ensure that the Group can meet its cash
obligations in a timely and cost-effective manner. To this end, the Group’s liquidity and funding management
policy is to maintain high quality and well diversified portfolios of liquid assets and sources of funds under
both normal business and stress conditions. Due to its large distribution network and strategic marketing
focus, the Group is able to maintain a diversified core deposit base comprising savings, demand, and fixed
deposits. This provides the Group a large stable funding base.

(a) Liquidity risk management process

The day-to-day responsibility for liquidity risk management and control is delegated to the ALCO which
monthly report to executive committee.

For day-to-day liquidity management, the treasury operations will ensure sufficient funding to meet its
intraday payment and settlement obligations on a timely basis. Besides, the process of managing liquidity
risk also includes:

156
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)

a) Liquidity risk management process (continued)

Principles of the liquidity risk:

• At all times the related senior management of the treasury group shall ensure that the Bank's operations
can meet its current and future funding needs. The Treasury Department shall stress-test its liquidity
position on a daily basis

• The related senior management of treasury group has established a risk control framework and
procedures to ensure it maintains sufficient liquidity at all time, including the holding of unencumbered
eligible assets, to withstand a range of stress events, including the loss of funding sources such as
deposits, borrowings, capital raising that liquidity risk is managed in accordance with the requirements
of the Board.

• Stress testing is performed regularly to assess various scenarios includes short, medium and long-term,
institution-specific and market-wide stress which may put the Bank's liquidity at risk.

• The Treasury Department identifies, monitors, manages and controls the risk associated intraday
liquidity as well as short, medium and long-term liquidity as these are key periods for liquidity
management. The Treasury Department develops and implements stress tests on the projected cash
flows. The outputs are used to inform the Bank's contingency funding plan.

• The Bank incorporates liquidity cost, benefits and risks in the internal pricing, performance measurement,
and new products/services approval process for all significant business activities (both on and off balance
sheet) in order to align with the benefits from accepting risks of each business unit and liquidity risks
affecting the business activities of the Bank.

Internal targets of the liquidity risk:

• The regulatory limit on the Liquidity Coverage Ratio (LCR) should be observed at all times.

• The Bank will have, at all times, an internal targets that is higher than the regulatory limit to allow for a
safety margin to ensure permanent full compliance with regulatory limit.

• Setting the level of the internal targets is at the discretion of the ALCO and needs to be both 1) stated and
motivated in the ALCO minutes and 2) formally approved by the President & Group Managing Director.

• The risk tolerance/internal targets must be reviewed at least once a year to reflect the financial
condition and the funding mobilization capacity

• Relevant divisions and departments should regularly assess and monitor the perceived risks of non-
compliance to the targets. Any breaches of internal targets should be reported to the ALCO for remedial
actions and President & Group Managing Director for approval.

157
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)

a) Liquidity risk management process (continued)

Internal targets of the liquidity risk: (continued)

• Any change level of internal targets will need to be reported by e-mail to the Chair of the BRIC on the
same day the change has been made.

• At all time, the Bank will have a contingency plan to be executed when it is perceived by the Bank that
the safety margin may not be sufficient and there is a risk that the regulatory limit on liquidity could be
breached. Such contingency plan should be sufficient to ensure that the regulatory limits on liquidity will
not be breached.

• In case, the Bank experiences a severe liquidity, the Bank must immediately notify NBC and advise the
action that is being taken to address the situation.

The Bank has put in place a robust and comprehensive liquidity risk management framework in accordance
with National Bank of Cambodia's Prakas No. B7-017-301 dated on 27 September 2017 on Liquidity Risk
Management Framework (LRMF), which consists of risk appetite, risk tolerance, policies, early warning
indicators, and monitoring mechanism which are reviewed and endorsed by BRMC and approved by the
Board. The key elements of the framework are to ensure that the Bank maintains sufficient liquidity at all times,
including the holding of unencumbered eligible assets, to withstand a range of stress events, including the loss
of funding sources, either internally (as with deposits) or externally (as with borrowings or raising additional
capital), and other issues. The Bank ensures that the business activities are mainly funded with stable sources
of funding on an ongoing basis.

The management designs a set of early warning indicators to aid its daily liquidity risk management
processes in identifying the emergence of increased risk or vulnerabilities in its liquidity risk position or
potential funding needs.

The Bank’s contingency liquidity plan (CLP) is in place to alert and to enable the management to act
effectively and efficiently during a liquidity crisis and under adverse market conditions. The objective of
contingency liquidity plan is to ensure that the bank has a framework for managing the liquidity sufficiently
and robustly in the event of liquidity crisis based on the result of liquidity stress testing.

The Group is measuring, monitoring and managing its liquidity positions to comply with the regulatory
Liquidity Coverage Ratio (LCR). The Bank shall calculate Liquidity Coverage Ratio (LCR) using new
reporting template from 1 January 2016 via a phase-in period until fully comply by 1 January 2020. The Bank
shall, at all time, maintain an adequate stock of eligible liquid assets to fulfil the LCR limits as determined in
accordance with the following timeline:

With effect from 1 September 2016 1 September 2017 1 September 2018 1 June 2019 1 January 2020
Minimum LCR 60% 70% 80% 90% 100%

158
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)

a) Liquidity risk management process (continued)

The purpose of the LCR aims at promoting short-term resilience of each institution’s liquidity risk profile,
ensuring that each institution has an adequate stock of unencumbered liquid assets that can be converted
into cash at no or little loss of value in markets, to meet its liquidity needs for a 30-day liquidity stress scenario,
and ensuring that prompt corrective actions are taken by the institution’s management when the LCR
potentially falls below the minimum requirement.

The Bank also uses a range of tools such as liquidity ratio, liquidity gap analysis, safety margin, and monthly cash
flow projection to measure, monitor and manage its liquidity positions. In addition, The Bank also performs daily
and monthly liquidity stress test in order to identify and quantify its exposures to possible future liquidity stresses,
analysing possible impacts on the Bank’s cash flows, liquidity position, profitability and solvency.

(b) Funding approach

The Group’s main sources of liquidities arise from shareholder’s paid-up capital, borrowings, subordinated
debts, due to other banks and financial institutions and deposits from customers. The sources of liquidity are
regularly reviewed daily through management’s review of maturity of fixed deposits and key depositors. For
borrowings and subordinated debts are also regularly reviewed daily via management's review of interest and
principal repayments and maturity.

(c) Non-derivative cash flows

The table below presents the cash flows payable under non-derivative financial liabilities and assets held for
managing liquidity risk by remaining contractual maturities at the reporting period. The amounts disclosed in
the table are the contractual undiscounted cash flows, whereas the Group manages the inherent liquidity
risk based on contractual undiscounted cash flows.

159
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)

c) Non-derivative cash flows (continued)

The Group
Up to 1 to 3 3 to 6 6 to 12 1 to 5 Over
1 month months months months years 5 years Total
US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
Financial liabilities
Deposits and placements of other banks and financial institutions 175,970,349 9,215,069 13,017,546 33,584,422 40,747,725 103,351,755 375,886,866
Deposits from customers 2,531,089,539 272,332,376 336,468,086 653,630,934 592,339,778 25,243,282 4,411,103,995
Other liabilities 28,620,226 63,785 12,677 2,540 - - 28,699,228
Lease liabilities 1,170,306 1,535,260 2,503,107 5,053,229 20,581,294 3,816,462 34,659,658
Borrowings 3,385,091 64,831,199 10,292,464 67,477,276 445,672,141 5,985,745 597,643,916
Subordinated debts - 45,834 4,558,596 16,776,922 127,967,578 69,556,379 218,905,309
Total financial liabilities (contractual maturity dates) 2,740,235,511 348,023,523 366,852,476 776,525,323 1,227,308,516 207,953,623 5,666,898,972
In KHR’000 equivalent (Note 4) 11,084,252,642 1,407,755,151 1,483,918,265 3,141,044,932 4,964,462,947 841,172,405 22,922,606,342

Assets held for managing liquidity risk (contractual maturity dates) 1,669,790,664 317,803,320 423,641,084 718,599,200 3,405,850,353 620,482,217 7,156,166,838
In KHR’000 equivalent (Note 4) 6,754,303,236 1,285,514,429 1,713,628,185 2,906,733,764 13,776,664,678 2,509,850,568 28,946,694,860

As at 31 December 2019
Financial liabilities
Deposits and placements of other banks and financial institutions 172,835,944 10,288,815 11,750,142 9,602,863 36,520,215 105,936,955 346,934,934
Deposits from customers 2,402,381,760 279,218,632 359,057,249 673,746,233 448,897,971 19,882,611 4,183,184,456
Other liabilities 26,675,519 236,497 339,381 - - - 27,251,397
Lease liabilities 1,042,790 1,367,706 2,576,174 5,081,428 23,121,979 4,760,054 37,950,131
Borrowings 26,184,654 27,992,072 75,895,128 80,685,179 423,525,392 5,318,536 639,600,961
Subordinated debts - - 4,325,282 12,555,044 101,690,664 79,406,271 197,977,261
Total financial liabilities (contractual maturity dates) 2,629,120,667 319,103,722 453,943,356 781,670,747 1,033,756,221 215,304,427 5,432,899,140
In KHR’000 equivalent (Note 4) 10,713,666,718 1,300,347,667 1,849,819,176 3,185,308,294 4,212,556,601 877,365,540 22,139,063,996

Assets held for managing liquidity risk (contractual maturity dates) 1,343,277,244 632,545,967 404,176,750 663,729,352 3,005,271,271 369,127,493 6,418,128,077
in KHR’000 equivalent (Note 4) 5,473,854,769 2,577,624,816 1,647,020,256 2,704,697,109 12,246,480,429 1,504,194,534 26,153,871,913

160
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)
c) Non-derivative cash flows (continued)
The Bank
Up to 1 to 3 3 to 6 6 to 12 1 to 5 Over
1 month months months months years 5 years Total
US$ US$ US$ US$ US$ US$ US$
As at 31 December 2020
Financial liabilities
Deposits and placements of other banks and financial institutions 176,671,075 7,124,445 2,186,170 25,015,940 40,747,725 103,351,754 355,097,109
Deposits from customers 2,477,890,696 263,366,379 325,733,156 635,073,701 567,433,640 19,756,459 4,289,254,031
Other liabilities 28,434,359 54,600 - - - - 28,488,959
Lease liabilities 1,082,083 1,494,995 2,374,137 4,704,387 18,888,896 655,929 29,200,427
Borrowings 1,442,209 60,301,229 3,999,653 58,135,533 430,242,996 3,753,850 557,875,470
Subordinated debts - 45,834 4,558,596 16,776,922 127,967,578 69,556,379 218,905,309
Total financial liabilities (contractual maturity dates) 2,685,520,422 332,387,482 338,851,712 739,706,483 1,185,280,835 197,074,370 5,478,821,304
In KHR’000 equivalent (Note 4) 10,862,930,107 1,344,507,365 1,370,655,175 2,992,112,724 4,794,460,978 797,165,827 22,161,832,176

Assets held for managing liquidity risk (contractual maturity dates) 1,622,393,307 296,587,899 398,341,665 685,014,808 3,318,881,281 614,987,111 6,936,206,071
In KHR’000 equivalent (Note 4) 6,562,580,927 1,199,698,051 1,611,292,035 2,770,884,898 13,424,874,782 2,487,622,864 28,056,953,557

As at 31 December 2019
Financial liabilities
Deposits and placements of other banks and financial institutions 176,209,427 8,164,348 5,010,927 5,657,352 34,612,283 105,936,955 335,591,292
Deposits from customers 2,358,491,961 273,218,232 350,178,997 657,013,977 421,325,292 14,204,400 4,074,432,859
Other liabilities 26,115,905 - - - - - 26,115,905
Lease liabilities 987,076 1,350,145 2,290,717 4,672,594 21,444,212 1,373,972 32,118,716
Borrowings 25,752,724 22,647,953 69,429,074 72,502,200 391,929,778 - 582,261,729
Subordinated debts - - 4,325,282 12,555,044 101,690,664 79,406,271 197,977,261
Total financial liabilities (contractual maturity dates) 2,587,557,093 305,380,678 431,234,997 752,401,167 971,002,229 200,921,598 5,248,497,762
In KHR’000 equivalent (Note 4) 10,544,295,154 1,244,426,263 1,757,282,613 3,066,034,756 3,956,834,083 818,755,512 21,387,628,381

Assets held for managing liquidity risk (contractual maturity dates) 1,293,027,835 608,704,366 374,962,240 624,041,709 2,909,086,466 367,983,735 6,177,806,351
In KHR’000 equivalent (Note 4) 5,269,088,428 2,480,470,291 1,527,971,128 2,542,969,964 11,854,527,349 1,499,533,720 25,174,560,880

161
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)
(d) Off-balance sheet items

i. Loan commitments and guarantee

The dates of the contractual amounts of the Group’s and the Bank’s off-balance sheet financial instruments that commit it to extend credit to customers and other
facilities (Note 32) are summarised in table below:

The Group
Up to 1 to 3 3 to 12 1 to 5 Over
1 month months months years 5 years Total
US$ US$ US$ US$ US$ US$
At 31 December 2020
Unused portion of overdrafts 120,937,607 - - - - 120,937,607
Bank guarantees 2,525,862 8,901,002 20,652,127 14,959,175 - 47,038,166
Letters of credit 2,025,994 5,528,555 308,269 - - 7,862,818
Gross settled (interest rate swap - cash flow hedges)
- (inflow) - (55,905) (497,068) (1,022,263) (7,569) (1,582,805)
- outflow - 526,497 2,200,304 4,501,866 12,583 7,241,250
Net - 470,592 1,703,236 3,479,603 5,014 5,658,445

Total 125,489,463 14,900,149 22,663,632 18,438,778 5,014 181,497,036

162
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)
(d) Off-balance sheet items (continued)

i. Loan commitments and guarantee (continued)

The Group
Up to 1 to 3 3 to 12 1 to 5 Over
1 month months months years 5 years Total
US$ US$ US$ US$ US$ US$
At 31 December 2019
Unused portion of overdrafts 93,060,063 - - - - 93,060,063
Bank guarantees 4,160,581 8,694,805 21,218,165 4,358,846 - 38,432,397
Letters of credit 1,596,300 3,982,916 3,369,134 - - 8,948,350
Gross settled (interest rate swap - cash flow hedges)
- (inflow) (207,366) (51,621) (1,805,889) (1,197,379) - (3,262,255)
- outflow 150,582 39,248 2,100,484 1,702,899 - 3,993,213
Net (56,784) (12,373) 294,595 505,520 - 730,958

Total 98,760,160 12,665,348 24,881,894 4,864,366 - 141,171,768

163
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)
(d) Off-balance sheet items (continued)

i. Loan commitments and guarantee (continued)

The Bank
Up to 1 to 3 3 to 12 1 to 5 Over
1 month months months years 5 years Total
US$ US$ US$ US$ US$ US$
At 31 December 2020
Unused portion of overdrafts 120,108,962 - - - - 120,108,962
Bank guarantees 2,525,862 8,901,002 20,446,986 14,957,812 - 46,831,662
Letters of credit 2,025,994 5,528,555 308,269 - - 7,862,818
Gross settled (interest rate swap - cash flow hedges)
- (inflow) - (55,905) (497,068) (1,022,263) (7,569) (1,582,805)
- Outflow - 526,497 2,200,304 4,501,866 12,583 7,241,250
Net - 470,592 1,703,236 3,479,603 5,014 5,658,445

Total 124,660,818 14,900,149 22,458,491 18,437,415 5,014 180,461,887

164
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)
(d) Off-balance sheet items (continued)

i. Loan commitments and guarantee (continued)

The Bank
Up to 1 to 3 3 to 12 1 to 5 Over
1 month months months years 5 years Total
US$ US$ US$ US$ US$ US$
At 31 December 2019
Unused portion of overdrafts 93,060,063 - - - - 93,060,063
Bank guarantees 4,160,581 8,670,727 21,215,439 4,358,846 - 38,405,593
Letters of credit 1,596,300 3,982,916 3,369,134 - - 8,948,350
Gross settled (interest rate swap - cash flow hedges)
- (inflow) (207,366) (51,621) (1,805,889) (1,197,379) - (3,262,255)
- outflow 150,582 39,248 2,100,484 1,702,899 - 3,993,213
Net (56,784) (12,373) 294,595 505,520 - 730,958

Total 98,760,160 12,641,270 24,879,168 4,864,366 - 141,144,964

ii. Other financial facilities

Other financial facilities are also included as above based on the earliest contractual date.

165
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.3 Liquidity risk (continued)

(e) COVID-19 pandemic and impact on liquidity

In line with the additional measures of the National Bank of Cambodia which set out to provide an additional
liquidity to the banking and financial sector to mitigate the impact of COVID-19 pandemic, the Bank has also
continued to place greater emphasis on liquidity management with introduced risk management measures
to reduce liquidity risk and maintain business continuity such as:
• The Bank has maintained the optimal level of fund or cash-on-hand for operation at headquarters,
branches, and ATMs in order to deal with the unprecedented events resulted from the COVID-19
pandemic;
• As part of the implementation of the contingency funding plan, the Bank has signed facility agreements
with lenders for long-term loans (senior loans);
• Additionally, the Bank has communicated and negotiated with potential lenders for acquiring long-term
loans (senior loans) for the year of 2021.

35.4 Fair value of financial instruments

Financial instruments comprise financial assets and financial liabilities. The Group and the Bank have an
established framework and policies which provide guidance concerning the practical considerations,
principles and analytical approaches for the establishment of prudent valuation for financial instruments
measured at fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.

The valuation of financial instruments are determined by reference to quoted prices in active markets or
by using valuation techniques based on observable inputs or unobservable inputs. Management judgment
is exercised in the selection and application of appropriate parameters, assumptions and modelling
techniques where some or all of the parameter inputs are not observable in deriving fair value.

Valuation adjustment is also an integral part of the valuation process. Valuation adjustment is to reflect the
uncertainty in valuations generally for products that are less standardised, less frequently traded and more
complex in nature. In making a valuation adjustment, the Group and the Bank follow methodologies that
consider factors such as liquidity, bid-offer spread, and unobservable prices and inputs in the market and
uncertainties in the assumptions and parameters.

The Group and the Bank continuously enhance its design, validation methodologies and processes to
ensure the valuations are reflective. The valuation models are validated both internally and externally, with
periodic reviews to ensure the model remains suitable for its intended use.

166
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.4 Fair value of financial instruments (continued)

Determination of fair value:

The Group and the Bank classify its financial instruments measured at fair value according to the following
hierarchy, reflecting the significance of the inputs in making the fair value measurements:

Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or
liabilities in active markets.

Level 2 Inputs to the valuation methodology include:

• Quoted prices for similar assets and liabilities in active markets; or

• Quoted prices for identical or similar assets and liabilities in non-active markets; or
• Inputs that are observable for the asset or liability, either directly or indirectly, for substantially
the full term of the financial instrument.

Level 3 One or more inputs to the valuation methodology are unobservable and significant to the fair
value measurement.

Assets and liabilities are classified as Level 1 when the valuation is based on quoted prices for identical
assets or liabilities in active markets.

Assets and liabilities are regarded as being quoted in an active market if the prices are readily available from
a published and reliable source and those prices represent actual and regularly occurring market
transactions on an arm’s length basis.

When fair value is determined using quoted prices of similar assets and liabilities in active markets or
quoted prices of identical or similar assets and liabilities in non-active markets, such assets and liabilities
are classified as Level 2. In cases where quoted prices are generally not available, the Group and the
Bank determine fair value based upon valuation techniques that use market parameters as inputs. Most
valuation techniques employ observable market data, including but not limited to yield curves, equity
prices, volatilities and foreign exchange rates.

Assets and liabilities are classified as Level 3 if their valuation incorporates significant inputs that are not
based on observable market data. Such inputs are determined based on observable inputs of a similar
nature, historical observations or other analytical techniques.

If prices or quotes are not available for an instrument or a similar instrument, fair value will be established
by using valuation techniques or Mark-to-Model. Judgment may be required to assess the need for
valuation adjustments to appropriately reflect unobservable parameters. The valuation models shall also
consider relevant transaction data such as maturity. The inputs are then benchmarked and extrapolated
to derive the fair value.

167
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.4 Fair value of financial instruments (continued)

Determination of fair value: (continued)

(a) Financial instruments measured at fair value

The Group and the Bank did not have significant amounts of financial instruments measured at fair value.

(b) Financial instruments not measured at fair value

As at the reporting date, the fair values of financial instruments of the Group and the Bank approximate
their carrying amounts.

The estimated fair values are based on the following methodologies and assumptions:

i. Deposits and placements with other banks

Deposits and placements with other banks include current accounts which are non-interest bearing,
savings deposits and short-term deposits. The fair value of deposits and placements with other banks
approximate their carrying values at the reporting date due to the relatively short maturity of these
instruments.

ii. Financial investments

• Financial investments at FVOCI

This represents the Bank’s investment in Credit Bureau Holding (Cambodia) Ltd. with 5% as Equity
Cash Investment and 1% through the Association of Banks in Cambodia. No fair value disclosures
are provided for equity investment securities of US$153,529 (2019: US$153,529) that are measured
at cost because their fair value cannot be reliably measured. The investment is neither redeemable
nor transferable and there is no market for them. The Group and the Bank do not intend to dispose of
the investment.

• Financial investments at amortised cost

Financial investments at amortised cost include negotiable certificate of deposits (“NCD”) with the
National Bank of Cambodia with maturities of less than one year. The fair value of financial
investments approximates their carrying values at the reporting date due to the relatively short maturity
of these instruments.

iii. Loans and advances

The fair value of loans and advances is based on observable market transactions. Where observable market
transactions are not available, fair value is estimated using valuation models, such as discounted cash flow
techniques. Input into the valuation techniques includes expected lifetime credit losses, interest rates,
prepayment rates and primary origination or secondary market spreads. For collateral-dependent impaired
loans, the fair value is measured based on the value of the underlying collateral.

168
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.4 Fair value of financial instruments (continued)

(b) Financial instruments not measured at fair value (continued)

iii. Loans and advances (continued)

Input into the models may include data from third party and information obtained from other market
participants, which includes observed primary and secondary transactions. Its carrying value approximates
to fair value at the reporting date.

iv. Deposits and placements of other banks and financial institutions and deposits from customers

The fair value of deposits and placements of other banks and financial institutions and deposits from
customers with maturities of less than one year approximates their carrying amount due to the relatively short
maturity of these instruments. The fair value of deposits and placements of other banks and financial
institutions and deposits from customers with remaining maturities of more than one year are expected to
approximates their carrying amount due to the Group and the Bank offered similar interest rate of the
instrument with similar maturities and terms.

The estimated fair value of deposits with no stated maturities, which includes non-interest bearing
deposits, deposits payable on demand is the amount payable at the reporting date.

v. Other assets and other liabilities

The carrying amounts of other financial assets and other financial liabilities are assumed to approximates
their fair values as these items are not materially sensitive to the shift in market interest rates.

vi. Borrowings and subordinated debts

The fair value of borrowings and subordinated debts are estimated by discounting the expected future
cash flows using the applicable prevailing market interest rates for borrowings with similar risk profiles.
However, only the contractual interest rates which are confirmed and provided by all lenders are available
at the reporting date instead of the applicable prevailing market interest rates. The Group and the Bank
believed that the contractual interest rates were not significantly different to the prevailing market interest
rates on the ground that there was no change to interest rates following the lenders’ consideration on the
Group’s and the Bank’s credit risk profile as at reporting date. On this basis, the fair value of borrowings
and subordinated debts approximates their carrying values at the reporting date.

169
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

35. Financial risk management (continued)

35.5 Capital management

The Bank’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of
statement of financial position, are:

• To comply with the capital requirement set by the National Bank of Cambodia;
• To safeguard the Bank’s ability to continue as a going concern so that it can continue to provide returns
for shareholders and benefits for other stakeholders; and
• To maintain a strong capital base to support the development of business.

The National Bank of Cambodia requires all commercial banks to i) hold minimum capital requirement, ii)
maintain the Bank’s net worth at least equal to minimum capital, and iii) comply with solvency ratio, liquidity
coverage ratio and other prudential ratios.

The table below summarises the composition of regulatory capital follows requirement of the National
Bank of Cambodia, and the amounts are based on the separate financial statements for the year ended
31 December 2020.

The Bank
2020 2019 2020 2019
US$ US$ KHR’000 KHR’000
(Note 4) (Note 4)
Tier 1 capital
Share capital 433,163,019 428,818,154 1,752,144,412 1,747,433,978
Share Premium 11,706,215 - 47,351,640 -
Retained earnings 138,414,769 117,886,779 559,887,741 480,388,624
General reserves 455,413,629 388,464,324 1,842,148,129 1,582,992,120
Less: Intangible assets (13,884,558) (7,915,362) (56,163,037) (32,255,100)
Less: Loans to related parties (19,436,759) (10,242,118) (78,621,690) (41,736,631)
1,005,376,315 917,011,777 4,066,747,195 3,736,822,991
Tier 2 complementary capital
General provision 44,467,660 37,843,403 179,871,685 154,211,867
Subordinated debts (*) 166,723,802 138,887,498 674,397,779 565,966,554
Less: Equity participation in banking or
financial institutions (71,310,571) (71,310,571) (288,451,260) (290,590,577)
139,880,891 105,420,330 565,818,204 429,587,844

1,145,257,206 1,022,432,107 4,632,565,399 4,166,410,835

(*) This represents subordinated debts approved by the National Bank of Cambodia.

170
 ACLEDA Bank Plc.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020

36. Tax contingencies

On 24 December 2018, the Bank obtained the letter on Tax Reassessment for the financial years ended
2009 to 2013 from Department of Enterprise Tax Audit (“DETA”) of the General Department of Taxation
(“GDT”) which has requested the Bank to pay the tax liabilities on various tax matters.

On 11 January 2019, the Bank lodged the administrative protests against the reassessment in accordance
with the tax provisions. The protest letter was prepared by the Bank and submitted to the GDT on the
grounds that the reassessment is not appropriate.

On 17 September 2019, the Bank received Notification Letter for Tax Collection from GDT, requesting for
payment on tax in arrears resulted from above Tax Reassessment. On 23 September 2019, the protest
letter was prepared by the Bank again and submitted to the GDT on the grounds that the reassessment
is not appropriate. On 10 February 2020, the Bank received the Notification Letter from GDT on the
temporary delay over tax collection related to above tax re-assessment.

Additionally, on 10 March 2020, the Bank received the Notification Letter from GDT to conduct tax audit
for the fiscal years from 2015 to 2018 in which the Bank provided some requested documents to GDT on
2 July 2020. There has been no official response on the protest letter above as well as the outcome of the
tax audit for the fiscal years from 2015 to 2018 from GDT as at date of these financial statements.
Management believes that the tax liability recorded by the Bank is adequate.

37. Significant event

Initial Public Offering (“IPO”)

On 25 February 2020, the Bank obtained approval in principle for the Bank’s IPO from the Board of the
Securities and Exchange Commission of Cambodia (“SECC”). The Bank and Yuanta Securities
(Cambodia) Plc. (“YSC”), the underwriter, conducted the Book Building process from 3 to 14 March 2020.
On 20 March 2020, the result of the Book Building was released, with 2,180 investors participated, in which
95.55% and 4.45% are local and foreign investors, respectively. The final offering price has been set at
KHR16,200 (US$3.97) in accordance with the Book Building and Subscription Procedure approved by
the SECC.

The Subscription phase started from 24 March 2020 to 24 April 2020 and the result was released on
30 April 2020 with 4,344,865 shares were subscribed.

The shares of the Bank were listed on the Cambodia Securities Exchange (“CSX”) on 25 May 2020.

171