Annual report 2008-OK-B-up.qxp - Canadia Bank Plc.

Annual Report 2008 64

matika 

CONTENTS 

CANADIA BANK PLC. 

Annual Report 2008 

TMB½r 

 

Page 

sarlixitBIRbFan / naykRbtibtþi 

/CEO 

President’s/CEO’s Report 2-7 

TsSn³vis½y ebskkmµ nig tMélsÚñl 

 

Vision, Mission and Core values 8 

esckþIsegçbGMBIhirBaØvtßú 

 

Financial Highlights 9-10 

karcUlrYmcMENkkñúgshKmn_ nigsgÁm 

 

Contribution to Community and Society 11 

karGPivDÆn_FnFanmnusS 

 

Human Resource Development 11 

kareFVIGPi)alkic©rbs;FnaKar 

 

Corporate Governance 11 

karRKb;RKghaniP½y 

 

Risk Management 12 

RkmsIlFm’rbs;FnaKarkaNaDIy:a k>G 

 

Canadia Bank’s Code of Conduct 12 

r)aykarN_rbs;RkumRbwkSaPi)al 

 

Director’s Report 13-16 

r)aykarN_rbs;svnkrÉkraCü 

 

Independent Auditor’s Report 17-18 

taragtulükar 

 

Balance Sheet 19-21 

r)aykarN_lT§pl 

 

Income Statement 22-24 

r)aykarN_sþIBIkarERbRbYlmUlniFiPaKTunik 

 

Statement of Change in Equity 25-27 

r)aykarN_lMhUrsac;R)ak; 

 

Cash Flow Statement 28-30 

kMNt;sMKal;r)aykarN_hirBaØvtßú 

 

Notes to the Financial Statements 31-70 

B½t’mansMrab;TMnak;TMng 

 

Corporate Contact Information 71-74

sarlixitBIRbFan / 

naykRbtibtþi 

CUncMeBaH GtifiCn PaKTunik nigmitþPkþirbs; FnaKarkaNaDIya: k>G TaMgGs; ¡ 

kñúgGMT,úgqñaM 2008 enH BiPBelak)anCYbRbTHnUvvibtþihirBaØvtßú nigesdækic©d¾GaRkk;bMput cab;taMgBIcugqñaM 1920 

nigedImqñaM 1930 mk . mUlehtuTaMgGs;enHekIteT,IgedaysarbBaðavibtþi \NTan enAkñúgshrdæGaemrikenABak;kNþal 

qñaM 2007 ehIy)anrIkraldaldl;RbeTsepSg² dUcCa cRkPBGg;eKøs TVIbGWur:ub nigRbeTs]sSahkmμenABaseBj 

BiPBelak nigCH\T§iBlCaGviC¢amandl; kMeNInplitplkñúgRsuksrub (GDP) enAkñúgqñaM 2008 nigbnþeTAqñaM 2009 . 

TIpSarPaKh‘unPaKeRcIn )anFøak;cuHtMélCag 50° karvinieyaKelIGclnRTBüEdlekIneT,Igkñúgry³eBlBI 5 eTA 10 

qñaMenH)anFøak;cuH . karekIneT,IgnUvPaBGt;kargareFVIelIBiPBelakKWminEmnCaktþacMbgkñúgqñaM 2008 enHeT 

EtvanwgQaneT,Igdl;cMNucFn;FrmYykñúgry³eBl 6 ExedImqñaM 2009 eTaHbICaya:gNak¾edaytamry³kar BüakrN_ 

vanwgGacFøak;cuHenAcugqñaM 2009 nigedImqñaM 2010 . 

xN³eBlEdl´sresrnUvsarlixitenHKWmankþIsgÇwmmYYyfavibtþiEdlbgáeT,IgedaymnusSelak enH)ancuHfm 

fynaeBlfμIenH ehIyesdækic©nwgcab;epþImrIkcMerIneT,IgvijnaeBlqab;² xagmuxenH.esdækic©viTU CaeRcInenACMuvij 

BiPBelak)an pþl;nUvPaBsuTidæiniymcMeBaHkaregIbeT,IgvijnUvsßanPaBhirBaØvtßú nig esdækic©Edl)anFøak;cuHkñúgPaB 

exμAggwtGs;ry³eBl 18 ExknøgmkenH . 

RbeTskMBugGPivDÆn_dUcCa RbeTskm3landuløarGaemrik . cMeBaHRbtibtþikarsaxa)anekIneT,IgBI 16 eTA 25 saxa 

nigcMnYnbuKÁlikekInBI 602 eTA 803 nak; . 

2 

Annual Report 2008

eTaHbICa FnaKarkaNaDIya: )anbegáInkarRbugRby½tñcMeBaHkarpþl;\NTanenAkñúgqmasTI2énqñaM 2008 

ya:gNak¾eday kBa©b;\NTanrbs;eyIg)anekIneT,Ig 17>5° eTAdl; 391 landuløarGaemrik. TaMgenHbgðajBITMnukcitþ 

rbs;FnaKareyIgcMeBaHesßrPaBsnþisux nigsuvtßiPaBénbriyakasneya)ayesdækic© nigTisedAsgÁmTaMgmUl eRkamkardwknaM 

rbs;raCrdæaPi)al énRBHraCaNacRkkm

CEO 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



PRESIDENT’S AND CEO'S REPORT 

Distinguished clients, shareholders and friends of CANADIA BANK PLC, 

During the year 2008 the world has experienced the worst financial and economical crisis since late 1920/ 

early 1930. What has all started as "sub-prime" problem in the United States in mid-2007, spreading to 

other countries like Great Britain, continental Europe and industrial countries all over the world, has been 

turned into negative growth domestic product (GDP) development in many countries in 2008 and will 

continue during a large part of 2009. Major stock markets lost more than 50% of their value, real estate 

investment gains of the last 5 - 10 years have been erased. Raising unemployment worldwide was not 

much of a factor in 2008, however will hit new heights within the first 6 months in 2009, but is predicted 

to ease in late 2009 / early 2010. 

While I write this statement there seem to be hope that this "man-made" crisis slowed down recently and 

will bottom out soon. Many well respected economists world-wide see reasons for optimism for a 

consolidation and recovery of the financial and economical gloom and doom of the past 18 months. 

Developing countries like Cambodia could not escape this global turmoil, however the effects were more 

indirect than direct. Cambodia has been hit less than other countries like Singapore or Thailand, since 

these countries are more a player in the globalization. Our banking & finance sector has been largely 

shielded from the global financial systems and thus more or less bypassed. However less demand in 

garments and apparel, less arrivals of tourists and the slow down of constructions have caused raising 

unemployment and less income for the general public. Agriculture has been a bright spot in Cambodia's 

economy, employing about 60% of the workforce and absorbing a large number of jobless people from 

other sectors, who have returned to their provinces to help their families in the fields. 

The banking & finance sector remains healthy and stable. The regulating authorities have promptly taken 

the necessary actions and measures to assure that liquidity, equity and other important ratios in the 

sector were secured. The average capital adequacy ratio for Cambodia's commercial banks in 2008 stood 

at 28%, well above the benchmark of 15% and this represents a top level worldwide in the banking 

industry. 

Achievements and goals 

With our strong commitment to our core values, vision and mission we have again achieved outstanding 

results in many aspects in 2008. Compared to 2007 net-profit attributable to shareholders improved by 

10% to US$ 22,1 million, total assets grew by 6% to 583,6 million, total deposits rose to US$ 462,1 million, 

shareholders equity "Tier1" increased to US$ 95,2 million and "Tier2" to US$ 102,3 million, the operational 

network expanded from 16 to 25 branches and the number of employees increased from 602 to 803. 

Despite the fact that especially in the second half of 2008 banks in general looked more prudent at loan 

applications, our "net" loan portfolio increased by 17,5% to US$ 391 million. That reflects also the 

confidence of our bank in the Royal Government of Cambodia, the stable, secure and safe political climate 

of our country, its economical potential and overall social goals. 

6 


With the financial year end 2008 we put our new core banking system "T 24" into full operation. This system 

allows the speedy daily consolidation of the Head Office and branch operations, assures up to date 

Management Information Systems (MIS), streamlines overall reporting requirements and provides more 

efficient services to all our clients. In addition this system allows us to be prepared for the challenging 

future of internet banking. 

Our commitment in the development of our Human Resource Capital is in full swing. Intensive skills training 

on management and staff level has been developed in 2008 and will continue to be a priority during 

2009. Our ATM network has increased to 48 ATM machines at the end of 2008. Another 17 ATM outlets are 

planned to be installed in 2009. Our exclusive agreement with China Union Pay (CUP card or Chinese Credit 

Card) has been implemented in 2008 and will increase our market share in the credit card market in 2009. 

We plan to expand our branch network with 4-5 new branches in strategic locations in Provinces and 

Districts nationwide. The board of directors of the bank has decided to publish annual and half yearly 

financial results in all major newspapers in Cambodia in order to be as transparent as possible to our clients 

and the general public. During 2009 we will also offer a number of scholarship program for applicants with 

a high-level academic track record with the possibility to enter into a full-time job with the bank after 

graduation. And in later 2009 the Head Office of Canadia Bank will be ready to move into the new Canadia 

Tower. 

Acknowledgements 

Like every year since we have published our annual report I would like on behalf of the board of directors 

and the management of the bank to thank all shareholders, customers, regulating authorities, suppliers 

and friends of Canadia Bank for their loyalty and support. 

Last, but not least my vote of thanks goes to our employees at all levels for their hard work for the bank 

and loyalty to the bank during the past year. Without them our success and outstanding results would not 

be possible. Our strong and competent human resource capital will remain a key factor for our future goals 

and challenges 

Pung Kheav Se 

President and Chief Executive Officer 

Date: 15 June 2009 


VISION 

To be a premier and a well-rounded local financial services group, dedicated to creating the highest levels 

of value for our clients, shareholders and employees, and at the same time producing long-term levels of 

industry-leading profitability and growth. 

MISSION 

We work as a unified team to understand our client's ever-changing requirements and exceeding their 

expectations by providing solutions to their business needs in this dynamic environment. 

CORE VALUE 

Doing the right thing - We have the responsibility of being ethical ambassadors for our customers, 

shareholders, communities and one another. 

Trusting and teamwork - We succeed together, taking collective responsibility for our customers' satisfaction. 

Inclusive meritocracy - We care about one another, value one another's differences, focus on results and 

strive to help all associates reach their full potential and get reward as well as recognition. 

Winning - We have a passion for achieving results and winning, for all our stakeholders and for one another. 

Leadership - We will be decisive and accountable leaders, taking action to help build a better future. 

8 


FINANCIAL HIGHLIGHTS 

Year ended 31 December 2008 2007 2006 2005 2004 

(US$ million) 

Gross Revenue 62.62 43.63 30.93 23.48 17.67 

Net income 22.07 20.11 12.52 6.03 3.78 

Total assets 583.57 552.51 368.09 293.78 248.76 

Shareholder's equity 95.25 73.17 60.14 43.67 2.55 

Loans (net) 390.60 332.40 205.41 157.73 129.50 

Deposits 462.14 458.31 293.33 237.68 214.42 

Return on Shareholder's equity (RoE) 23.17% 25.17% 20.80% 13.75% 13.29% 

Return on assets (RoA) 3.78% 3.64% 3.40% 2.04% 1.49% 

Interest margin to gross income 62.83% 61.99% 61.59% 76.62% 67.56% 

Expense to income ratio 55.94% 42.37% 49.29% 67.89% 73.07% 

Loan to deposits 94.45% 76.79% 74.13% 71.36% 66.22% 

Solvency ratio 20.26% 16.71% 18.81% 15.94% 16.52% 

Liquidity ratio 53.42% 61.05% 72.95% 71.60% 68.24% 

Net worth (US$ Million) 90.44 68.50 49.56 33.07 27.52 

Earnings per share (US$ / share) 0.55 0.50 0.30 0.23 0.16 


FIVE YEARS FINANCIAL REVIEW 

Total assets 

Deposits 

Loans and advances-net 

Total shareholder’s equity 

Net profit 

Earnings per share 

Return on equity 

Return on assets 

10 


CONTRIBUTION TO THE COMMUNITY AND SOCIETY 

A healthy development of the community and society in general profits from a strong performance in all 

business sectors. As a leading commercial bank we recognize the importance to serve as an important 

pillar for the public infrastructure as part of our social responsibilities. Our mission and vision as well as 

overall business strategy contributes to the economical and social development of Cambodia. Major 

activities undertaken include, but are not limited to: 

• Assistance in the development of human resources in Cambodia the Bank has provided 150 

internships for university students. 

• Donations of approx. US$400,000 to communities as well as social institutions, such as 

Cambodian Red Cross, education, Non-Profit Organizations etc. 

HUMAN RESOURCE DEVELOPMENT 

The Bank focuses as one of its priorities in the capacity building of its human capital by providing both 

internal and external training programs locally and internationally. In 2008, the Bank has given financial 

support to 35 staff members to undertake ACCA training programs in Cambodia and overseas. Additional 

staff members are studying for their MBA, general English and Chinese language skills and technical 

improvements related to Banking & Finance. Furthermore the Bank has and continues to organize internal 

training courses to enhance its staff capacity in matters of banking, accounting and related to the planed 

stock exchange. 

The quality of training has further improved in order to meet the requirements and challenges of best 

business practices as well as development, modernization and integration steps in line with the overall 

Bank's business plan and strategies. 

CORPORATE GOVERNANCE 

The Bank is fully committed to maintain high standards in corporate governance and sound 

practices to ensure sustainable growth rates and to protect the interest of its stakeholders. 

business 

The composition of the Board has been realigned to strengthen its capacity, strategy and overall business 

policy and to provide leadership for the management and staff. During 2008 two non-executive and independent 

directors (with extensive experience in finance, banking and audit) were appointed. All Board 

members actively participated in the Board- and committee meetings. 

The Audit Committee, who reports directly to the Board of Directors, reviews the audited financial 

statements to ensure that it conforms with accepted accounting principles. In addition it provides their 

judgments on items that might affect the financial position of the Bank. The Committee has the power to 

conduct or authorize investigations into any matter within its terms of reference. 


RISK MANAGEMENT 

Being fully aware of the important role of risk management, the Board of Directors focused particularly on 

this issue during the year. The Risk Management Committee (RMC) of the Board (including one independent 

director as member), held periodic meetings to assess risks and provide guidance about managing 

significant risks based on various sources of information and data with help of analytical and methodological 

frameworks. On the operational level the Internal Audit regularly and timely checks whether all Head 

Office departments and branches follow the internal rules and regulations written in the banks operational 

handbooks. In case of need the Audit Department requires and follows up on prompt corrective actions 

based on their report. The Risk Management- and the Credit Management Committees monitor and 

evaluate possible risks of all loans to clients. In addition each head of all operating units have regular 

meetings in order to be well informed and aware of potential and actual risks which could effect the bank 

overall performance. 

CODE OF CONDUCT 

All staff and management are required to perform their work diligently and honestly, placing first the 

interests of the Bank. In addition, all staff is deemed to understand, accept and follow their duty to strictly 

abide by the Bank's Code of Conduct which is stipulated as follows: 

• Not to solicit or to receive on an unsolicited basis gifts, commissions, kickbacks or 

valuables of any kind from customers; 

• Not to use their position to conduct private business; 

• Not to conduct in any illegal or immoral activities acting in the capacity of the Bank's staff; and 

• Not to engage in any acts, behaviors or arrangements causing damages to the Bank's 

reputation and/or financial interest. 

12 


DIRECTORS' REPORT 

The Board of Directors ("the Directors") hereby submit their report and the audited financial statements of 

Canadia Bank Plc. ("the Bank") for the year ended 31 December 2008. 

CANADIA BANK PLC. 

The Bank was incorporated in 1991 under a joint venture between the National Bank of Cambodia 

("the Central Bank") and certain overseas Cambodians. On 4 February 1998, the Central Bank disposed of 

all its shares to private investors. 

In 2001, the Overseas Cambodian Investment Corporation ("OCIC"), a public limited company incorporated 

in the Kingdom of Cambodia, acquired 100% of the shares of the Bank and consequently became the 

holding company of the Bank. 

In 2007, OCIC conducted a corporate restructuring whereby it transferred its investment in the Bank to 

Canadia Investment Holding Plc ("CIHP"). The restructuring was approved by the Central Bank and the 

Ministry of Commerce. Consequently, CIHP is now the new holding company of the Bank. 

PRINCIPAL ACTIVITIES 

The principal activities of the Bank consist of the operation of core banking business and the provision of 

related financial services through the Bank's head office and various branches in Phnom Penh and the 

provinces. 

There were no significant changes in the nature of these principal activities during the year. 

RESULTS OF OPERATIONS AND DIVIDEND 

The results of operations for the year ended 31 December 2008 are set out in the income statement on 

page 24. 

There were no dividends declared or paid during the year ended 31 December 2008 (2007: Nil). 

RESERVES AND PROVISIONS 

There were no material movements to or from reserves and provisions during the financial year other than 

those disclosed in the financial statements. 


BAD AND DOUBTFUL LOANS 

Before the financial statements of the Bank were drawn up, the Directors took reasonable steps to 

ascertain that action had been taken in relation to the writing off of bad loans or the making of provisions 

for bad and doubtful loans, and satisfied themselves that all known bad loans had been written off and 

that adequate provisions had been made for bad and doubtful loans. 

At the date of this report, the Directors are not aware of any circumstances which would render the 

amount written off for bad loans or the amount of the provision for bad and doubtful loans in the 

financial statements of the Bank inadequate to any material extent. 

ASSETS 

Before the financial statements of the Bank were drawn up, the Directors took reasonable steps to ensure 

that any assets which were unlikely to be realised in the ordinary course of business at their value as shown 

in the accounting records of the Bank, have been written down to an amount which they might be 

expected to realise. 

At the date of this report, the Directors are not aware of any circumstances which would render the values 

attributed to the assets in the financial statements of the Bank misleading in any material respect. 

VALUATION METHODS 

At the date of this report, the Directors are not aware of any circumstances that have arisen which would 

render adherence to the existing method of valuation of assets and liabilities in the financial statements of 

the Bank misleading or inappropriate in any material respect. 

CONTINGENT AND OTHER LIABILITIES 

At the date of this report, there is: 

(a) no charge on the assets of the Bank which has arisen since the end of the financial year 

which secures the liabilities of any other person, and 

(b) no contingent liability in respect of the Bank that has arisen since the end of the financial 

year other than in the ordinary course of banking business. 

No contingent or other liability of the Bank has become enforceable, or is likely to become enforceable 

within the period of twelve months after the end of the financial year which, in the opinion of the 

Directors, will or may have a material effect on the ability of the Bank to meet its obligations as and when 

they become due. 

CHANGE OF CIRCUMSTANCES 

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this 

report or the financial statements of the Bank which would render any amount stated in the financial 

statements misleading in any material respect. 

14 


ITEMS OF AN UNUSUAL NATURE 

The results of the operations of the Bank for the financial year were not, in the opinion of the Directors, 

materially affected by any items, transaction or event of a material and unusual nature. There has not 

arisen in the interval between the end of the financial year and the date of this report any item, 

transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect 

substantially the results of the operations of the Bank for year in which this report is made. 

THE BOARD OF DIRECTORS 

The members of the Board of Directors holding office during the year and as at the date of this report are: 

Mr Pung Kheav Se, President/Chief Executive Officer 

Mrs Lim Sophany, Director 

Mr Pung Way, Director 

Mr Jimmy Leow Min Fong, Chairman of Audit Committee 

Mr Charles Vann, Executive Vice President 

Mrs Pung Carolyne, Assistant to President 

Mr Chen Lee Yiaw Hui, Vice President 

Mr Gerald Yeo, (Non-executive, appointed on 1 June 2008) 

Mr Shen Jie Qing, (Non-executive, resigned on 15 March 2008) 

DIRECTORS' INTERESTS 

The Bank's directors who hold shares in CIHP, the ultimate parent company of the Bank are: Mr Pung Kheav 

Se, Mr Pung Way and Mrs Lim Sophany. 

DIRECTORS' BENEFITS 

During and at the end of the financial year, no arrangements existed to which the Bank was a party with 

the object of enabling directors of the Bank to acquire benefits by means of the acquisition of shares in or 

debentures of the Bank or any other body corporate. 

No director of the Bank has received or become entitled to receive any benefit by reason of a contract 

made by the Bank with the directors or with a firm of which the director is a member, or with a company 

in which the director has a substantial financial interest other than those disclosed in the financial 

statements. 

RESPONSIBILITIES OF THE DIRECTORS IN RESPECT OF 

THE FINANCIAL STATEMENTS 

The Directors are responsible for ensuring that the financial statements are properly drawn up so as to 

present fairly, in all material respects, the financial position of the Bank as at 31 December 2008 and of its 

financial performance and cash flows for the year then ended. In preparing these financial statements, the 

Directors are required to: 


i) adopt appropriate accounting policies which are supported by reasonable and prudent 

judgements and estimates and then apply them consistently; 

ii) comply with the disclosure requirements and guidelines issued by the Central Bank and 

Cambodian Accounting Standards or, if there have been any departures in the interests of 

fair presentation, these have been appropriately disclosed, explained and quantified in the 

financial statements; 

iii) maintain adequate accounting records and an effective system of internal controls; 

iv) prepare the financial statements on a going concern basis unless it is inappropriate to 

assume that the Bank will continue operations in the foreseeable future; and 

effectively control and direct the Bank in all material decisions affecting the operations and 

performance and ascertain that these have been properly reflected in the financial state 

ments. 

The Directors confirm that the Bank has complied with the above requirements in preparing the financial 

statements. 

APPROVAL OF THE FINANCIAL STATEMENTS 

The accompanying financial statements, which present fairly, in all material respect, the financial position 

of the Bank as at 31 December 2008, and of its financial performance and its cash flows for the year then 

ended in accordance with the guidelines issued by the Central Bank and Cambodian Accounting 

Standards, were approved by the Board of Directors. 

Signed in accordance with a resolution of the Board of Directors. 

Mr Pung Kheav Se 

President and Chief Executive Officer 

Date: 31 March 2009 

Mr Charles Vann 

Executive Vice President 


16 


Independent Auditor’s Report 

PricewaterhouseCoopers (Cambodia) Ltd 

124 Norodom Boulevard, Chamkarmon 

Phnom Penh 

Kingdom of Cambodia 

Tel : (855) 23 218 086 

Fax : (855) 23 211 594 

To the Shareholders of Canadia Bank Plc. 

We have audited the accompanying financial statements of Canadia Bank Plc. ("the Bank") which comprise 

the balance sheet as of 31 December 2008 and the income statement, statement of changes in equity and 

cash flow statement for the year then ended, a summary of significant accounting policies and other 

explanatory notes on pages 19 to 70. 

Management's Responsibility for the Financial Statements 

The Board of Directors is responsible for the preparation and fair presentation of these financial statements 

in accordance with guidelines issued by the National Bank of Cambodia and Cambodian Accounting 

Standards. This responsibility includes: designing, implementing and maintaining internal controls 

relevant to the preparation and fair presentation of financial statements that are free from material 

misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and 

making accounting estimates that are reasonable in the circumstances. 

Auditor's Responsibility 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted 

our audit in accordance with International Standards on Auditing. These Standards require that we 

comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether 

the financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in 

the financial statements. The procedures selected depend on the auditor's judgment, including the 

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. 

In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation 

and fair presentation of the financial statements in order to design audit procedures that are appropriate 

in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's 

internal control. An audit also includes evaluating the appropriateness of accounting policies used and the 

reasonableness of accounting estimates made by management, as well as evaluating the overall 

presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 

our audit opinion. 


Opinion 

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial 

position of the Bank as of 31 December 2008, and of its financial performance and its cash flows for the 

year then ended in accordance with the guidelines issued by the Central Bank and Cambodian Accounting 

Standards. 

For PricewaterhouseCoopers (Cambodia) Limited 

Phnom Penh, Kingdom of Cambodia 


18 


taragtulükar 

naéfTI31 ExFñÚ qñaM2008 

kMNt; 31 FñÚ 2008 31 FñÚ 2007 31 FñÚ 2008 31 FñÚ 2007 

sMKal; duløarGaemrik duløarGaemrik lanerol lanerol 

(mineFVIsvnkmμ ) (mineFVIsvnkmμ ) 

RTBüskmμ 

sac;R)ak;kñúgéd 4 42>825>814 27>501>166 174>772 110>087 

smtulüenAFnaKarkNþal 5 72>046>256 71>056>749 294>021 284>440 

smtulüCamYyFnaKar nigRKwHsßanhirBaØvtßúepSg² 6 28>785>020 80>725>776 117>472 323>145 

\NTan nigbuerRbTaneGayGtifiCn-suT§ 7 390>602>198 332>403>990 1>594>047 1>330>613 

RTBüskmμepSg² 8 4>280>898 4>913>411 17>470 19>668 

vinieyaKTunkñúgFnaKarBaNiC¢kmμeRkARbeTs 9 10>580>000 10>580>000 43>177 42>352 

RTBüsm,tþi nigbrikçar 10 31>221>264 19>643>894 127>414 78>635 

kmμviFIkMuBüÚT½r 11 1>130>351 1>172>275 4>613 4>693 

RTBüsm,tiþrwbGUs 12 2>100>000 4>512>741 8>570 18>065 

srubRTBüskmμ 583>571>801 552>510>002 2>381>556 2>211>698 

RTBüGkmμ nigmUlniFiPaKTunik 

RTBüGkmμ 

R)ak;beBaØIrbs;FnaKarepSg² 13 25>777>981 6>739>404 105>200 26>978 

R)ak;beBaØIGtifiCn 14 436>362>009 451>570>063 1>780>793 1>807>635 

bMNulBn§elIR)ak;cMeNj 15 4>834>595 4>421>143 19>730 17>698 

bMNulepSg² 16 6>399>452 5>143>666 26>116 20>590 

kMcIepSg² 17 7>057>279 4>379>241 28>801 17>530 

bMNulbnÞab;bnSM 18 7>080>000 7>080>000 28>894 28>341 

sMviFanFnsMrab;kardwgKuNbuKÁlik 19 810>350 - 3>307 - 

srubRTBüGkmμ 488>321>666 479>333>517 1>992>841 1>918>772 

mUlniFiPaKTunik 

edImTunPaKh‘un 20 40>545>000 40>545>000 165>464 162>302 

cMeNjrkSaTuk 54>705>135 32>631>485 223>251 130>624 

srubmUlniFiPaKTunik 95>250>135 73>176>485 388>715 292>926 

srubRTBüGkmμ nigmUlniFiPaKTunik 583>571>801 552>510>002 2>381>556 2>211>698 


20 


BALANCE SHEET 

AS AT 31 DECEMBER 2008 

2008 2007 2008 2007 

Note US$ US$ Riel Million Riel Million 

(Unaudited) (Unaudited) 

ASSETS 

Cash on hand 4 42,825,814 27,501,166 174,772 110,087 

Balances with the Central Bank 5 72,046,256 71,056,749 294,021 284,440 

Balances with other banks 6 28,785,020 80,725,776 117,472 323,145 

Loans and advances to customers 7 390,602,198 332,403,990 1,594,047 1,330,613 

Other assets 8 4,280,898 4,913,411 17,470 19,668 

Investment 9 10,580,000 10,580,000 43,177 42,352 

Property and equipment 10 31,221,264 19,643,894 127,414 78,635 

Computer software 11 1,130,351 1,172,275 4,613 4,693 

Properties foreclosed 12 2,100,000 4,512,741 8,570 18,065 

Total assets 583,571,801 552,510,002 2,381,556 2,211,698 

LIABILITIES AND SHAREHOLDERS' EQUITY 

LIABILITIES 

Deposits from banks 13 25,777,981 6,739,404 105,200 26,978 

Due to customers 14 436,362,009 451,570,063 1,780,793 1,807,635 

Income tax liabilities 15 4,834,595 4,421,143 19,730 17,698 

Other liabilities 16 6,399,452 5,143,666 26,116 20,590 

Borrowings 17 7,057,279 4,379,241 28,801 17,530 

Subordinated debt 18 7,080,000 7,080,000 28,894 28,341 

Provision for staff gratitude obligations 19 810,350 - 3,307 - 

Total liabilities 488,321,666 479,333,517 1,992,841 1,918,772 

SHAREHOLDERS' EQUITY 

Share capital 20 40,545,000 40,545,000 165,464 162,302 

Retained earnings 54,705,135 32,631,485 223,251 130,624 

Total shareholders' equity 95,250,135 73,176,485 388,715 292,926 

Total liabilities and shareholders' equity 583,571,801 552,510,002 2,381,556 2,211,698 


)aykarN_lT§pl 

sMrab;dMNac;qñaMéfTI31 ExFñÚ qñaM2008 

kMNt; 31 FñÚ 2008 31 FñÚ 2007 31 FñÚ 2008 31 FñÚ 2007 

sMKal; duløarGaemrik duløarGaemrik lanerol lanerol 

(mineFVIsvnkmμ ) (mineFVIsvnkmμ ) 

cMNUlkarR)ak; 21 52>709>241 36>414>584 215>107 145>768 

cMNaykarR)ak; 21 ¬13>364>028¦ ¬9>367>741¦ ¬54>539¦ ¬37>499¦ 

cMNUlkarR)ak;suT§ 39>345>213 27>046>843 160>568 108>269 

cMNUlkMér nigeCIgsar 22 8>830>950 5>859>422 36>039 23>455 

cMNaykMér nigeCIgsar 22 ¬1>087>439¦ ¬528>071¦ ¬4>438¦ ¬2>114¦ 

cMNUlkMér nigeCIgsarsuT§ 7>743>511 5>331>351 31>601 21>341 

cMNUlepSg² 23 1>079>862 1>046>067 4>407 4>187 

48>168>586 33>424>261 196>576 133>797 

cMNayrdæ)alTUeTA 24 ¬11>408>141¦ ¬7>140>100¦ ¬46>557¦ ¬28>582¦ 

sMviFanFnsMrab;karxatbg;\NTan - suT§ 26 ¬9>168>383¦ ¬1>140>676¦ ¬37>416¦ ¬4>566¦ 

cMeNjsuT§munbg;Bn§ 27>592>062 25>143>485 112>603 100>649 

Bn§elIR)ak;cMeNj 27 ¬5>518>412¦ ¬5>028>697¦ ¬22>521¦ ¬20>130¦ 

cMeNjsuT§ 22>073>650 20>114>788 90>082 80>519 

22 



INCOME STATEMENT 

FOR THE YEAR ENDED 31 DECEMBER 2008 


Note US$ US$ Riel Million Riel Million 


Interest income 21 52,709,241 36,414,584 215,107 145,768 

Interest expense 21 (13,364,028) (9,367,741) (54,539) (37,499) 

Net interest income 39,345,213 27,046,843 160,568 108,269 

Fee and commission income 22 8,830,950 5,859,422 36,039 23,455 

Fee and commission expense 22 (1,087,439) (528,071) (4,438) (2,114) 

Net fee and commission income 7,743,511 5,331,351 31,601 21,341 

Other operating income 23 1,079,862 1,046,067 4,407 4,187 

48,168,586 33,424,261 196,576 133,797 

General administrative expenses 24 (11,408,141) (7,140,100) (46,557) (28,582) 

Provision for bad loans - net 26 (9,168,383) (1,140,676) (37,416) (4,566) 

Profit before income tax 27,592,062 25,143,485 112,603 100,649 

Income tax expense 27 (5,518,412) (5,028,697) (22,521) (20,130) 

Net profit for the year 22,073,650 20,114,788 90,082 80,519 

24 


)aykarN_sþIBIkarERbRbYlmUlniFiPaKTunik 


edImTun cMeNjrkSaTuk srub 

duløarGaemrik duløarGaemrik duløarGaemrik 

sMrab;dMNac;qñaMenAéfTI31 ExFñÚ qñaM2007 

smtulüenAéfTI01 Exmkra qñaM 2007 40>545>000 12>516>697 53>061>697 

cMeNjsuT§kñúgqñaM - 20>114>788 20>114>788 

smtulüenAéfTI31 ExFñÚ qñaM2007 40>545>000 32>631>485 73>176>485 

smmUlCalanerol (mineFVIsvnkmμ ) 162>302 130>624 292>926 

sMrab;dMNac;qñaMenAéfTI31 ExFñÚ qñaM2008 

smtulüenAéfTI 01 Ex mkra qñaM 2008 40>545>000 32>631>485 73>176>485 

cMeNjsuT§kñúgqñaM - 22>073>650 22>073>650 

smtulüenAéfTI31 ExFñÚ qñaM2008 40>545>000 54>705>135 95>250>135 

smmUlCalanerol (mineFVIsvnkmμ ) 165>464 223>251 388>715 


26 


STATEMENT OF CHANGE IN EQUITY 


Share Retained 

capital earnings Total 

US$ US$ US$ 

For the year ended 31 December 2007 

Balance as at 1 January 2007 40,545,000 12,516,697 53,061,697 

Net profit for the year - 20,114,788 20,114,788 

Balance as at 31 December 2007 40,545,000 32,631,485 73,176,485 

In million Riel equivalent (Unaudited) 162,302 130,624 292,926 

For the year ended 31 December 2008 

Balance as at 1 January 2008 40,545,000 32,631,485 73,176,485 

Net profit for the year - 22,073,650 22,073,650 

Balance as at 31 December 2008 40,545,000 54,705,135 95,250,135 

In million Riel equivalent (Unaudited) 165,464 223,251 388,715 


)aykarN_lMhUrsac;R)ak; 


31 FñÚ 2008 31 FñÚ 2007 31 FñÚ 2008 31 FñÚ 2007 

duløarGaemrik duløarGaemrik lanerol lanerol 

¬mineFVIsvnkmμ¦ ¬mineFVIsvnkmμ¦ 

lMhUrsac;R)ak;)anmkBIskmμPaBRbtibtiþkar 

sac;R)ak;Edl)aneRbIR)as;kñúgRbtibtiþkar 

¬kMNt;sMKal; 28¦ ¬19>939>701¦ ¬65>641>329 ¬81>374¦ 262>762 

Bn§elIR)ak;cMeNj)anbg; ¬5>104>960¦ ¬3>394>072¦ ¬20>834¦ ¬13>586¦ 

sac;R)ak;suT§)anmkBIskmμPaBRbtibtiþkar ¬25>044>661¦ 62>247>257 ¬102>208¦ 249>176 

lMhUrsac;R)ak;)anmkBIskmμPaBvinieyaK 

R)ak;beBaØIenAFnaKarkNþal ¬23>999>976¦ ¬11>500>017¦ ¬97>944¦ ¬46>035¦ 

sac;R)ak;)anmkBIkarlk;GclnRTBü 122>178 90>146 499 361 

karTijGclnRTBü ¬12>831>762¦ ¬10>079>408¦ ¬52>366¦ ¬40>348¦ 

karTijkmμviFIkMuBüÚT½r ¬74>693¦ ¬1>162>108¦ ¬305¦ ¬4>652¦ 

sac;R)ak;suT§)anmkBIskmμPaBvinieyaK ¬36>784>253¦ ¬22>651>387¦ ¬150>116¦ ¬90>674¦ 

lMhUrsac;R)ak;)anmkBIskmμPaBhirBaØb,Tan 

TUTat;sgmUlniFikMcI - KfW ¬427>429¦ ¬427>429¦ ¬1>744¦ ¬1>710¦ 

TUTat;sgmUlniFikMcI - IFC - ¬2>500>000¦ - ¬10>008¦ 

sac;R)ak;)anmkBIskmμPaBhirBaØb,Tan ¬427>429¦ ¬2>927>429¦ ¬1>744¦ ¬11>718¦ 

karERbRbYlsuT§énsac;R)ak; nigsmmUlsac;R)ak; ¬62>256>343¦ 36>668>441 ¬254>068¦ 146>784 

sac;R)ak; nigsmmUlsac;R)ak; ³ 

naedImkariybriecäT 139>887>823 103>219>382 559>971 418>761 

lMeGogbNþalmkBIGRtabþÚrR)ak; - - 10>912 5>574 

nacugkariybriecäT ¬kMNt;sMKal; 4¦ 77>631>480 139>887>823 316>815 559>971 

28 


– 

– 

 

 

 

 

 

 

 


CASH FLOW STATEMENT 



US$ US$ Riel Million Riel Million 


Cash flows from operating activities 

Cash (used in)/generated from operations (note 28) (19,939,701) 65,641,329 (81,374) 262,762 

Income tax paid (5,104,960) (3,394,072) (20,834) (13,586) 

Net cash used in operating activities (25,044,661) 62,247,257 (102,208) 249,176 

Cash flows from investing activities 

Reserve requirement with the Central Bank (23,999,976) (11,500,017) (97,944) (46,035) 

Proceeds from sale of property and equipment 122,178 90,146 499 361 

Purchases of property and equipment (12,831,762) (10,079,408) (52,366) (40,348) 

Purchases of computer software (74,693) (1,162,108) (305) (4,652) 

Net cash used in investing activities (36,784,253) (22,651,387) (150,116) (90,674) 

Cash flows from financing activities 

Repayment of borrowing from KfW (427,429) (427,429) (1,744) (1,710) 

Repayments of borrowing from IFC - (2,500,000) - (10,008) 

Net cash used in financing activities (427,429) (2,927,429) (1,744) (11,718) 

Net changes in cash and cash equivalents (62,256,343) 36,668,441 (254,068) 146,784 

Cash and cash equivalents: 

At the beginning of the year 139,887,823 103,219,382 559,971 418,761 

Currency translation difference - - 10,912 (5,574) 

At the end of the year (note 4) 77,631,480 139,887,823 316,815 559,971 

30 


NOTES TO THE FINANCIAL STATEMENTS 

1. BACKGROUND INFORMATION 

Canadia Bank Plc. was incorporated in 1991 under a joint venture between the National Bank of Cambodia 

("the Central Bank") and certain overseas Cambodians. On 4 February 1998, the Central Bank disposed of 

all its shares to private investors. 

In 2001, the Overseas Cambodian Investment Corporation ("OCIC"), a public limited company incorporated 

in the Kingdom of Cambodia, acquired 100% of the shares of the Bank and consequently became the 

holding company of the Bank. 


Canadia Investment Holding Plc ("CIHP"). The restructuring was approved by the Central Bank and the 

Ministry of Commerce. Consequently, CIHP is now the new holding company of the Bank. 

The principal activities of the Bank comprise the operations of the core banking business and the 

provision of related financial services through its head office and various branches in Phnom Penh and the 

provinces. The Bank holds a commercial banking licence which was renewed for an indefinite period on 18 

October 2006. There were no significant changes in the nature of these principal activities during the year. 

The registered office of the Bank is currently located at No. 265-269 Ang Duong Street, Phnom Penh, 

Kingdom of Cambodia. 

As at 31 December 2008, the Bank has 803 employees (31 December 2007: 602). 

The financial statements cover only the individual entity of Canadia Bank Plc. 

The financial statements were authorised for issue by the Board of Directors on 31 Mach 2009. The Board 

of Directors has the power to amend and reissue the financial statements. 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

The significant accounting policies adopted in the preparation of these financial statements are set out 

below. These policies have been consistently applied to all the years presented, unless otherwise stated. 

2.1 Basis of preparation 

The financial statements have been prepared in accordance with the guidelines issued by the Central Bank 

and Cambodian Accounting Standards ("CAS"). In applying CAS, the Bank also applies CFRS 4: Insurance 

Contracts and CFRS 7: Financial Instruments: Disclosures. The accounting principles applied may differ 

from generally accepted accounting principles adopted in other countries and jurisdictions. The 

accompanying financial statements are therefore not intended to present the financial position and results 

of operations and cash flows in accordance with jurisdictions other than Cambodia. Consequently, these 

financial statements are addressed to only those who are informed about Cambodia accounting 

principles, procedures and practices. 

The financial statements are prepared using the historical cost convention. 


32 


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 

2.1 Basis of preparation (continued) 

The significant inter-account transactions between the Bank and its branches in Cambodia have been 

eliminated. 

The preparation of financial statements in accordance with CAS requires the use of estimates and 

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets 

and liabilities at the date of financial statements and the reported amounts of revenues and expenses 

during the reporting period. Although these estimates are based on management's best knowledge of 

current event and actions, actual results ultimately may differ from those estimates. The areas involving a 

higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the 

financial statements are disclosed in note 3. 

For the sole regulatory purpose of complying with the Prakas No. B7-07-164 dated 13 December 2007 of 

the Central Bank, a translation to Khmer Riel ("Riel") is provided for the balance sheet, the income 

statement, the statement of changes in equity, the cash flow statement and the notes to the financial 

statements as of and for the year ended 31 December 2008 using the official rate of exchange regulated 

by the Central Bank as at the reporting date, which was US$1 to Riel 4,081 (31 December 2007: US$1 to Riel 

4,003). Such translation amounts are unaudited and should not be construed as representations that the 

US$ amounts represent, or have been or could be, converted into Khmer Riel at that or any other rate. 

2.2 New accounting standards and interpretations 

CFRS 7, Financial Instruments: Disclosures, and a complementary amendment to CAS 1, Presentation of 

Financial Statements - Capital Disclosures (effective from 1 January 2008). CFRS 7 introduces new 

disclosures to improve the information about financial instruments. It requires the disclosure of 

qualitative and quantitative information about exposure to risks arising from financial instruments, 

including specified minimum disclosures about credit risk, liquidity risk and market risk, including 

sensitivity analysis to market risk. It replaces CAS 30, Disclosures in the Financial Statements of Banks and 

Similar Financial Institutions. It is applicable to all entities that report under CAS and CFRS. The 

amendment to CAS 1 introduces disclosures about the level of an entity's capital and how it manages 

capital. Management assessed the impact of CFRS 7 and the amendment to CAS 1 and concluded that the 

main additional disclosures will be the sensitivity analysis to market risk and the capital disclosures 

required by the amendment of CAS 1. Management applies CFRS 7 and the amendment to CAS 1 from 

annual periods beginning 1 January 2008. 

The following standards and revision to existing standards (which are effective 1 January 2008) did not 

result in substantial changes to the Bank's accounting policies. In summary: 

CAS 7, Cash flow statement 

CAS 8, Accounting policies, changes in accounting estimates and errors 

CAS 10, Events after the balance sheet date 

CAS 12, Income taxes 

CAS 16, Property, plant and equipment 

CAS 17, Leases 

CAS 18, Revenue 

CAS 21, The effect of changes in foreign exchange rates 

CAS 23, Borrowed costs 

CAS 24, Related party disclosures 

CAS 37, Provision, contingent assets and contingent liabilities 

CAS 38, Intangible assets 

CAS 40, Investment property 




2.2 New accounting standards and interpretations (continued) 

CAS 21 (revised 2008) has no material effect on the Bank's policy. The functional currency of the Bank has 

been re-evaluated based on the guidance of the revised standards. The Bank has the same functional 

currency as its measurement currency. 

(b)Standards and amendments effective in 2008 but not relevant 

The following standards and amendments are mandatory for accounting periods beginning on or after 1 

January 2008 but are not relevant to the Bank's operations: 

CAS 2, Inventories 

CAS 11, Construction contracts 

CAS 27, Consolidated and separate financial statements 

CAS 41, Agriculture 

CFRS 4, Insurance 

2.3 Foreign currency transactions 

(i) Functional and presentation currency 

Items included in the financial statements of the Bank are measured using the currency of the primary economic 

environment in which the Bank operates ("the functional currency"). The financial statements are 

presented in United States dollars ("US$"), which is the Bank's functional and presentation currency. 

(ii) Transactions and balances 

Transactions in currencies other than US$ are translated into US$ at the exchange rate prevailing at the 

date of transaction. Foreign exchange gains and losses resulting from the settlement of such transactions 

and from the translation at the year end exchange rate from monetary assets and liabilities denominated 

in currencies other than US$ are recognised in the income statement. 

2.4 Cash and cash equivalents 

For the purpose of the cash flow statement, cash and cash equivalents comprise balances with less then 

three months' maturity from the date of acquisition, including cash on hand, non-restricted balance with 

the Central Bank, and balances with other banks. 

2.5 Loans and advances to customers 

All loans and advances to customers are stated in the balance sheet as the amount of principal, less any 

amounts written off and the provision for loan losses. Short term loans are those with a repayment date 

within one year of the date the loan was advanced. Long term loans are those with a final repayment date 

of more than one year of the date the loan was advanced. 

Loans are written off when there is no realistic prospect of recovery. Recoveries of loans and advances previously 

written off or provided for decrease the amount of the provision for losses on loans and advances 

in the income statement. 

2.6 Provision for loan losses 

The Bank follows the mandatory credit classification and provisioning as required by Prakas B7-02-145 

dated 7 June 2002 issued by the Central Bank. The Prakas requires commercial banks to classify their loan 

portfolio into four classes and the mandatory level of specific provisioning is provided, depending on the 

classification concerned and regardless of the assets (except cash) pledged as collateral as follows: 


34 



2.6 Provision for loan losses (continued) 

Rate of provision 

Standard 0% 

Substandard 10% 

Doubtful 30% 

Loss 100% 

2.7 Other credit related commitments 

In the normal course of business, the Bank enters into other credit related commitments including loan 

commitments, letters of credit and guarantees. The accounting policy and provision methodology are 

similar to those for originated loans as noted above. Specific provisions are raised against other credit 

related commitments when losses are considered probable. 

2.8 Investment in Foreign Trade Bank of Cambodia 

The Bank entered into a sale and purchase agreement dated 28 October 2005 with the Privatisation Committee 

(acting on be of the Royal Government of Cambodia) to acquire 46% of the share capital of the 

Foreign Trade Bank of Cambodia ("FTB"). This investment is carried at cost. The dividend is recognised as 

income when received. The Bank does not have power to govern the financial and operational policy of 

FTB which requires the Bank to consolidate FTB. Cambodia has not adopted equity accounting standard 

and the Bank intends to reduce its shareholdings to below 20% as required by the Central Bank. 

2.9 Interest income and expenses 

Interest earned on loans and advances to customers, deposits with the Central Bank and other banks are 

recognised on accruals basis, except where serious doubt exists as to the collectability of loans and 

advances to customers, in which case no interest income is recognised. The policy on the suspension of 

interest is in conformity with the Central Bank's guidelines on the suspension of interest on non-performing 

loans and provision for bad and doubtful debts. 

Interest expense on deposits of customer and settlement accounts of other banks and borrowings are 

recognised on accruals basis. 

2.10 Fee and commission income 

Fee and commission income is recognised on an accruals basis when the service has been provided. Fee 

and commission income comprises income received from inward and outward bank transfers, loan 

processing, bank guarantees, letters of credit, ATM/Visa and Mastercard charges. Loan commitment fees 

are deferred and recognised as other income in the income statement over the loan term. Unamortised 

loan commitment fees are presented as a deduction from loans. 

2.11 Property and equipment 

Property and equipment is stated at cost less accumulated depreciation, except land which is not 

depreciated. Historical 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 the future economic benefits associated with the item will flow 

to the Bank and cost of the item can be measured reliably. All other repairs and maintenance are charged 

to the income statement during the financial year in which they are incurred. 

Land is not depreciated. Depreciation on other assets is calculated using the following rates and methods: 




2.11 Property and equipment (continued) 

Buildings - straight-line 5% 

Motor vehicles - declining 25% 

Office equipment and furniture - declining 25% 

Computers and IT equipment - declining 50% 

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying 

amount is greater than its estimated recoverable amount. 

Gains and losses on disposals are determined by comparing the proceeds within the carrying amount and 

are recognised in the income statement. 

2.12 Computer software 

Acquired computer software licences are capitalised on the basis of the cost incurred to acquire the 

specific software and bring it to use. These costs are amortised over a two-year period using the declining 

balance method. 

Costs associated with developing or maintaining computer software programs are recognised as an 

expense as incurred. 

2.13 Impairment of non-financial assets 

Assets that have indefinite useful lives are not subject to amortisation and are tested annually for 

impairment. Assets that are subject to amortisation or depreciation 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 

value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which 

there are separately identified cash flows (cash-generating units). Non-financial assets other than goodwill 

that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 

2.14 Leases 

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are 

classified as operating leases. Payments made under operating leases are charged to the income statement 

on a straight-line basis over the period of the lease. 

2.15 Provision 

Provisions are recognised when: the Bank has 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 

has been reliably estimated. 

When 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 expenditure 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 provision due to the passage of time is recognised 

as interest expense. 




2.16 Employment benefit 

Staff gratitude benefits 

The Bank provides its employees with retirement and resignation benefits. At the age of retirement, the 

retired employee will be given a compensation base on the number of the full-year service multiply by the 

final month salary. An employee who has worked for the Bank for two years or more is entitled upon 

resignation for a lump sum payment representing an employee's final month salary multiplied by number 

of full-year service. 

Such plan has been adopted by the Bank since August 2006. The Bank recognises the provision for the 

employment benefits in the financial statements which is calculated for employees who are entitled to 

receive this benefit. 

2.17 Deferred and current income tax 

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted 

at the balance sheet date in Cambodia where the Bank operates and generates taxable income. 

Deferred income tax will be provided 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. 

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be 

available against which the temporary differences can be utilised. 

2.18 Subordinated debt 

Subordinated debt is treated as financial liabilities for financial reporting purpose and included as a Tier II 

line item in the calculation of the Bank's net worth in accordance with the guidelines of the Central Bank. 

Subordinated debt with no fixed repayment term and which is interest-free is recognised initially at fair 

value and subsequently stated at the outstanding principal. 

2.19 Related party transactions 

Parties are considered to be related if one party has the ability to control the other party or can exercise 

significant influence over the other party in making financial and operating decisions. 

In accordance with the Law on Banking and Financial Institutions, related parties are defined as parties 

who hold, directly or indirectly, at least 10% of the capital or voting rights and includes any individual who 

participates in the administration, direction, management or internal control of the Bank. 

Transactions with related parties and related account balances are disclosed in note 30. 

2.20 Rounding of amounts 

Amounts in the financial statements have been rounded off to the nearest dollar and nearest million Riel 

for US$ and Riel amounts, respectively. 

36 



3. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

The Bank makes estimates, assumptions and judgements that affect the reported amounts of assets and 

liabilities. Estimates, assumptions and judgements are continually evaluated and based on historical 

experience and other factors, including expectations of future events that are believed to be reasonable 

under the circumstances. 

a) Impairment losses on loans and advances 

The Bank follows the mandatory credit classification and provisioning as required by Prakas No. B7-00-51, 

dated 17 February 2000, on the classification and provisioning for bad and doubtful debts and Prakas No 

B7-02-145, dated 7 June 2002, on the amendment of Prakas No B7-00-51 of the Central Bank. The Central 

Bank requires commercial banks to classify their loan portfolio into four classes and the minimum 

mandatory level of specific provision is made depending on the classification concerned and regardless of 

the assets (except for cash) pledged as collateral. For the purpose of loan classification, the Bank takes into 

account historical payment experience and the borrower's financial condition. 

b) Investment with FTB 

The Bank owns 46% of the share capital of FTB. This investment is carried at cost. The Directors believe it is 

appropriate to carry this investment at cost as Cambodia has not adopted equity accounting standards 

and the Bank intents to dispose in the near future. 

c) Income tax 

Taxes are calculated on the basis of current interpretation of the tax regulations. However, these 

regulations are subject to periodic variation and the ultimate determination of tax expenses will be made 

following inspection by the Tax Department. 

Where the final tax outcome of these matters is different from the amounts that were initially recorded, 

such differences will have an impact on the income tax and deferred tax provisions in the year in which 

such determination is made. 

4. CASH ON HAND 




Cash on hand 42,825,814 27,501,166 174,772 110,087 

For the purpose of the cash flow statement, cash and cash equivalents comprise of: 




Cash on hand (as above) 42,825,814 27,501,166 174,772 110,087 

Balances with Central Bank: 

Current accounts 5,090,531 8,601,000 20,775 34,430 

Term deposits (maturity less then 3 months) 5,500,000 25,000,000 22,446 100,075 

Overdraft (3,105,467) - (12,673) - 

Balances with other banks - current accounts 27,320,602 78,785,657 111,495 315,379 

77,631,480 139,887,823 316,815 559,971 



5. BALANCES WITH THE CENTRAL BANK 




Balances with the Central Bank: 


Term deposits 5,500,000 25,000,000 22,446 100,075 

Statutory deposit 4,054,500 4,054,500 16,546 16,230 

Reserve deposits 57,401,225 33,401,249 234,254 133,705 

Balances with the Central Bank 72,046,256 71,056,749 294,021 284,440 

(a) Reserve account 

The reserve account represents the minimum reserve requirement which is calculated at 8% for Khmer Riel 

and 16% for other currencies (2007: 8%) of the total amount due to customers and other banks and 

borrowings. On 26 January 2009, the Central Bank dropped the reserve rate to 12% for other currencies 

than Riel. 

(b) Statutory deposit 

Under Prakas No. B7-01-136 on Bank's Capital Guarantee dated 15 October 2001, banks are required to 

maintain a statutory deposit of 10% of paid-up capital. This deposit is refundable should the Bank voluntarily 

cease its operations in Cambodia and it is not available for use in the Bank's day-to-day operations. 

(c) Interest rates 

Current accounts and reserves deposits are non-interest bearing. Annual interest rates on other balances 

with the Central Bank are summarised as follows: 

2008 2007 

Term deposits 1.05% - 3.07% 4.00% - 4.19% 

Statutory deposit 1.18% - 1.77% 3.00% 

6. BALANCES WITH OTHER BANKS 




38 

Local banks: 

Current accounts 610,388 740,863 2,491 2,966 

Overseas banks: 


Fixed deposits 500,000 1,000,000 2,041 4,003 

28,785,020 80,725,776 117,472 323,145 

Included in the balances with other banks are trust deposits for Visa Card and Master Card operations 

amounting to US$430,996 (2007: US$418,816) and US$533,422 (2007: US$521,302) respectively. The 

deposits are not available for the Bank's day-to-day operations. 

Current accounts with other local banks are non-interest bearing. Current accounts with overseas banks 

earn interest at rates ranging from 0% to 4.52% (2007: 0% to 5.21%). Fixed deposits earn interest at 5% per 

annum (2007: 5% per annum). 



7. LOANS AND ADVANCES TO CUSTOMERS 




Commercial loans: 

Short-term loans 140,652,557 134,021,723 574,003 536,489 

Overdrafts 98,594,541 79,924,839 402,364 319,939 

Long-term loans 82,876,071 87,452,221 338,217 350,071 

Micro-financing loans 116,364 147,507 476 590 

322,239,533 301,546,290 1,315,060 1,207,089 

Consumer loans: 

Mortgage loans 88,108,882 43,778,016 359,572 175,243 

Credit cards 1,089,667 1,028,354 4,447 4,117 

Consumer loans/Leasing 683,447 385,502 2,789 1,543 

89,881,996 45,191,872 366,808 180,903 

Total loans (gross) 412,121,529 346,738,162 1,681,868 1,387,992 

Provisions for bad and doubtful debts (20,708,846) (13,176,166) (84,513) (52,744) 

Unamortised loan commitment fees (810,485) (1,158,006) (3,308) (4,635) 

390,602,198 332,403,990 1,594,047 1,330,613 

a) Provision for bad and doubtful debts 

Movements in the provisions for bad and doubtful debts are as follows: 




At beginning of the year 13,176,166 12,033,815 53,772 48,171 

Charges for the year 13,593,843 16,772,419 55,476 67,140 

Recovery during the year (4,425,460) (15,631,743) (18,060) (62,574) 

Amount written off (1,632,740) (560) (6,663) (2) 

Exchange differences (2,963) 2,235 (12) 9 

At end of the year 20,708,846 13,176,166 84,513 52,744 

The Bank wrote off US$1,632,740 (2007: US$560) loans and advances which had been previously fully 

provisioned. These write-offs have no effect on income statement. 



7. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) 

b) Loan classification 

Gross loans 2008 2007 2008 2007 



Standard loans: 

Secured 353,932,220 322,512,095 1,444,397 1,291,016 

Unsecured 311,987 432,311 1,273 1,731 

Substandard loans: 

Secured 35,981,324 6,824,523 146,840 27,319 

Doubtful loans: 

Secured 6,836,133 6,393,600 27,898 25,594 

Loss loans: 

Secured 14,819,551 10,575,633 60,479 42,332 

Unsecured 240,314 - 981 - 

412,121,529 346,738,162 1,681,868 1,387,992 

c) Analysis by industry 

Gross loans 2008 2007 2008 2007 



Manufacturing 22,451,512 32,429,041 91,625 129,813 

Building and construction 42,173,418 87,297,636 172,110 349,452 

Mortgage 88,109,243 43,782,506 359,574 175,261 

Wholesale and retail 79,815,604 70,570,455 325,727 282,494 

Import and export 19,621,998 13,850,276 80,077 55,443 

Transportation, storage and communication 7,960,014 11,293,512 32,485 45,208 

Services 108,510,765 75,747,889 442,832 303,219 

Agriculture 31,141,740 4,220,175 127,089 16,893 

Individuals 1,089,667 1,028,354 4,447 4,117 

Others 11,247,568 6,518,318 45,902 26,092 

412,121,529 346,738,162 1,681,868 1,387,992 

d) Maturity analysis 


Gross loans US$ US$ Riel Million Riel Million 


Not later than 1 year 285,498,785 207,566,312 1,165,121 830,888 

Later than 1 year and no later than 3 years 33,622,945 87,303,867 137,215 349,477 

Later than 3 years and no later than 5 year 14,815,272 12,594,433 60,461 50,416 

Later than 5 years 78,184,527 39,273,550 319,071 157,211 

412,121,529 346,738,162 1,681,868 1,387,992 

40 



7. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) 

e) Interest rates 

The annual interest rates that applied during the year are as follows: 


Overdrafts 6.00% - 18.00% 6.00% - 18.00% 

Short term loans 7.20% - 21.60% 7.20% - 21.60% 

Long term loans 7.20% - 18.00% 7.20% - 16.80% 

Micro-financing loans 12.00% - 21.60% 12.00% - 21.60% 

Mortgage loans 7.20% - 13.20% 7.20% - 12.00% 

Credit cards 18.00% - 21.00% 18.00% - 21.00% 

8. OTHER ASSETS 




Accrued interest receivable 2,242,535 1,475,025 9,152 5,905 

Deposits with companies outside Cambodia 259,896 234,890 1,061 940 

Prepaid expenses 127,198 44,663 519 179 

Other advances 435,788 734,152 1,778 2,939 

Travellers cheques purchased 93,214 36,517 380 146 

Foreclosed property receivable - 900,000 - 3,603 

Other assets 1,122,267 1,488,164 4,580 5,956 

4,280,898 4,913,411 17,470 19,668 

9. INVESTMENT 

On 28 October 2005, the Bank entered into a sale and purchase agreement with the Privatisation 

Committee (acting on behalf of the Royal Government of Cambodia) to acquire 46% of the share capital of 

FTB for a consideration of US$ 10,580,000. The investment is carried at cost. The Bank was previously 

required by the Central Bank to reduce its shareholding to less than 20% by 31 December 2008. The Central 

Bank, on 6 February 2009, extended the deadline to 31 March 2009. 



10. PROPERTY AND EQUIPMENT 

Assets 

Computer 

Freehold Under Furniture Office and 

land Building construction and fixtures equipment ITequipment Vehicles Total 

US$ US$ US$ US$ US$ US$ US$ US$ 

At 1 January 2007 

Cost 3,484,790 2,940,710 4,097,203 244,960 642,211 1,080,852 925,921 13,416,647 

Accumulated depreciation - (1,135,107) - (145,302) (402,417) (814,149) (555,865) (3,052,840) 

Net book amount 3,484,790 1,805,603 4,097,203 99,658 239,794 266,703 370,056 10,363,807 

Year ended 31 December 2007 

Opening net book amount 3,484,790 1,805,603 4,097,203 99,658 239,794 266,703 370,056 10,363,807 

Additions 360,000 322,691 7,583,811 170,844 374,665 777,914 489,483 10,079,408 

Disposals - net - - - (2,025) (1,148) - (85,599) (88,772) 

Depreciation charge - (150,122) - (38,397) (100,998) (297,587) (123,445) (710,549) 

Closing net book value 3,844,790 1,978,172 11,681,014 230,080 512,313 747,030 650,495 19,643,894 

At 31 December 2007 

Cost 3,844,790 3,263,401 11,681,014 413,330 1,008,039 1,733,515 1,314,813 23,258,902 

Accumulated depreciation - (1,285,229) - (183,250) (495,726) (986,485) (664,318) (3,615,008) 

Net book amount 3,844,790 1,978,172 11,681,014 230,080 512,313 747,030 650,495 19,643,894 

Million Riel equivalent (unaudited) 15,391 7,919 46,759 922 2,051 2,989 2,604 78,635 

Year ended 31 December 2008 

Opening net book amount 3,844,790 1,978,172 11,681,014 230,080 512,313 747,030 650,495 19,643,894 

Additions 563,350 2,042,730 8,329,393 113,033 312,901 900,886 569,469 12,831,762 

Disposals - net (30,000) (2,146) - (22,562) (19,489) (14,016) (2) (88,215) 

Depreciation charge - (199,470) - (67,232) (157,193) (515,766) (226,516) (1,166,177) 

Closing net book value 4,378,140 3,819,286 20,010,407 253,319 648,532 1,118,134 993,446 31,221,264 

At 31 December 2008 

Cost 4,378,140 5,303,984 20,010,407 445,842 1,242,913 2,572,851 1,867,981 35,822,118 

Accumulated depreciation - (1,484,698) - (192,523) (594,381) (1,454,717) (874,535) (4,600,854) 

Net book amount 4,378,140 3,819,286 20,010,407 253,319 648,532 1,118,134 993,446 31,221,264 

Million Riel equivalent (unaudited) 17,867 15,587 81,662 1,034 2,647 4,563 4,054 127,414 

42 



11. COMPUTER SOFTWARE 

Work in 

Software progress Total 

US$ US$ US$ 

At 1 January 2007 

Cost 485,395 - 485,395 

Accumulated amortisation (385,873) - (385,873) 

Net book amount 99,522 99,522 

Year ended 31 December 2007 

Opening net book amount 99,522 - 99,522 

Additions 106,483 1,055,625 1,162,108 

Amortisation charge (89,355) - (89,355) 

Closing net book amount 116,650 1,055,625 1,172,275 

At 31 December 2007 

Cost 591,878 1,055,625 1,647,503 


Net book amount 116,650 1,055,625 1,172,275 

Million Riel equivalent (unaudited) 467 4,226 4,693 

Year ended 31 December 2008 

Opening net book amount 116,650 1,055,625 1,172,275 

Additions 73,443 1,250 74,693 

Transfer from Work -in-Progress 1,056,875 (1,056,875) - 

Amortisation charge (116,617) - (116,617) 

Closing net book amount 1,130,351 - 1,130,351 

At 31 December 2008 

Cost 1,722,196 - 1,722,196 


Net book amount 1,130,351 - 1,130,351 

Million Riel equivalent (unaudited) 4,613 - 4,613 

12. PROPERTIES FORECLOSED 

The properties foreclosed are assets obtained by taking possession of collateral held as security for loans 

which are in default. These assets are not held for operational purposes and will be disposed of in order to 

recover the outstanding amount within the maximum allowable period of twelve months as per the 

guidelines issued by the Central Bank. 



13. DEPOSITS FROM BANKS 




Current accounts 78,327 3,996,884 320 16,000 

Saving accounts 2,392,425 2,742,520 9,763 10,978 

Fixed deposits 23,307,229 - 95,117 - 

25,777,981 6,739,404 105,200 26,978 

The current accounts and margin deposits are non-interest bearing. The savings and fixed deposits bear 

the following interest rates per annum: 


Saving accounts 0.75% 0.75% 

Fixed deposits 4.25% - 5.30 NA 

14. DUE TO CUSTOMERS 





Saving accounts 201,861,505 255,969,220 823,797 1,024,645 

Fixed deposits 199,729,928 165,151,846 815,098 661,103 

Margin deposits 455,045 575,443 1,856 2,303 

a) Margin deposits 

436,362,009 451,570,063 1,780,793 1,807,635 

Margin deposits represent the aggregate balance of required non-interest bearing cash deposits from customers 

for letters of credit and guarantees outstanding at year end (note 29). 

b) Interest rates 

The current accounts and margin deposits are non-interest bearing. The savings and fixed deposits bear 

the following interest rates per annum: 


Saving accounts 0.75% - 4.75% 0.75 - 2.00 

Fixed deposits 3.00% - 9.70% 3.00% - 9.60 

44 



15. CURRENT TAX LIABILITIES 




Balance at beginning of the year 4,421,143 2,786,518 18,043 11,154 

Charge for the year (note 27) 5,518,412 5,028,697 22,521 20,130 

Income tax paid during the year (5,104,960) (3,394,072) (20,834) (13,586) 

4,834,595 4,421,143 19,730 17,698 

Income tax is calculated by applying the corporate tax rate to accounting net income before tax. No effect 

has been taken into account of items deemed not deductible by the Law on Taxation. 

The Bank has obtained tax clearance up to the fiscal year 2007. The current tax year is subject to the Tax 

Department's assessment. The outcome of a tax audit cannot, at present, be determined. 

16. OTHER LIABILITIES 




Accrued interest payable 4,989,586 3,641,960 20,363 14,579 

Accounts payable 298,845 42,288 1,220 169 

Tax payable 166,921 155,571 681 623 

Accrued expense 162,807 152,697 664 611 

Amount due to MasterCard International - 538,050 - 2,154 

Staff bonus payable 288,497 251,658 1,177 1,007 

Other liabilities 492,796 361,442 2,011 1,447 

17. BORROWINGS 

6,399,452 5,143,666 26,116 20,590 




Overdraft - the Central Bank 3,105,467 - 12,674 - 

Term borrowing - KfW 3,951,812 4,379,241 16,127 17,530 

7,057,279 4,379,241 28,801 17,530 



17. BORROWINGS (CONTINUED) 

i) Overdraft 

It represent short-term temporary overdraft from the Central Bank. 

ii) Term borrowing 

It represent borrowing from KfW through the Ministry of Economy and Finance ("MoEF") is the result of 

loan and finance agreements between the Bank, KfW and MoEF dated 23 April 2003 for Small and Medium 

Enterprise ("SME") term-lending I and dated 18 October 2005 for SME term-lending II. The agreements 

stipulate that the funds borrowed from KfW through MoEF shall be sub-lent to Small and Medium 

Enterprises to build SME capacity in Cambodia. The sub-loans are classified as an asset of the Bank under 

loans and advances to customers. KfW borrowing is unsecured and bear average interest rate of 5.81% 

(2007: 5.50%). 

18. SUBORDINATED DEBT 

On 28 October 2005, the Bank entered into an agreement with Mr Pung Kheav Se (a main shareholder of 

the Bank through CIHP) to provide the Bank with a subordinated loan of US$ 7,080,000 for the purpose of 

acquiring shares in the Foreign Trade Bank of Cambodia. This subordinated debt is unsecured, 

non-interest bearing and has no fixed terms of repayment. This subordinated debt was approved by the 

Central Bank on 28 December 2005. 

This subordinated debt is treated as a liability for financial reporting purposes and included as capital Tier 

II (note 32.5) for the Bank's Net Worth calculation in accordance with the guidelines of the Central Bank. 

19. PROVISION FOR STAFF BENEFITS 




Provision for staff benefits 810,350 - 3,307 - 

The Bank has provided its employees with retirement and resignation benefit plan since August 2006. 

Movements in the provision for staff benefits are as follows: 




Opening balance - - - - 

Provision for the year 837,790 - 3,419 - 

Payments in the year (27,440) - (112) - 

Ending balance 810,350 - 3,307 - 

46 



20. SHARE CAPITAL 


CIHP. The restructuring was approved by the Central Bank and the Ministry of Commerce. Consequently, 

CIHP is now the new holding company of the Bank. 

The total authorised amount of share capital as at 31 December 2008 was 40,545,000 shares (2007: 

40,545,000 shares) with a par value of US$ 1 per share. All shares are fully paid. There were no share movement 

during the year. 

21. NET INTEREST INCOME 




Interest income: 

Loans and advances to customers 50,824,983 31,713,930 207,417 126,952 

Other banks 1,099,034 3,478,277 4,485 13,923 

The Central Bank 785,224 1,222,377 3,205 4,893 

Total interest income 52,709,241 36,414,584 215,107 145,768 

Interest expense: 

Non-bank customers' deposits 12,419,340 9,077,984 50,683 36,339 

Other banks 704,617 23,669 2,876 95 

Borrowing 240,071 266,088 980 1,065 

Total interest expense 13,364,028 9,367,741 54,539 37,499 

Net interest income 39,345,213 27,046,843 160,568 108,269 



22. NET FEE AND COMMISSION INCOME 




Loan commitment fees 2,882,884 1,326,734 11,765 5,311 

Commission from remittances 2,284,365 1,789,023 9,322 7,161 

Other fees and commission 1,539,708 1,025,196 6,284 4,104 

Miscellaneous loan fees and charges 1,123,807 727,905 4,586 2,914 

Income from letters of credit 430,822 322,395 1,758 1,291 

Fees for telex, fax and phone 294,744 436,734 1,203 1,748 

Fees for credit card advances and late payments 146,575 109,623 598 439 

ATM/Credit card annual fees 128,045 121,812 523 487 

Total fee and commission income 8,830,950 5,859,422 36,039 23,455 

Fee and commission expense (1,087,439) (528,071) (4,438) (2,114) 

Total fee and commission expense (1,087,439) (528,071) (4,438) (2,114) 

Net fee and commission income 7,743,511 5,331,351 31,601 21,341 

23. OTHER OPERATING INCOME 




Gains on foreign exchange currency 572,116 846,389 2,335 3,388 

Gains on sales of foreclosed properties 89,565 76,265 366 305 

Rental incomes 64,450 72,760 263 291 

Other incomes 353,731 50,653 1,443 203 

1,079,862 1,046,067 4,407 4,187 

48 



24. GENERAL ADMINISTRATIVE EXPENSES 




Employee benefit expense (note 25) 5,597,598 3,373,229 22,845 13,503 

Depreciation and amortisation 1,282,794 799,904 5,235 3,202 

Charitable donations and gifts 968,163 523,824 3,951 2,097 

Communication 452,729 229,280 1,848 918 

Travel, accommodation and food 439,340 249,106 1,793 997 

Utilities 427,646 237,128 1,745 949 

Advertising and public relations 397,254 337,173 1,621 1,350 

Taxes and duties 327,251 272,510 1,336 1,091 

Building rental 299,544 166,020 1,222 665 

Repair and maintenance 254,426 92,252 1,038 369 

Legal and professional fees 219,530 172,122 896 689 

Motor vehicles 124,787 96,460 509 386 

Printing and forms 117,352 58,878 479 236 

Stationery and supplies 53,692 32,639 219 131 

Furniture, fixture and equipment expenses 42,335 42,456 173 170 

Loss on disposals of property and equipment 31,580 235 129 1 

Insurance 14,449 18,672 59 75 

Loss on sales of properties foreclosed - 287,787 - 1,152 

Other operational costs 357,671 150,425 1,459 601 

25. EMPLOYEE BENEFIT EXPENSE 

11,408,141 7,140,100 46,557 28,582 




Salaries 4,263,003 3,006,960 17,398 12,037 

Other short term benefits 496,805 366,269 2,028 1,466 

Staff gratitude benefits 837,790 - 3,419 - 

5,597,598 3,373,229 22,845 13,503 



26. PROVISION FOR BAD LOANS - NET 




Provision for loan losses (note 7a ) (13,593,843) (16,772,419) (55,476) (67,140) 

Recovery of loan losses (note 7a ) 4,425,460 15,631,743 18,060 62,574 

27. INCOME TAX EXPENSE 

(9,168,383) (1,140,676) (37,416) (4,566) 




Current income tax expense 5,518,412 5,028,697 22,521 20,130 

a) Reconciliation between income tax expense and accounting profit: 



(Unaudited) (Unaudited 

Accounting profit before income tax 27,592,062 25,143,485 112,603 100,649 

Non-deductible expenses for tax purposes - - - - 

Taxable income 27,592,062 25,143,485 112,603 100,649 

Income tax calculated at the rate of 20% 5,518,412 5,028,697 22,521 20,130 

In accordance with Cambodian tax laws, the Bank has an obligation to pay Corporate Income Tax of either 

Tax on Profit at the rate of 20% on taxable profit or Minimum Tax at 1% of turnover, whichever is higher. 

b) Deferred tax 

No deferred tax has been recognised in the financial statements as there are no material temporary 

differences. 

c) Other tax matters 

The Bank's tax returns are subject to periodic examination by the Tax Department. As the application of tax 

laws and regulations to many types of transactions are susceptible to varying interpretations, amounts 

reported in the financial statements could be changed at a later date, upon final determination by the Tax 

Department. 

50 



28. CASH (USED IN)/GENERATED FROM OPERATIONS 




Profit before income tax 27,592,062 25,143,485 112,603 100,649 

Adjustments for: 

Depreciation and amortisation 1,282,794 799,904 5,235 3,202 

Provision for loan losses (note 7a ) 13,593,843 16,772,419 55,476 67,140 

Recovery of loan losses (note 7a ) (4,425,460) (15,631,743) (18,060) (62,574) 

Provision for staff gratitude obligations 810,350 - 3,307 - 

Gain on disposals of property and 

equipment (33,963) (1,373) (139) (5) 

Change in working capital: 

Balances with other banks 475,701 3,656,072 1,941 14,635 

Loans and advances to customers (67,366,591) (128,137,122) (274,923) (512,933) 

Other assets 632,513 (2,243,895) 2,581 (8,982) 

Foreclosed properties 2,412,741 (314,051) 9,846 (1,257) 

Deposits from banks 19,038,577 2,866,795 77,697 11,476 

Due to customers (15,208,054) 162,111,604 (62,064) 648,933 

Other liabilities 1,255,786 619,234 5,126 2,478 

Cash (used in)/generated from operations (19,939,701) 65,641,329 (81,374) 262,762 

29. COMMITMENTS AND CONTINGENT LIABILITIES 

a) Loan commitments, guarantees and other financial liabilitie 

At 31 December 2008 and 31 December 2007, the Bank had the contractual amounts of the Bank's 

off-balance sheet financial instruments that commit it to extend credit to customers, guarantees and other 

facilities as follows: 




Unused portion of approved credit facilities 28,459,913 39,748,989 116,145 159,115 

Documentary credit 3,500,945 6,926,989 14,287 27,729 

Bankers' acceptance 362,426 3,286,418 1,479 13,156 

Performance and bankers' guarantees 644,632 759,482 2,631 3,040 

Others 105,406 108,190 430 433 

33,073,322 50,830,068 134,972 203,473 

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



29. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED) 

b) Lease commitments 

Where the Bank is the lessee, the future minimum lease payments under non-cancellable operating leases 

of its branches in Phnom Penh and provinces are as follows: 




Not later than one year 307,385 176,080 1,254 705 

Later than one year and not later than five years 770,315 589,160 3,144 2,358 

Over five years 2,111,368 2,151,772 8,616 8,614 

3,189,068 2,917,012 13,014 11,677 

c) Capital expenditure and other service commitments 

The following are the capital commitments for new office buildings, new core banking software and other 

related services as at balance sheet date: 

Authorised and contracted for: 




Not later than one year 5,656,910 1,425,464 23,086 5,706 

Later than one year and not later than 

five years 622,188 559,753 2,539 2,241 

6,279,098 1,985,217 25,625 7,947 

The estimated total capital expenditure of the Bank's new head office building has been revised to 

approximately US$27.7 million, of which the cost incurred and capitalised under property and equipment 

to date is US$20.0 million. Out of the US$7.7 million of remaining capital expenditure, an amount of US$6.2 

million has been contracted for. 

52 



30. RELATED PARTY BALANCE AND TRANSACTIONS 

The Bank is controlled by Canadia Investment Holding Plc incorporated in Cambodia, which owns 100% 

the Bank's shares. 

A number of banking transactions are entered into with related parties in the normal course of business. 

These include loans, deposits and foreign currency transactions. 

The volumes of related-party transactions, outstanding balances at the year-end, and relating expense and 

income for the year are as follows: 

a) Loans and advances to directors and key management 




Loans and advances to directors and key 

management : 

At the beginning of the year 235,264 19,201 960 77 

Loans advanced during the period 137,554 223,673 561 895 

Loan repayments received (192,013) (7,610) (784) (30) 

At the end of the year 180,805 235,264 737 942 

Interest received 31,859 13,858 130 56 

The loans to directors and key management carry interest rates ranging from 10% to 12% 

(2007: 10% to 12%). 

No provisions have been recognised in respect of loans given to related parties (2007: nil). 

b) Deposits with related parties 




Deposits with associate company 225,941 188,582 922 755 

This is current account held with associate company and is non-interest bearing. 



30. RELATED PARTY BALANCE AND TRANSACTIONS (CONTINUED) 

c) Deposits from related parties 




Saving deposits from: 

Parent entity 76,230 66,413 311 266 

Directors and key management 644,967 448,338 2,632 1,795 

Other related companies 146,680 148,905 599 596 

Term deposits from associated company 4,200,000 - 17,140 - 

5,067,877 663,656 20,682 2,657 

Interest paid 2,783 3,307 11 13 

The saving deposits from parent entity, directors and key management bear interest at 0.75% (2007: 

0.75%) and term deposits from associate company bear interest at 5.5%. 

d) Subordinated debt 




Subordinated debt from Mr Pung Kheav Se 7,080,000 7,080,000 28,893 28,341 

The subordinate debt is interest free with no fixed term of repayment. This subordinate debt was to finance 

the acquisition of FTB. The proceeds from the future disposal of FTB's shares are to pay back this subordinate 

debt. 

e) Key management compensation 




Salaries and short term benefits 431,975 383,725 1,763 1,536 

f) Other transactions with related parties 




Management fee charged by parent entity 30,250 - 123 - 

54 



31. EVENTS AFTER THE BALANCE SHEET DATE 

i) Reserve requirement 

On 26 January 2009, the Central Bank issued a Prakas requiring all commercial banks to maintain reserve 

requirements against deposits and borrowings at a daily average balance equal to 8% in Riel and 12% in 

foreign currencies with the Central Bank. This Prakas superseded the existing Prakas which require reserve 

requirements at 8% in Riel and 16% in foreign currencies. 

ii) Classification and provision for bad and doubtful debts 

On 25 February 2009, the Central Bank issued a Prakas, B7-09-074 revising loans classification and 

provisioning for banks and financial institutions. It applies for loans and advances or other assets with 

similar nature. The Prakas replaces existing Prakas B7-00-51 and B702-145 from 25 February 2009. The 

minimum mandatory loan loss provision is made depending on the classification concerned unless other 

information is available to indicate worsening. 

Below table compares the current and new loan classifications and minimum provisioning requirements: 

Classifications Minimum Provisioning Minimum Provisioning 

Requirements 

Requirements 

Current 

New 

Standard 0% 1% 

Special mention NA 3% 

Sub-standards 10% 20% 

Doubtful 30% 50% 

Loss 100% 100% 

Both past due and qualitative factors shall be taken into account for loan classification and provisioning. 

32. FINANCIAL RISK MANAGEMENT 

The Bank's activities expose it to a variety of financial risks: credit risk, market risk (including currency risk, 

interest rate risk and price 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 Bank does not use derivative financial instruments such as foreign exchange contract and interest rate 

swaps to manage its risk exposure. 



32. FINANCIAL RISK MANAGEMENT (CONTINUED) 

The Bank holds the following financial assets and liabilities: 




FINANCIAL ASSETS 

Cash on hand 42,825,814 27,501,166 174,772 110,087 

Balances with the Central Bank 72,046,256 71,056,749 294,021 284,440 

Balances with other banks 28,785,020 80,725,776 117,472 323,145 

Loans and advances to customers 390,602,198 332,403,990 1,594,047 1,330,613 

Other assets 2,595,645 2,646,432 10,593 10,594 

Total financial assets 536,854,933 514,334,113 2,190,905 2,058,879 

FINANCIAL LIABILITIES 

Deposits from banks 25,777,981 6,739,404 105,200 26,978 

Due to customers 436,362,009 451,570,063 1,780,793 1,807,635 

Other liabilities 6,399,452 5,143,666 26,116 20,590 

Borrowings 7,057,279 4,379,241 28,801 17,530 

Subordinated debt 7,080,000 7,080,000 28,893 28,341 

Total financial liabilities 482,676,721 474,912,374 1,969,803 1,901,074 

Net financial assets 54,178,212 39,421,739 221,102 157,805 

32.1 Credit risk 

The Bank takes on exposure to credit risk, which is the risk that a counterparty will cause a financial loss to 

the Bank by failing to discharge an obligation. Credit risk is the most important risk for the Bank's business. 

Credit exposure arises principally in lending activities that lead to loans and advances. There is also credit 

risk in off-balance sheet financial instruments, such as loan commitments. The credit risk management is 

carried out by the Bank's credit committee. 

a) Credit risk measurement 

The Bank assess the probability of default of individual counterparties using internal rating tool. Credit 

committee is responsible for determining the risk rating for each borrower. 

In measuring credit risk of loans and advances to customers at a counterparty level, the Bank reflects the 

nine risk rating grades which are: (i) minimal risk, (ii) below average risk, (iii) average risk, (iv) above 

average risk, (v) higher than above average risk but still acceptable, (vi) watch, (vii) sub-standards, (viii) 

doubtful and (ix) loss. 

Risk ratings are reviewed and updated at least annually, and in event of (i) change of loan terms and 

conditions including extension; (ii) repayment irregularities or delinquencies and (iii) adverse information 

relating to the borrower or transaction. 

56 




32.1 Credit risk (continued) 

b) Risk limit control and mitigation policies 

The Bank operates and provides loans and advances to individuals or enterprises within the Kingdom of 

Cambodia. The Bank manages, limits and controls the concentration of credit risk whenever it is identified. 

Large exposure is defined by the Central Bank as overall credit exposure to any individual beneficiary 

which exceeds 10% of the Bank's net worth. 

The Bank is required, under the conditions of Prakas No. B7-06-226 of the Central Bank, 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 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 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; and 

• Cash in the form of margin deposits. 

c) Impairment and provisioning policies 

The Bank is required to follow the mandatory credit classification and provisioning in accordance with 

Prakas No. B7-00-51 dated 17 February 2000 on the classification and provisioning for bad and doubtful 

debts and Prakas No B7-02-145 dated 7 June 2002 on the amendment of Prakas No B7-00-51 of the Central 

Bank. The Central Bank requires commercial banks to classify their loan portfolio into four classes and the 

minimum mandatory level of specific provision is made depending on the classification concerned and 

regardless of the assets (except for cash) pledged as collateral, as follows: 


Standard 0% 0% 

Substandard 10% 10% 

Doubtful 30% 30% 

Loss 100% 100% 





d) Maximum exposure to credit risk before collateral held or other credit enhancements 




Credit risk exposures relating to on-balance 

sheet assets: 

Balances with other banks 28,785,020 80,725,776 117,472 323,145 


Other assets 2,595,645 2,646,432 10,593 10,594 

Credit risk exposures relating to off-balance 

sheet items: 

Unused portion of approved credit facilities 28,459,913 39,748,989 116,145 159,115 

Guarantees, acceptances and other financial 

facilities 4,613,409 11,081,079 18,827 44,358 

455,056,185 466,606,266 1,857,084 1,867,825 

The above table represents a worse case scenario of credit risk exposure to the Bank at 31 December 2008 

and 2007, without taking account of any collateral held or other credit enhancement attached. For on-balance 

sheet assets, the exposures set out above are based on net carrying amounts. 

As shown above, 86% of total maximum exposure is derived from loans and advances to customers 

(2007: 71%). 

Management is confident in its ability to continue to control and sustain minimal exposure of credit risk to 

the Bank resulting from its loans and advances on the followings: 

• Almost all of loans and advances are collateralised and loan to collateral value is ranging 

from 60% to 70%. 

• 78% of loans portfolios are considered neither past due nor impaired (2007: 90%). 

• Provision for loan losses had been provided for those individually impaired loans in 

accordance with the Central Bank's requirement. 

58 





e) Loans and advances 

Loans and advances are summarised as follows: 




Loans and advances neither past due nor 

impaired 322,845,455 311,940,540 1,317,533 1,248,698 

Loans and advances past due but not 

impaired 31,398,753 11,003,866 128,138 44,048 

Loans and advances individually impaired 57,877,321 23,793,756 236,197 95,246 

Gross 412,121,529 346,738,162 1,681,868 1,387,992 

Less: 

Provision for loan losses (20,708,846) (13,176,166) (84,514) (52,744) 

Unamortised loan commitment fees (810,485) (1,158,006) (3,307) (4,635) 

Net loans and advances 390,602,198 332,403,990 1,594,047 1,330,613 

For the purpose of loan provisioning, expected recovery from collateral (except cash) is not taken into 

consideration in accordance with the Central Bank's requirement. The total provision for loan loss is 

US$20,708,846 which represents specific provision for the individual loans. 

i. Loans and advances neither past due nor impaired 

Loans and advances not past due are not considered impaired, unless other information is available to 

indicate the contrary. 

ii. Loans and advances past due but not impaired 

Loans and advances less than 90 days past due are not considered impaired, unless other information is 

available to indicate the contrary. Gross amount loans and advances by class to customer that were past 

due but not impaired are as follows: 




Past due up to 30 days 14,037,571 7,528,607 57,288 30,137 

Past due 30-60 days 5,396,795 548,976 22,024 2,198 

Past due 60-90 days 11,964,387 2,926,283 48,826 11,714 

Total 31,398,753 11,003,866 128,138 44,049 

Value of collateral ** 62,565,025 35,726,890 255,328 143,015 





e) Loans and advances (continued) 

** The value of collateral is based on the valuation assessed by property valuation agents or performed 

internally by the Bank during loan approval process or upon loan renewal. As the current property price is 

volatile, the fair value of collateral assessed when the loan was approved might be different from current 

value. Under the Central Bank's regulation, the value of collateral is not taken into account when 

determining the impairment of loans and advances to customers. 

iii. Loans and advances individually impaired 

In accordance with Prakas No. B7-00-51 dated 17 February 2000 on the classification and provisioning for 

bad and doubtful debts, loans and advances past due more than 90 days are considered impaired and a 

minimum level of specific provision for impairment is made depending on the classification concerned, 

unless other information is available to indicate the contrary. 




Past due up to 90 days 7,855,986 - 32,060 - 

Past due 90-180 days 28,125,338 6,824,523 114,780 27,319 

Past due 180-360 days 6,836,133 6,393,600 27,898 25,594 

Past due 360 days or more 15,059,864 10,575,633 61,459 42,333 

Total 57,877,321 23,793,756 236,197 95,246 

Value of collateral ** 86,391,842 35,411,130 352,565 44,049 

iv. Loans and advances renegotiated 

Restructuring activities include extended payment arrangements, modification and deferral of payments. 

Following restructuring, the loan is still kept in its current classification unless there is strong evidence of 

improvement in the customer's financial condition. 

The Bank restructured loans and advances amounting to US$27,300,000 during the year and these loans 

were classified as non-performing loans at 31 December 2008. 

f) Repossessed collaterals 

During the year ended 31 December 2008, the Bank obtained assets by taking possession of collateral held 

as security amounting to US$2,100,000 (2007: US$12,866,341). 

Repossessed properties have to be sold within one year as required by the Central Bank. Repossessed 

property is classified in the balance sheet as foreclosed properties. 

60 





g) Concentration of financial assets with credit risk exposure 

i. Geographical sector 

The following table breaks down the Bank's main credit exposure at their carrying amount, as catergorised 

by geographical region as at 31 December 2008. For this table, the Bank has allocated exposure to regions 

based on the country of domicile of our counterparties. 

Other 

Canada China and ASEAN Other 

Cambodia and USA Hong Kong Countries Countries Total 

US$ US$ US$ US$ US$ 

31 December 2008 

Balances with other banks 610,387 16,008,970 4,733,328 6,709,515 722,820 28,785,020 

Loans and advances 390,602,198 - - - - 390,602,198 

Other assets 2,242,535 353,110 - - - 2,595,645 

As at 31 December 2008 393,455,120 16,362,080 4,733,328 6,709,515 722,820 421,982,863 

In Riel million equivalents 1,605,690 66,774 19,317 27,382 2,949 1,722,112 

31 December 2007 

Balances with other banks 740,862 20,083,216 31,614,392 25,953,204 2,334,102 80,725,776 

Loans and advances 332,403,990 - - - - 332,403,990 

Other assets 2,375,025 271,407 - - - 2,646,432 

As at 31 December 2007 335,519,877 20,354,623 31,614,392 25,953,204 2,334,102 415,776,198 

In Riel million equivalents 1,343,086 81,480 126,552 103,891 9,343 1,664,352 





g) Concentration of financial assets with credit risk exposure (continued) 

ii. Industry sector 

The following table breaks down the Bank's main credit exposure at their carrying amounts, as categorised 

by the industry sectors of our counterparties. 

Building Wholesale import 

Financial and and and 

institutions Services Mortgage construction retail export Agriculture Other Total 

US$ US$ US$ US$ US$ US$ US$ US$ US$ 

31 December 2008 

Balances with other banks 28,785,020 - - - - - 28,785,020 

Loans and advances - 91,379,426 87,932,966 40,349,434 79,593,639 19,488,409 30,356,664 41,501,660 390,602,198 

Other assets 317,087 855,328 572,417 77,044 365,989 116,927 61,302 229,551 2,595,645 

As at 31 December 2008 29,102,107 92,234,754 88,505,383 40,426,478 79,959,628 19,605,336 30,417,966 41,731,211 421,982,863 

In Riel million equivalents 118,766 376,410 361,190 164,980 326,315 80,009 124,136 170,306 1,722,112 

31 December 2007 

Balances with other banks 80,725,776 - - - - - 80,725,776 

Loans and advances - 64,306,505 43,617,677 86,544,844 70,263,270 13,109,020 3,909,887 50,652,787 332,403,990 

Other assets 271,407 48,043 371,364 137,953 186,251 58,919 17,953 1,554,542 2,646,432 

As at 31 December 2007 80,997,183 64,354,548 43,989,041 86,682,797 70,449,521 13,167,939 3,927,840 52,207,329 415,776,198 

In Riel million equivalents 324,232 257,611 176,088 346,991 282,009 52,711 15,724 208,986 1,664,352 

32.2 Market risk 

The Bank takes on exposure to market risk, which is the risk that the fair value or future cash flow of a financial 

instrument will fluctuate because of changes in market prices. Market risk arises from open positions 

in interest rates, currency and equity products, all of which are exposed to general and specific market 

movements and changes in the level of volatility of market rates or prices such as interest rates, credit 

spreads, foreign exchange rates and equity prices. 

The Bank does not use derivative financial instruments such as foreign exchange contract and interest rate 

swaps to hedge its risk exposure. 

62 




32.2 Market risk (continued) 

a) Foreign exchange risk 

The Bank operates in Cambodia and transacts in many currencies, and is exposed to various currency risks, 

primarily with respect to Khmer Riel, Euro and Thai Baht. 

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities 

denominated in a currency that is not the Bank's functional currency. 

The management monitors their foreign exchange risk against functional currencies. However, the Bank 

does not hedge their foreign exchange risk exposure arising from future commercial transactions and 

recognised assets and liabilities using forward contracts. 

The table below summarises the Bank's exposure to foreign currency exchange rate risk at 31 December 

2008. Included in the table are the Bank's financial instruments at carrying amount by currency in US$ 

equivalent. 

US$ Riel EUR THB Gold Other TOTAL 

As at 31 December 2008 

Assets 

Cash on hand 38,451,843 3,010,754 37,248 1,272,133 9,500 44,336 42,825,814 

Balances with the Central Bank 69,570,268 2,475,988 - - - - 72,046,256 

Balances with other banks 26,845,316 6,031 802,514 - - 1,131,159 28,785,020 

Loans and advances 389,074,202 188,650 - 1,339,346 - - 390,602,198 

Other assets 2,567,673 - 10,709 - - 17,263 2,595,645 

Total financial assets 526,509,302 5,681,423 850,471 2,611,479 9,500 1,192,758 536,854,933 

Liabilities 

Deposits from banks 25,776,303 1,678 - - - - 25,777,981 

Due to customers 428,871,178 5,986,901 - 1,487,233 16,697 - 436,362,009 

Other liabilities 6,314,509 66,526 - 18,417 - - 6,399,452 

Borrowings 7,057,279 - - - - - 7,057,279 

Subordinated debt 7,080,000 - - - - - 7,080,000 

Total financial liabilities 475,099,269 6,055,105 - 1,505,650 16,697 - 482,676,721 

Net Balance Sheet Position 51,410,033 (373,682) 850,471 1,105,829 (7,197) 1,192,758 54,178,212 

In million Riel equivalent 

(unaudited) 209,804 (1,525) 3,471 4,513 (29) 4,867 221,101 

Credit commitments 32,710,538 55,813 83,534 223,438 - - 33,073,323 





a) Foreign exchange risk (continued) 

US$ Riel EUR THB Gold Other TOTAL 

As at 31 December 2007 

Assets 

Cash on hand 24,642,455 1,534,549 7,725 1,177,053 130,673 8,711 27,501,166 

Balances with the Central Bank70,669,355 387,394 - - - - 71,056,749 

Balances with other banks 75,948,394 4,084 1,903,474 - - 2,869,824 80,725,776 

Loans and advances 330,622,806 147,507 - 1,633,677 - - 332,403,990 

Other assets 2,626,478 - 5,744 - - 14,210 2,646,432 

Total financial assets 504,509,488 2,073,534 1,916,943 2,810,730 130,673 2,892,745 514,334,113 

Liabilities 

Deposits from banks 6,734,292 5,112 - - - - 6,739,404 

Due to customers 445,153,522 4,282,805 - 2,022,745 110,991 - 451,570,063 

Other liabilities 4,959,737 34,225 - - 4,323 145,381 5,143,666 

Borrowings 4,379,241 - - - - - 4,379,241 

Subordinated debt 7,080,000 - - - - - 7,080,000 

Total financial liabilities 468,306,792 4,322,142 - 2,022,745 115,314 145,381 474,912,374 

Net Balance Sheet Position 36,202,696 (2,248,608) 1,916,943 787,985 15,359 2,747,364 39,421,739 

In million Riel equivalent 

(unaudited) 144,919 (9,001) 7,674 3,154 61 10,998 157,805 

Credit commitments 50,722,220 - 31,776 76,072 - - 50,830,068 

b) Price risk 

The Bank is not exposed to securities price risk because it does not hold any investment held and classified 

on the balance sheet either as available for sale or at fair value through profit or loss. The Bank currently 

does not have a policy to manage its price risk. 

c) Interest rate risk 

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate 

because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial 

instrument will fluctuate because of changes in 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 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. 

64 





c) Interest rate risk (continued) 

The table below summarises the Bank's exposure to interest rate risks. It includes the Bank's financial 

instruments at carrying amounts, categorised by the earlier of contractual repricing or maturity dates. 

Up to 1 1-3 1-12 1 to 5 Over Non-interest 

month months months years 5 years bearing Total 

US$ US$ US$ US$ US$ US$ US$ 


Assets 

Cash on hand - - - - - 42,825,814 42,825,814 

Balances with the 

Central Bank - 5,500,000 - 4,054,500 62,491,756 72,046,256 

Balances with other banks 27,320,602 500,000 - - 964,418 - 28,785,020 

Loan and advances to 

customers 47,919,959 35,566,358 174,425,149 54,509,065 78,181,667 - 390,602,198 

Other assets - - - - - 2,595,645 2,595,645 

Total assets 75,240,561 41,566,358 174,425,149 54,509,065 83,200,585 107,913,215 536,854,933 

Liabilities 

Deposits from banks 20,200,259 5,499,395 - - - 78,327 25,777,981 

Due to customers 265,946,946 31,316,174 96,827,502 7,500,811 - 34,770,576 436,362,009 

Other liabilities - - - - - 6,399,452 6,399,452 

Borrowings 3,105,467 213,714 213,714 1,709,712 1,814,672 - 7,057,279 

Subordinated debt - - - - - 7,080,000 7,080,000 

Total liabilities 289,252,672 37,029,283 97,041,216 9,210,523 1,814,672 48,328,355 482,676,721 

Total interest rate 

repricing gap (214,012,111) 4,537,075 77,383,933 45,298,542 81,385,913 59,584,860 54,178,212 

In million Riel 

equivalents (Unaudited) (873,383) 18,516 315,804 184,863 332,136 243,166 221,101 





c) Interest rate risk (continued) 


month months months years 5 years bearing Total 

US$ US$ US$ US$ US$ US$ US$ 


Assets 

Cash on hand - - - - - 27,501,166 27,501,166 

Balances with the Central 

Bank 25,000,000 - - - 4,054,500 42,002,249 71,056,749 

Balances with other banks 69,789,926 1,000,000 - - 940,119 8,995,731 80,725,776 

Loan and advances to 

customers 1,083,354 5,855,272 197,603,311 97,957,720 29,904,333 - 332,403,990 

Other assets - - - - - 2,646,432 2,646,432 

Total assets 95,873,280 6,855,272197,603,311 97,957,720 34,898,952 81,145,578 514,334,113 

Liabilities 

Deposits from banks 2,742,520 - - - - 3,996,884 6,739,404 

Due to customers 255,969,220 28,957,230 56,320,250 80,449,809 - 29,873,554 451,570,063 

Other liabilities - - - - - 5,143,666 5,143,666 

Other borrowings - 213,714 213,714 3,951,813 - - 4,379,241 

Subordinated debt - - - 7,080,000 - - 7,080,000 

Total liabilities 258,711,740 29,170,944 56,533,964 91,481,622 - 39,014,104 474,912,374 

Total interest rate 

repricing gap (162,838,460) (22,315,672) 141,069,347 6,476,098 34,898,952 42,131,474 39,421,739 

In million Riel equivalents 

(Unaudited) (651,842) (89,330) 564,701 25,924 139,701 168,652 157,806 

32.3 Liquidity risk 

Liquidity risk is the risk that the Bank is unable to meet its payment obligations associated with its financial 

liabilities when they fall due and to replace funds when they are withdrawn. The consequence of this 

may be the failure to meet obligations to repay depositors and fulfil commitments to lend. 

a) Liquidity risk management process 

The management monitors balance sheet liquidity and manage the concentration and profile of debt 

maturities. Monitoring and reporting taking the form of daily cash position and project for the next day, 

week and month respectively, as these are key periods for liquidity management. The management 

monitors the movement of main depositors and projection of their withdrawals. 

66 




32.3 Liquidity risk (continued) 

b) Funding approach 

The Bank's main sources of liquidities arise from shareholder's paid-up capital and customers' deposits. The 

sources of liquidity are regularly reviewed daily through management's review of maturity of term 

deposits and key depositors. 

c) Non-derivative cash flows 

The table below presents the cash flows payable by the Bank under non-derivative financial liabilities by 

remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the 

contractual undiscounted cash flows, whereas the Bank manages the inherent liquidity risk based on 

expected undiscounted cash flows. 


months months years 5 years bearing Total 

US$ US$ US$ US$ US$ US$ 


Liabilities 

Deposits from banks 20,454,500 5,600,377 - - - 26,054,877 

Due to customers 301,951,710 32,379,729 103,283,426 8,590,706 - 446,205,571 

Other liabilities 4,390,263 744,657 - - - 5,134,920 

Borrowings 3,105,467 332,268 325,857 2,376,044 2,073,822 8,213,458 

Subordinated debt - - - 7,080,000 - 7,080,000 

Total liabilities 

(contractual maturity) 329,901,940 39,057,031 103,609,283 18,046,750 2,073,822 492,688,826 

In million Riel equivalents 

(Unaudited) 1,346,330 159,392 422,829 73,649 8,463 2,010,663 

Total assets 

(expected maturity) 123,156,906 44,162,003 174,425,149 54,509,065 140,601,810 536,854,933 


months months years 5 years bearing Total 

US$ US$ US$ US$ US$ US$ 


Liabilities 

Deposits from banks 6,739,404 - - - - 6,739,404 

Due to customers 285,842,774 28,957,230 56320250 80,340,309 109,500 451,570,063 

Other liabilities 4,403,921 739,745 - - - 5,143,666 

Other borrowings - 335,771 331,728 2,478,627 2,629,366 5,775,492 

Subordinated debt - - - 7,080,000 - 7,080,000 

Total liabilities 

(contractual maturity) 296,986,099 30,032,746 56,651,978 89,898,936 2,738,866 476,308,625 

In million Riel equivalents (Unaudited) 1,188,835 120,221 226,778 359,865 10,964 1,906,663 

Total assets 

(expected maturity) 140,971,177 9,501,704 197,603,311 97,957,720 68,300,201 514,334,113 




32.3 Liquidity risk (continued) 

d) Off-balance sheet items 

i. Loan commitments 

The dates of the contractual amounts of the Bank's off-balance sheet financial instruments that commit it 

to extent credit to customers and other facilities (note 29), are summarised in the table below. 

ii. Other financial facilities 

Other financial facilities (note 29), are also included below based on the earliest contractual date. 

iii. Operating lease commitments 

Where the Bank is the lessee, the future minimum lease payments under non-cancellable operating 

leases, as disclosed in note 29, are summarised in the table below. 

iv. Capital commitments 

Capital commitments for the construction of head office buildings and acquisitions of property and equipment 

(note 29) are summarised in the below table. 

No later than 1-5 Over 

1 year years 5 years Total 

US$ US$ US$ US$ 


Unused portion of approved credit facility 28,459,913 - - 28,459,913 

Acceptances and other financial facilities 4,613,410 - - 4,613,410 

Operating lease commitments 307,385 770,315 2,111,368 3,189,068 

Capital commitments 5,656,910 622,188 - 6,279,098 

Total 39,037,618 1,392,503 2,111,368 42,541,489 

In million Riel (equivalents) 159,313 5,683 8,616 173,612 


Unused portion of approved credit facility 39,748,989 - - 39,748,989 

Acceptances and other financial facilities 11,081,079 - - 11,081,079 

Operating lease commitments 176,080 589,160 2,151,772 2,917,012 

Capital commitments 1,425,464 559,753 - 1,985,217 

Total 52,431,612 1,148,913 2,151,772 55,732,297 

In million Riel (equivalents) 209,884 4,599 8,613 223,096 

68 




32.4 Fair value of financial assets and liabilities 

a) Financial instruments measured at fair value 

The Bank did not have financial instruments measured at fair value. 

b) Financial instruments not measured at fair value 

The table below summarises the carrying amounts and fair value of those financial assets and liabilities not 

presented on the Bank's balance sheet at their fair value. 

Carrying value 

Fair value 

US$ US$ US$ US$ 


Financial assets 

Balances with other banks 28,785,020 80,725,776 28,785,020 80,725,776 


Other assets 2,595,645 2,646,432 2,595,645 2,646,432 

Financial liabilities 

Deposits from banks 25,777,981 6,739,404 25,777,981 6,739,404 

Due to customers 436,362,009 451,570,063 436,362,009 451,570,063 

Borrowings 7,057,279 4,379,241 7,057,279 4,379,241 

Subordinated debt 7,080,000 7,080,000 7,080,000 7,080,000 

Off balance sheet financial instruments: 

Unused portion of approved credit facilities 28,459,913 39,748,989 

Guarantees, acceptances and other financial facilities 4,613,410 11,081,079 

i. Balances with other banks 

Balances with other banks include current accounts which are non-interest bearing, saving deposits and 

short-term deposits. The fair value of balances with other banks approximates the carrying amount. 

ii. Loans and advances to customers 

Loans and advances are net of provision for loan losses. The provision of loan losses is made under the 

requirements of Central Bank's Prakas. 

iii. Due to customers and deposits from banks 

The fair value of due to customers and deposits from banks approximates the carrying amount. The 

estimated fair value of deposits with no stated maturities, which includes non-interest bearing deposits, is 

the amount repayable on demand. 

The fixed interest bearing deposits are not quoted in active market and are short-term. Their fair value 

approximates the carrying amount. 




32.4 Fair value of financial assets and liabilities (continued) 

b) Financial instruments not measured at fair value (continued) 

iv. Borrowings 

The borrowings are not quoted in active market. Their fair value approximates the carrying amount. 

v. Subordinated debt 

The estimated fair value of subordinated debt with no stated maturities is the amount repayable on 

demand. 

32.5 Capital management 

The Bank's objectives when managing capital, which is a broader concept than the 'equity' on the face of 

balance sheet, are: 

• 

To comply with the capital requirement set by the Central Bank; 

To safeguard the Bank's ability to continue as a going concern so that it can continue to provide 

return for shareholder and benefits for other stakeholders; and 

To maintain a strong capital base to support the development of business. 

• 

The Central Bank 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, liquidity and other 

prudential ratios 

The table below summarises the composition of regulatory capital: 

31 December 2008 31 December 2007 

US$ Riel Million US$ Riel Million 

(Unaudited) 

(Unaudited) 

Tier I capital 

Statutory capital 40,545,000 165,464 40,545,000 162,302 

Retained earnings 54,705,135 223,251 32,631,485 130,624 

Total qualifying Tier 1 capital 95,250,135 388,715 73,176,485 292,926 

Tier II capital 

Subordinated debt 7,080,000 28,894 7,080,000 28,341 

Total qualifying Tier 2 capital 7,080,000 28,894 7,080,000 28,341 

Less: 

Investment in another bank (10,580,000) (43,177) (10,580,000) (42,352) 

Intangible assets (1,130,351) (4,613) (1,172,275) (4,693) 

Loans and advances to related parties (180,805) (737) (235,264) (942) 

Total regulatory capital (net worth) 90,438,979 369,082 68,268,946 273,280 

Subordinated debt is treated as financial liabilities for financial reporting purposes and included as a Tier 

II line item in the calculation of the Bank's net worth in accordance with the guidelines of the Central Bank. 

33. COMPARATIVE FIGURES 

Certain comparative figures have been reclassified to conform with the current year's presentation of the 

financial statements. 

70 


CORPORATE CONTACT INFORMATION 

Name in Khmer: FnaKarkaNaDIya: k>G 

Name in Chinese: 

Name in English: CANADIA BANK PLC (“CNB”) 

Legal Representative: Pung Kheav Se 

Bank’s license: indefinite period 

Registered Address of Head Office: No.265-269, 

Ang Doung Street, Phnom Penh, Cambodia. 

Tel: (855-23) 215286, Fax: (855-23)427064 

Email: canadia@canadiabank.com.kh 

Internet Website: www.canadiabank.com.kh 

BANK’S BRANCHES: 

Olympic 

No. 394, Samdech Preah Sihanouk Blvd., Phnom Penh, Cambodia. 

Tel: (855) 23- 218 397/378, 23- 720 492/503 

HP: (855) 11- 807 998, (855) 16- 538 353 

Fax: (855) 23- 218 395 

Charles De Gaulle 

No. 126, Charles de Gaulle Blvd., Phnom Penh, Cambodia. 

Tel: (855) 23- 214 868/898/668 

HP: (855) 12- 776 592 

Fax: (855) 23- 214 288 

Sorya 

Corner Street No.63 and Street No. 142, Sangkat Phsar Thmei 1, 

Khan Daun Penh, Phnom Penh, Cambodia. 

Tel: (855) 23- 220 311/312 

HP: (855) 12- 570 052 

Fax: (855) 23- 220 313 


Sihanouk Ville 

Independent Blvd., Sihanouk Ville, Cambodia. 

Tel: (855) 34- 933 490 

HP: (855) 16- 347 505 , (855) 12- 978 708 

Fax: (855) 34- 933 697 

Battambang 

The North of Phsar Thom Market, Battambang City, Cambodia. 

Tel: (855) 53- 952 267 

HP: (855) 12- 530 512, (855) 16- 530 244, (855) 16- 839 238 

Fax: (855) 53- 952 005 

Kampong Cham 

Canadia Commercial Center, Kampong Cham City, Cambodia. 

Tel: (855) 42- 941 361 

HP: (855) 12- 914 040, (855) 12- 848 672 

Fax: (855) 42- 941 360 

Pailin 

2, 726 Wat Village, Pailin Commune, Pailin District, Pailin City, Cambodia. 

HP: (855) 16- 530 011, (855) 12- 464 038, (855) 16- 864 399. 

Siem Reap 

Sivutha Road, Mondol 1, Svay Dangkum Commune, Siem Reap District, 

Siem Reap Province 

Tel: (855) 63- 964 808 

HP: (855) 12- 848 673, (855) 11- 974 043 

Fax: (855) 63- 964 809 

No. 558-559, Phsar Chas Street, Svay Dangkum District, Cambodia. 

Tel: (855) 63- 964 808 

HP: (855) 12- 848 673, (855) 11- 974 043 

Fax: (855) 63- 964 809 

72 

Annual Report 2008 

Poipet 

National Road 5, Kbal Spean Village, Poipet Commune, 

Banteaymeanchey Province, Cambodia. 

Tel: (855) 54- 967 107 

HP: (855) 16- 870 240, (855) 12- 945 243 

Fax: (855) 54- 967 104

Kampot 

No. 33, Street Angkor, Kampong Bay South Village, Kampong Bay Commune, 

Kampot Province, Cambodia. 

Tel: (855) 33- 932 392 / Fax: (855) 33- 392 391 

HP: (855) 16- 943 705 

Banteay MeanChey 

No. 15-18, 1 Village, Preah Ponlea Commune, Serysophoam District, 

Banteay Meanchey Province. 

Tel: (855) 54- 958 989/969 / Fax: (855) 54- 710 263 

HP: (855) 16- 530 013 

Takhmao 

No. 301, Street 207, Takhmao Commune, Kandal Province 

Tel :(855) 23- 425 885 

HP: (855) 11- 974 093 

Fax: (855) 23- 425 887 

Porchentong 

No.327, Russian Federation Boulevard 

Tel :(855) 23- 890 805 

HP: (855) 12- 676 697 

Fax :(855) 23- 890 807 

Kampong Chhnang 

Street No.5, Kampong Chhnang Commune, Kampong Chhnang District, 

Kampong Chhnang Province 

Tel : (855) 26- 770 017/018 / Fax : (855) 26- 770 027 

HP: (855) 16- 870 248 

Stat Chas 

No.A-15, Street No. 93-70 and 900, Sangkat Sras Chork, 

Khan Daun Penh, Phnom Penh. 

Tel :(855) 23- 430 325 / Fax: (855) 23- 430 326 

HP: (855) 12- 251 333 

Chenla 

No. Mao Tse Toung (St. 245), corner Monireth,Sangkat Phsar Deum Kor, 

Khan Tuol Kork, Phnom Penh, Cambodia. 

Tel : (855) 23- 880 619-620-621 / Fax : (855) 23- 880 621 

HP: (885) 12- 595 799 


Sovanna 

# 307-309, St. 271, Sangkat Tumnup Teuk, Khan Chamkarmon, 

Phnom Penh City, Cambodia. 

Tel : (855) 23- 214 129 / Fax : (855) 23- 214 129 

HP: (855) 12- 922 779 

Kbal Thnal 

# 480, National Road 2, Sangkat Chak Angre Loeu, Khan Meanchey, 

Phnom Penh City, Cambodia. 

Tel : (855) 23- 720 238 239 / Fax : (855) 23- 720 292 

HP: (855) 16- 666 005 

Siem Reap Phsar Leu 

#107-108, Banteaychas Village, Slorkram Commune, Siem Reap District, 

Siem Reap Province. 

Tel : (855) 63-966 806 807 / Fax : (855) 63-760 542 

HP: (855) 99- 919 178 

Neak Loeung 

No.255-257, Village 4, Break Ksay Commune, Peamro District, Prey Veng Province. 

Tel : (855) 43-750 221/222 

HP: (855) 11- 883 384 

Fax : (855) 43- 750 223 

Pursat 

NR No5 Sathavy Village, Svey Att Commune, Sampovmeas Distric, Pursat Province 

Tel : (855) 52- 740 287/288/289 

HP: (855) 16- 936 987/Fax : (855) 52- 740 289 

Phsar Heng Ly 

No. 27B, St. 271, Sangkat Teuk Thla, Khan Reuseikeo, Phnom Penh 

Tel : (855) 23- 880 316/317/319 

HP: (855) 11- 875 011/Fax : (855) 23- 880 319 

Tuol Kok 

No. 101F, St. 289, Sangkat Beung Kok I, Khan Tuol Kok, Phnom Penh 

Tel : (855) 23- 880 495/492/427 

HP: (855) 12- 570 052/Fax : (855) 23- 880 429 

74

Annual report 2008-OK-B-up.qxp - Canadia Bank Plc.

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?