ANNUAL REPORT 2020 CONTENTS
2020 Financial Highlights...... 01 Highlights Logo and Brand Story...... 03
Vision, Mission and Core Values...... 04 01 2020 Financial Highlights
Recap the History of the Bank...... 05
Board Chairman’s Message...... 06 04 Vision, Mission and Core Values ...... 10
Board of Directors-Brief Profile 14 Management Team-BriefStructure...... Profile...... 20 05 Recap the History of the Bank Report of the Board of Directors...... 21
Corporate Governance...... 22 25 Our Products Internal Control and Risk Management...... 24
Our Products...... 25
Our Customers...... 30 43 Independent Auditor’s Report Corporate Social Responsibility 2020...... 34
Director’s Report...... 38
Independent Auditor’s Report...... 43 76 Keys Partners
Keys Partners...... 76
Bank’s Address...... 79
2020 Financial Highlights
1 Total Bank assets increased 60% to USD 37.70 Millions.
2 The gross loan portfolio grew 61% to USD 29.50 Millions.
3 Operating Incomes increased 101% to USD 2.76 Millions.
4 Total tax expenses increased 112% to USD 0.42 Millions.
5
6 TheNon-performing Bank made profits loan ratio after was tax 1.39%. of USD 1.09 Millions.
7 Established a new Branch in Khan Kamboul, namely Daun Penh Specialized Bank Plc. Kamboul Branch.
8 Changed bank name to Daun Penh Specialized Bank Plc., with new logo.
9 Increased Capital at the amount of 3 million US dollars.
10 Changed the composition of the Board of Directors from 3 to 5 members.
DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 101 2020 Financial Highlights (Continued)
Loan to Customer and Non-Performing Loan Ratio Pro�it for the Financial Year and 35 1.69% Taxes1.20 & Licenses Expenses 30 0.42 1.00 1.39%
USD Millions 25 USD Millions 0.80 20 1.16%
15 0.60 0.20 10 0.40
5 0.20 0 0.05 2018 2019 2020 0.00 2018 2019 2020
Loan to Customer Non-Performing Loan Ratio Pro�it for the Financial Year Taxes & Licenses Expenses
37.70 Operation Income 40Total Bank Assets 3.0 2.76 35 2.5 30 USD Millions USD Millions 23.54 2.0 25 1.37 1.5 20 13.00 15 1.0 0.58 10 0.5 5 0.0 0 2018 2019 2020 2018 2019 2020
022 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Logo and Brand Story
Daun Penh Specialized Bank Plc. (the “DP Bank”) is named after the well-known Khmer ancestor “Daun Penh”, founder of “Phnom Daun Penh” in 1372, which later renamed as “Phnom Penh”, the current capital of the Kingdom of Cambodia. Additionally, Daun Penh district is a collection of large administrative, economic, IT and all kinds of commercial center including: Ministry of Economy and Finance, Ministry of Posts and Telecommunications, Council for the Development of Cambodia, National Bank of Cambodia, Phnom Penh Municipality, Central Market, and many high-rise commercial centers. It also consists national cultural centers such as the Royal Palace, National Museum, Independence Monument, Wat Phnom, etc. of significant
The well-established logo of the DP Bank is comprised of four elements:
1. Square : Represents the Chaktomuk River, the wonders of Phnom Penh’s geographical location, and the four directions in which the bank envisions to promote its reputation to target customers, to be their top minded
2.bank Naga when : they need financial services. Represents the dragon bridge of Wat Phnom. The bridge represented the means of connecting the economic,
commercial and financial activities of the public in that era. Compared to current day, it represents power of control and protection of the interests of customers, employees, shareholders, business partners and the financial means provided by the bank to the customers. In other words, Naga also symbolizes excellence, the community.
3. Letter “D” and “P”: Stands as the abbreviations for “Daun Penh” in English.
4. The color of the Cambodian flag : Is used as the color reference. In this sense, red stands for power, excellence and good fortune, white represents transparency and simplicity, while blue represents integrity, loyalty, professionalism and trust.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 033 Vision, Mission and Core Values
VISION
To be a top of mind bank in providing simple, tailored financial solutions. MISSION
Providing customers with our expertise in financial services at an affordable price and the best possible customer experiences. Assuring reasonable returns to all stakeholders and surrounding communities by, leveraging distribution channels and innovative technology solutions. CORE VALUES
SIMPLICITY INNOVATION We strongly believe in quality, We strongly believe that in- conditions easy to work, understand novation is very crucial in continuing for our customers, employees and all the success we see in our bank. We encourage stakeholders. In all our thought process, everybody to speak out their thoughts, ideas anything we do,we change or invent, and, experiment with new ideas or concepts. We it will be simple. We are simple, are keen to learn from all our mistakes and however strict, and very continue to improve upon ourselves, committed. INTEGRITY to achieve an outstanding We strongly believe in the positive outcome. value of honesty and strong moral principles at any time or any given situation. It’s our choice to uphold ourselves to a consistent standard, operating with full transparency ACCOUNTABILITY and accountability when CONFIDENTIALITY We are highly committed on conducting our We are highly committed on developing We closely take care of the developing our professional com- business. our professional competence for our employees; petence for our employees; to perform to perform the duties inprofessional manner. We parties involved in a transaction with the duties in professional manner. We are privacy and con�identiality of all the are accountable for all our actions towards our us; as this allows us to add value for our accountable for all our actions towards customers, shareholders,stakeholders, and customers whilst maintaining and our customers,shareholders, stakeholders, communities as a whole. We believe preserving our customers and communities as a whole. We that accountability is the best interest. believe that accountability is key to success and t the key to success and rustworthiness. trustworthiness.
044 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Recap the History of the Bank
The Bank is currently 100% owned by local shareholder called “Daun Penh Land Co., Ltd”.
On 23 January 2007, CAMKO Bank Limited was incorporated by Korean shareholders under the business registration number Co-3374/07E. On 23 May 2007, the Bank obtained a license from the National Bank of
Thereafter, the Bank decided to downsize the Bank’s operations to Specialized Bank with new license from NBCCambodia number (“NBC”) SB-09 to effective operate from as a commercial01 July 2011. bank, and officially commenced operations on 01 June 2007.
In late 2018, the shareholders of the Bank entered into Share Sale and Purchase Agreement (SSPA) to wholly sell the Bank to Daun Penh Land Co., Ltd. The transaction got approval from NBC on 05 June 2018
Theand ratifiedBank has amended been approved Memorandum and licensed Article of by Associations the National (“MoA”) Bank ofon Cambodia22 October to 2018. carry out specialized banking operation under the new name “Daun Penh Specialized Bank Plc” by License No. SB-09 dated 27 April 2020 and under the business registration number 00017370 dated 16 July 2020.
The Bank operates in Phnom Penh and Kandal Province through its branches. In addition, the Bank commits to expand banking operations through alternative channel networks in many allowable business models in order to provide better customers’ experiences and to expand the outreach.
DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 505 Board Chairman’s Message
“2020 was a very challenging year, not only for Cambodia but also for the whole world due to the COVID- 19 pandemic. It caused a severe economic downturn, job losses and even closing down some businesses across many industries. Even with these challenges, Daun Penh Specialized Bank Plc. is still able to position itself advantageously within our journey of transformation.”
The year began with many difficulties as the global by the pandemic. With all these efforts from the economy continues to suffer from the impacts of government, the banking sector is still operating the COVID-19 pandemic. Domestically there are in a controllable manner. signs that economic activity is beginning to pick up. The economy is projected to grow by 3.5% in During the pandemic Daun Penh Specialized Bank 2021 compared to the contraction of 1.9% that is Plc. continues its lending operations as normal, in expected by the end of 2020. order to support the needs of working capital and cash flow for our clients, and as a result the gross A multitude of economic sectors have been facing loan portfolio has grown remarkably around challenges but thanks to the country’s current 61% to USD29.50 million (2019: USD18.35 million) political stability, there is clear confidence from and Operating Incomes increased 101% to USD2.76 national and foreign investors. This looks to be million (2019: USD 1.37 million). The Bank very promising for the continued growth and made profits after tax of USD1.09 million (2019: expansion of the Cambodian banking system and USD0.38 million). NPL to total loans had slightly grew the general recovery and growth of our economy. to 1.39 % (2019: 1.16%) but still well below the The pandemic is clearly far from being over. The industry average. government is taking active steps in providing extensive supports to the SMEs all over the country. At Daun Penh Specialized Bank Plc. we have made The aid to SMEs includes but is not limited to tax great progress at defining ourselves through the reductions, working capital financing that is done many changes and growth cycles we have been through the SME Bank Plc (a government owned bank) through. The Board of Directors are delighted and partnership with private commercial banks, with the Bank’s performance in 2020 and we will vocational training programs, etc. As for the National keep playing an active role in overseeing the Bank’s Bank of Cambodia (NBC), they have encouraged the strategy, which will be executed following the best banking sector to assist clients to restructure their practices and standards. The Bank has enhanced debt with special focus on those who have been in its corporate governance and controllership business sectors that have been seriously affected to maximize efficiency and to achieve its
606 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 organizational goals. Major changes taking place improvements. In particular, I am pleased to include the following: extend thanks and appreciation for the on-going • Changed composition of the Board from 3 guidance and support we have received from the to 5 Board members with diverse expertise National Bank of Cambodia. We look forward amongst members to the continuous support from all stakeholders • Brought more experienced management into in ensuring the Bank continues to deliver the Bank balanced, sustainable and inclusive growth • Streamlined policies, procedures, and process in 2021 and beyond. It has been a pleasure for design to ensure there is a simple, fast and me to be a part of Daun Penh Specialized Bank reliable service to customers that is effective Plc. growth, and I will take with me many & efficient for the Bank fond memories of our achievements. • Changed the corporate name from Camko Specialized Bank Plc. to Daun Penh Specialized Sincerely, Bank Plc. and enhancing the brand image to the public.
The restructuring process isn’t complete yet, but it is well underway. The Bank will be focusing on Oknha Ing Bunhoaw, the four main strategies listed below. We plan to Chairman of the Board, implement them with the support of another 20 Daun Penh Specialized Bank Plc. initiatives in 2021. These will help the Bank nurture talent, boost efficiency, effectiveness, productivity and innovation. 1. Brand building and improving customer experience 2. Growth in a good customer base 3. Building employer branding 4. Improving reporting standard and nurturing compliance culture
Daun Penh Specialized Bank Plc. aims to be an important player in the financial sector of Cambodia by providing clients with pragmatic, efficient and secure banking products and
services. The bank is committed to reviewing and adding more products and services which are needed, to provide the best possible customer experience.The Bank has set a long-term strategic plan for an IT Infrastructure and IT Architecture in order to enable the Bank to upgrade to a commercial and digitalized banking in the next few years.
I’d like to take this opportunity to thank my board colleagues, as well as the management team, in efficiently executing their respective duties. I am also grateful to all other stakeholders such as regulatory authorities, customers, business partners, and the communities for the overall support you have given the Bank as it enables us to make our commitments towards more
DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 707 Board Of Directors
The Board of Directors (“BoD”) is appointed by the Shareholder and approved by the relevant authorities to supervise the overall operations of the Bank. The ultimate authority for appointing and/or removing Director shall be vested with Shareholder, acting in accordance with the prevailing Letter of Appointment of Director.
re- Members of the BoD shall be elected and re-elected for three-year term of office. The BoD shall elect / or elect a Chairman from among the members of the BoD to fulfil its roles and responsibilities.
duties effectively as well as have independence in making decisions under the relevant laws and regulations. The BoD must be properly accountable for their duties and allocate sufficient time to discharge their In addition to the powers prescribed by the laws and regulations, the BoD must recognize and uphold the
management of the Bank as follows (the Duty of “COLD”): interest of the Bank including its stakeholders as well as undertake the fiduciary duties of overseeing the
a) Duty of Care: which requires a Director to be diligent and prudent in managing the Bank’s business affairs. b) Duty of Obedience: which requires a Director to comply with the laws, regulations, the Bank’s objectives and AoI, the resolutions of the BoD and Shareholder’s. c) Duty of Loyalty: which dictates that a Director must act in good faith and must not allow his/ her personal interest to prevail over the interest of the Bank. d) Duty of Disclosure: which requires a Director to reveal the information that is accurate, adequate, transparent and timely.
The BoD of the Bank will establish Board Committees as required by the relevant authorities and may establish any additional Board Committees as it deems necessary.
The BoD shall meet regularly and at least four (4) time a year, except for extreme circumstance.
0088 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020909 Board of Directors- Brief Profile (continued)
Oknha Ing Bunhoaw Chairman of the Board, has joined the Board of Directors of DP Bank in November 2020.
He is a self-made tycoon, a prominent & highly respected businessman in Cambodia. He started as a trader with his Singaporean partner in early 1992 and established his first commercial enterprise in 1993 called AZ DISTRIBUTION CO., LTD. With A-to-Z business diversification vision, he gave birth to dozen commercial companies and invested in various industries including real estate. He is Chairman and CEO of Daun Penh (Cambodia) Group, a diverse local conglomerate in Cambodia. He is also an active investor in Myanmar, India, Singapore, United Kingdom, Canada and USA.
Oknha Ing Bunhoaw earned his Bachelor’s Degree in Private Law in 2005 from Cambodia University of Polytechnic and his Master’s Degree in Public Administration in 2007. He has attended various training courses on commercial management, investment laws, stock market and more from 2001 through 2010. In 2011, he attended an Executive Education of Harvard Kennedy School on Infrastructure in a Market Economy. He is a candidate of Doctor of Philosophy in Public Administration, Royal Academy of Cambodia in 2013.
With his passion toward national development, he spent his best 10 years to serve the nation in which from 2003 to 2008 he served as Member of Parliament, the National Assembly of Cambodia. He then was appointed as the Secretary of States in Ministry of Public Works and Transport from 2008 to 2013.
Oknha Ing Bunhoaw is also an enthusiastic charitable businessman by sharing what he earned to the society in many different ways across sectors and religions both by himself and through national and international charitable agencies. He donated millions of US dollars to meet the needs of low-income people, schools, pagodas, churches, environmental development & preservation programs, water resources programs, and disaster recovery programs, etc.
1010 DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 Board of Directors- Brief Profile (continued)
Mr. Vorn Samedy, ACMA, MCSI; a Director, has joined the Board of Directors of DP Bank in November 2020.
He is currently a Group Chief Financial Officer at Daun Penh (Cambodia) Group. He has a sound knowledge of the banking industry.
He spent 13 years of working experience with Canadia Bank Plc. a leading commercial bank in Cambodia, well-known real estate companies like Mega Asset Management (OCIC), ING Holdings, and a leading telecom company, CamGSM Co. Ltd.
He holds MBA in SAP Enterprise Resource Planning with distinction from Maharishi International University, USA in 2020 and Bachelor’s degree in Business from University of Technology Sydney, Australia in 2008.
He is an Associate Chartered Management Accountant (ACMA) of CIMA, UK and a member of the Chartered Institute for Securities & Investment (MCSI), UK.
Dr. Phai Touch - FIPA/ FFA/ CMIIA/ CPA/ MCSI, an Independent Director, has joined the Board of Directors of DP Bank since October 2018. He has 30 years of working experience with non-profit and profit-making organizations, the United Nations, the Embassy, Multi-National Companies, Conglomerate, other private sectors. He has spent more than 14 years as the board of directors at the leading financial institutions and general insurance, Sathapana, Prasac, and People & Partners. He obtained his Doctor of Business Administration from European University (European Business School), Switzerland, a Master’s Degree in accounting from Maharishi University of Management (MUM-MIU), USA; a Master’s Degree in Finance from Charles Sturt University, Australia; London Chamber of Commerce and Industry (LCCI), UK.
Currently, he is a Fellow of the Institute of Public Accountants (FIPA), Australia; a Fellow of the Institute of Financial Accountants (FFA), UK; and Chartered Audit Committee Director (CACD), IIA, Malaysia. A Chartered Member of the Institute of Internal Auditors (CMIIA), Malaysia. A Member of Kampuchea Institute of Certified Public Accountants and Auditors (CPA); a Member of Chartered Institute for Securities and Investment (MCSI), UK.
He attended courses on leadership, corporate governance in US, other numerous workshops and seminars nationally and internationally, such as Australia, Malaysia, Myanmar, Thailand, Philippine, Singapore. DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 1111 Board of Directors- Brief Profile (continued)
Mr. Tech Menh; an Independent Director, has joined the Board of Directors of DP Bank as an Independent Director in November 2020.
He is a very well respected professional with over 26 years of working experiences in various industries in both local conglomerates and multi-national companies.
While at his 3rd year in university, Mr. Tech Menh started his professional career in 1995 as an intern at an IT company before quickly becoming a Computer Trainer and later Accounting Manager and Accounting Software Specialist. He later joined Caltex, now known as Chevron, as Planning Analyst before taking exam and being awarded with scholarship in 1998 to study in Japan by the Japanese government.
The longest experiences came from almost 17 years with DKSH in Cambodia, starting as Finance Manager of a business unit, before shortly being promoted to Country Finance Director, later about 9 years and 4 years respectively concurrently additional roles as Country Head and a Member of Board of Directors.
He had a few years working for local conglomerates, first with AZ Group of Companies in 2005-2006 for a short period, then 2 years in 2018-2020 with One More Limited, the owner/ manufacturer of drinking water and instant noodles (Vital and Mee Chiet) and the owner of One More Restaurant.
He has been the Chief Financial Officer at Zuellig Pharma Ltd (in Cambodia) and Alliance Pharma Cambodge Sarl since October 2020 and has served as an independent director of People & Partners Plc since Mach 2018.
Mr. Tech Menh graduated a bachelor degree from Faculty of Business (now known as National University of Management) in the field of marketing and a master degree from Otaru University of Commerce with master of art in commerce, major in finance, in Japan.
12 DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 Board of Directors- Brief Profile (continued)
Mr. Ing Seav Meng , a Director, has joined the Board of Directors of DP Bank in November 2020.
He is a young business professional and a recent graduate of Oxford Brookes University in the United Kingdom. He holds a Master’s degree in Business Management and a Bachelor’s degree in Economics. His business experience spans 4 years and 3 countries with companies ranging from small tech startups to a successful exit from a medium sized entity. His main focus in these companies has been strategic planning, operations management, and Human resource management.
Currently, he is serving as Deputy CEO of a highly successful conglomerate, Daun Penh (Cambodia) Group under the well renowned businessman, Oknha Ing Bun Hoaw. The position has allowed him to broaden his business horizons into many industries. On a day-to-day basis the company operations span the real estate industry, banking, insurance, manufacturing, IT, and education sector to name a few. His value to the company is in bringing outside technical expertise in planning and management to help manage the vast portfolio of companies within the group.
Outside of the group business, Mr. Seav Meng constantly pursues the next tech innovation through his network both domestically and abroad in order to help solve issues he holds most important. These include companies operating in the elderly care and healthcare sector, mental health, and security services.
DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 13 Management Team-Brief Profile
14 DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 Mr. Rath Sarun Mr. Chhan Ponloeu Mr. Leang Kimhouth េ浒ក 浒ង គីមហួត 䮚ប䮶ន侶យក䮚បតិបត�ិ 侶យក䮚បតិបត�ិ襒ជីវកម� 侶យក䮚បតិបត�ិ䮚បតិបត�ិŒរ Mr.េ浒ក SarunChief 厶នᕒប់េផ� has Executive joinedីមŒរᅒរ the Officer ᾶមួយធ侶ஶរ DP Bank Mr.េ浒ក ChhanChief 厶នᕒប់េផ� PonloeuBusinessីមŒរᅒរᾶមួយធ侶ஶរ has Officer joined the Mr.េ浒ក LeangChief 厶នᕒប់េផ� Kimhouth OperationីមŒរᅒរᾶមួយធ侶ஶរ has Officerjoined the DP as Chief Executive Officer since DP Bank as a Chief Business Officer Bank as Chief Operation Officer (COO) ឯកេទស ដូនេពញ ម.ក ក�ុងមុខតំែណងᾶ䮚ប䮶ន ឯកេទស ដូនេពញ ម.ក ក�ុងមុខតំែណងᾶ ឯកេទស ដូនេពញ ម.ក ក�ុងមុខតំែណងᾶ January 2019. since February 2019. since October 2018. 侶យក䮚បតិបត�ិ ᕒប់㵒ំងពីែខមក楒 ᮶� ំ២០១៩ 侶យក䮚បតិបត�ិ襒ជីវកម� ᕒប់㵒ំងពីែខកុម�ៈ 侶យក䮚បតិបត�ិ䮚បតិបត�ិŒរ ᕒប់㵒ំងពីែខតុ浒 Heរហូតមកដល់បច� has more ុប䮔ន�េនះ។than 20 years’ working He᮶� ំ២០១៩ started រហូតមកដល់បច� his first careerុប䮔ន�េនះ។ in Banking ᮶�He ំ២០១៨ has moreរហូតមកដល់បច� than 14 ុប䮔ន�េនះ។years’ experience and Finance sector since 1999 and working in Deposit Taking Microfinance experiencesេ浒ក 掶នបទព in ិេ絒ធន៍Œរᅒរេ䵓ក�Commercial ុងធ侶Bankஶរ េ浒ក 厶នេផ�ីមបេ䮚មីŒរᅒរ ក�ុងវស័យិ េ浒ក 掶នបទពិេ絒ធន៍Œរᅒរក�ុង䮚គឹះ絒�ន and Microfinance Deposit-taking hold various positions such as: Chief sector , taking care of credit field in 奒ណិ ជ� និង䮚គឹះ絒�នមី䮚ក�ហរ��វត�ិ ុ ែដលទទួល䮚厶ក់ ធ侶ஶរ និងហរ��វត�ិ ុ ᕒប់㵒ំងពី᮶� ំ១៩៩៩ មី䮚ក�ហរ��វត�ិ ុ ែដលទទួល䮚厶ក់បេ��ីᾶង ១៤᮶� ំ Institution (MDI), taken care of of Accountants, Chief of Marketing several senior positions such as Head បេ��ីᾶង២០᮶� ំ មកេហយី េ⥒យ掶នតួ侶ទី រហូតមក ក�ងមុខតំែណង ᾶេ䮚ចីនដូចᾶ៖ មកេហយី េ⥒យទទួលខុស䮚ត�វចម䮔ង េ䕓េលីកិច� diverse roles and responsibilities in Officers, Branchុ Manager, Program of SME Lending Department, Head of ទទួលខុស䮚ត�វចម䮔ងៗ ក�ងមុខតំែណងᾶ䎶�ក់ដក 侶 ំ 䮚ប䮶នគណេនយ䮙ករ 䮚ប䮶ន徶�ក់ᅒរទផ្សោរ Œរឥណ䕒ន ក�ងមុខតំែណងសំՒន់ៗ ᾶេ䮚ចន several senior & executiveុ positionsឹ Manager, and CEO of Training Center,ី Collection Department,ុ Head of Branchី inᾶន់ខ�ស់បំផុតᾶេ䮚ច accounting, ីនfinance, េលកី ិច�Œរ treasury,៖ គណេនយ䮙 IT, Deputy侶យក絒Ւ Director 侶យកគេ䮚掶ង of Business អគ�侶យកInstitute. ដូចᾶ៖Effectiveness 侶យក侶យក⥒�នកម� Departmentី and សហ䮚ஶស Head of MIS,ហរ��វត�ិ HR,ុ រត侶ភ Admin,credit,ិ厶ល បេច�កវ savings,ទ្យោិ ព័ត៌掶ន andធន- Hisមជ䮈មណ�លហ� last positionកហ�ឹ នឺ prior 侶យករងវ to joiningទ្យោ絒�និ the Ւ�តតូចCredit Risk និងមធ䮙ម Departments. 侶យក侶យក⥒�ន䮚បមូល 䮶នមនុស䮟 & រដ�厶ល ឥណ䕒ន 䮚厶ក់បេ��សន䮟ំ Bank(䮚គះ絒�នឧត�មស was a Deputyក្សោ)។ Head មុនន ofងᕒកេចញ Financial បំណុល 侶យក侶យក⥒�ន䮚បសទ�徶ព絒Ւ sale. Moreover, he has taken chargeី ឹ ិ ឹ He holds a Master’s Degree ិ of Business Services Division of a leading commercial additionalនិងកិច�Œរលក់។ roles ᾶបែន�ម as េ浒កទទួលបន�Secretary ុកᾶof មកចូលរួមᾶមួយធ侶ஶរឯកេទស ដូនេពញ នAdministration,ិងᾶ侶យក侶យក⥒�ន major腒និភ័យឥណ䕒ន។ in General bank in Cambodia. BoardេលՒធ ិŒរof Directors របស់䮚ក�ម䮚ប ឹក្សោភandិ厶ល Shareholders និង徶គទុនិក េ浒ក 掶នមុខតំែណងᾶ 侶យក䮚បតិបត�រងិ Managementេ浒ក 厶នប��ប់䎶�ក់អនុបណ� from Build Brightិ ត University. 䮚គប់䮚គង for years. His last position prior to ᾶេ䮚ចីន᮶� ំ។ មុននឹងᕒកេចញមកដឹក侶ំធ侶ஶរ Heៃន侶យក⥒�នេស煒ហ obtained bachelor’sរ��វត�ិ ុ របស់ធ侶ஶរdegree of 奒ណHe ិ ជ�កម�attended ជ侶ញ䮚គប់䮚គងទូេ䕓ំ numerous short ព ី絒កលcourses joining the Bank was Chief Sale and ឯកេទស ដូនេពញ ម.ក េ浒ក掶ន មុខតំែណង business奒ណិ ជ�侶ំមុខមួយេ䵓ក� administrationុង䮚បេទសកម� majorុᾶ។ in វទ្យោិ andល័យេបៀល䮚厶យ many other national និង厶នចូលរួមវគ�បណ� and internationalុ ះ Distribution Officer of a leading MDI ᾶអគ�侶យកប㮶�ញែចកᕒយលក់ ក�ង䮚គះ絒�ន Marketingេ䵓ក�ង᮶� ំ១៩៩៩ from Faculty េ浒ក 厶នប��ប់䎶�ក់of Business, បworkshop 㮶� ល ន ងស andŒ�絒浒䎶�ក់ᾶត seminars. នងអន�រᾶត in Cambodia. He has been servingុ ឹ as ុ ិ ិ ិ ិ ិ a joined program with The Universityំ anមី䮚ក�ហ Independentរ��វត�ិ ុទទួល䮚厶ក់បេ�� Boardី of ែដលកំពុង侶ំមុខ Director បរ��ប䮚តិ 䮚គប់䮚គង奒ណិ ជ�កម� ជ侶ញទីផ្សោរ ᾶេ䮚ចីន 奒ក់ព័ន�នឹង䮚ប䮶នបទមួយ ចំនួនដូចᾶ of San Francisco and Georgetown forមួយ People េ䵓ក�ុង䮚បេទ andសកម� Partnerុᾶ។ េ浒ក Insurance គឺᾶស掶ជិក ពីម腒វទ្យោល័យ奒ណិ ិ ជ�絒�ស� ែដលសហŒរ កម�ីសហ䮚ஶសՒ�តតូច និងមធ䮙ម Œរ䮚គប់䮚គង University in 1999,University and holds of San a Francisco master’s Plc䮚ក�ម䮚ប sinceឹក្សោភ ិ厶ល Septemberឯក楒ជ䮙 2018. របស់䮚ក�មហ៊ុន䮶侶 កម�វធិ ីសិក្សោᾶមួយ 腒និភ័យឥណ䕒ន Œរ䮚គប់䮚គង និង徶ពᾶអ�ក degree of business administration 楒៉ប់រងភីភល & 垶តេនីរ អុិនសួេរន ភីអិលសុី ᕒប់ និង Georgetown University និង厶នប��ប់ ដឹក侶ំᾶេដីម ។ល។ Mr. Sarun obtained a Bachelor’s Degree from National University of Management 㵒ំងពីែខក�� ᮶� ំ២០១៨ រហូតមកដល់បច�ប䮔ន�េនះ។ 䎶�ក់អនុបណ�ិ ត 䮚គប់䮚គង奒ណិ ជ�កម� ពី絒កល in Accounting in 1999, and a master’sុ in 2005. He participated in numerous ំ degreeofេ浒ក 厶នប��ប់Business Administration 䎶�ក់បរ��ប័䮚តជិ 侶ញ in localវទ្យោល័យᾶតិ and ិ䮚គប់䮚គង international េ䵓ក�ុង᮶� ំ២០០៥។ forum & Financeគណេនយ䮙 (English- ក�ុង᮶� ំ១៩៩៩ base d ន ិង厶នប��ប់䎶�ក់international workshopេ浒ក 厶នចូលរួមវគ�បណ� in ranges ុofះប㮶�ល topics ន toិង អនុបណ�ិ ត䮚គប់䮚គង 奒ណិ ជ�កម� េលីជ侶ញំ supportសិŒ�絒浒䎶�ក់ᾶត his careersិ និងអន�រᾶត growth.ិ េលី䮚ប䮶ន ofហ រ��វត�ិCambodiaុ (កម�វ inធិ 2007.ីអន�រᾶត Heិេ䮚ប participatedី䮚 厶 ស ់ 徶 絒 បទ ែដល奒ក់ព័ន�ᾶេ䮚ចីន ស䮚掶ប់ஶំ䮚ទដល់ program) from Paññāsāstra University inអង numerousេគ�ស)់ ពី絒កលវ localទ្យោល័យប��絒�ស�កម�ិ and internationalុᾶ Œររកចេ䮚មី ីន ៃន襒ជីពŒរᅒររបស់េ浒ក។ forumេ䵓ក�ុង᮶� &ំ២០០៧។ workshop េ浒ក in ranges 厶នចូលរួមវគ�បណ� of topics.ុ ះ ប㮶�ល និងសិŒ�絒浒䎶�ក់ᾶតិ និងអន�រᾶតិ េលី䮚ប䮶នបទ奒ក់ព័ន�ᾶេ䮚ចីន។
DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 1515 Management Team-Brief Profile (continued)
1
2 3
16 DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 6
5 4
DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 17 Management Team-Brief Profile (continued)
1 Mr. Chhay Bunthoeun Head of Sale & Distribution Department
Mr. Bunthoeun has joined the DP Bank as Head of Sale & Distribution Department since April 2019.
(MDI), taken care of diverse roles and responsibilities in several positions such as internal audit He has more than 14 years’ working experiences in leading Microfinance Deposit-taking Institution
serviceofficer, department. Chief credit unit, Sub-branch manager, branch manager, deputy director of deposit and customer relationship department, regional director and Last, sale director of deposit & financial Mr. Bunthoeun obtained a Bachelor’s Degree in Accounting in 2005, and a master’s degree of management from Build Bright University in 2012. He participated in numerous local which is
China in June 2019. related to banking & finance sector and participated workshop on SME finance forum at Beijing
2 Ms. Nea Angkearasmei Head of Finance Department Ms. Nea Angkearasmei has joined the DP Bank as Head of Finance Department since December 2018.
She previously had 12-years’ working experiences in a leading MDIs and hold various positions such as Accountant, Chief of Accountants, and Deputy of Finance Department. She has acquired a breath of
management and technical support to branches etc. knowledge and skills related to financial transaction analysis, financial reporting standard, financial She Obtained a Bachelor’s Degree in Finance and Banking in 2005 and a Master’s Degree in Finance and Banking in 2011 at National University of Management. She attended numerous professional courses including Tax Agent, CIFRS convergence, Time Management & Effective Planning, and Cambodia Labor Law in HR practice etc.
3 Ms. Koy Landina Head of Compliance Department Ms. Koy Landina started her career with the DP Bank as Head of Compliance Department since March 2019.
She worked for a leading commercial bank from 2004 to 2019 in various positions such as Cashier, AVP & Manager of Branch Cashier, Staff of Compliance Report Unit, Staff of Legal Compliance Unit, Assistant Manager of Legal Compliance Unit, and her last position at that leading commercial bank in 2019 was Manager of Legal Compliance Unit of Compliance Division.
She holds a bachelor degree of business administration, major in Finance and Banking from National University of Management in 2004, has successfully graduated General English Program from Australian Centre for Education in 2017. And she is a graduate of the Regulation Compliance Course with the Institute of Banking and Finance in 2019.
18 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Management Team-Brief Profile (Continued) 4 Mr. Lun Chantheng Head of HR & Admin Department Mr. Lun Chantheng has joined DP Bank as Head of HR & Admin Department since August 2020.
He has more than 11 years of working experiences in Human Resources Management with commercial
spent 5 years in managerial role including Deputy Head of HR, Recruitment Manager, and Head of HR andbank, Administration. Microfinance Deposit-takingBesides, he spent Institution 8 years of (MDI), experience and construction with INGOs asindustry. Senior HRIn privateand Development sector, he
Head of Human Resource with one commercial Bank. Officer, HR Coordinator, and Training Coordinator. His last position prior to joining the bank was Deputy
in 2010; and he obtained his BA of Economics from Royal University of Law and Economics in 2000. HeMr. Chanthengparticipated graduated in numerous his MBAlocal inand General international Management forum from & workshop Paññāsāstra related University with HR Managementof Cambodia spectrum and leadership.
5 Mr. Sam Kakda Head of Underwriting Department Mr. Sam kakda has joined DP Bank as Head of Underwriting Department since December 2018.
inHe 2018, has more he was than the 8 Deputyyears of Director experience of the working Credit in underwriting a deposit-taking Department. microfinance sectors, with the main responsibilities of credit fields, such as Credit Officer, Credit Analyst, Chief Credit Analyst For SME. Later He holds a Bachelor of Business, Finance and Banking degree from Norton University, a General English Program from the Banana Center and the Stanford American School, and has attended national training and seminars such as credit analysis, lending to SME. Small, Credit Risk Management, Management and Leadership and International training, such as the Financial Market Assessment for Agriculture Sector from APRACA and Financial Technology Fair 2019 (FinTech 2019).
6 Mr. Chou Bunhy Head of Internal Audit Department Mr. Chou Bunhy has joined the DP Bank as a Head of Internal Audit Department since June 2019.
He started his first career in Banking & Finance sector in 2007 with a leading commercial bank in a various positions such as Credit Officer, Internal Auditor and Deputy Manager of Internal Audit; and then heMr. joined Chou aBunhy Microfinance holds a masterInstitution degree as Internal of Finance Audit & DepartmentBanking in 2010 Manager and obtainedfrom 2014 bachelor to 2019. degree of business economics in 2006 from National University of Management. Furthermore, he participated in
control, internal auditing, fraud auditing and compliance etc. numerous courses both local & abroad related to accounting and finance, risk management, internal
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 19 Management Structure
Shareholder
BOD
BOD ALCO, Risk & BOD Credit Committee BOD Audit Committee Compliance Committee
CEO
Executive Committee
New Project & Biz Process Credit Committee Committee
Chief Operation Of�icer Chief Biz Development Of�icer Chief Information (COO) (CBO) Of�icer (CIO)
Underwriting Sale & Distribution Marketing & Product HR & Admin Finance Compliance Internal Audit Department(UND) Department (SDD) Development Department (HAD) Department (FND) Department (CDT) Department (IAD) Department (MPD) Branches
2020 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Report of the Board of Directors
01 Approved to establish new Branch in Khan Kamboul, namely Daun Penh Specialized Bank Plc.
Kamboul Branch.
02
03 Approved onto increase Succession Capital Plan inGuideline the amount for Chiefof 3 million Executive US dollars.Officer.
04 Approved on BCP Framework for possible country lockdown, caused by Covid-19.
05 Approved on the Revision of Budget Plan 2020, caused by Covid-19.
06 Approved to change Bank name from Camko Specialized Bank Plc. to Daun Penh Specialized Bank Plc.
07 Approved to change the new Bank Logo for Daun Penh Specialized Bank Plc.
08 Approved to have the Board of Directors of the Bank composed of 5 members and having Oknha
Ing Bunhoaw been elected as Chairman of the Board, and nominated board committee including
approval term of references of such committees.
09 Approved on the change the composition of some Board Committees.
10 Approved to select BDO (Cambodia) Limited as Independent External Auditor for Auditing 2020
Financial Statement.
11 Approved social contributions budget under CRS program for 2020.
12 Approved on Budget Plan and Strategic Plan for 2021.
13 Reviewed, commented, advised and approved on numerous new and amended policies, proposed
by management team.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 21 Corporate Governance
How We Define Corporate Governance
It’s the rel
ationships and other arrangements to ensure that intended outcomes of the Bank are defined and budget and (3) monitoring, evaluating, and reporting the performance in order to achieve the following and achieved, including (1) defining objectives and key goals (2) setting strategy, policies, business plan outcomes:
1. Sustainable long-term value creation 2. Ethical and responsible business 3. Competitiveness and performance with long-term perspective
5. Good corporate citizenship; and Corporate resilience 4. Investors’ confidence and trust
Our Governance Framework
Daun Penh Specialized Bank Plc. is governed on the principle of a segregation of duties and responsibilities between 1) the Shareholder, 2) the Board of Directors, acting collectively and answerable to the Shareholders
business and operational affairs of the Bank. The structure and reporting lines are elaborated in the and 3) The Chief Executive Officer (“CEO”) who has direct day-to-day responsibility for controlling the Bank’s organizational chart which is accessible by all staffs, regulators, professional advisors, and other related stakeholders of the Bank.
1. Shareholder
Shareholder is owner of the Bank, and appoints Directors to act on its behalf and approves fees/remunerations of the BoD, some matters as per requirements of the laws and regulations and approves strategic matter stated in the Articles of Incorporation (“AoI”) of the Bank.
22 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Corporate Governance (continued) 2. Board of Directors
The BoD is appointed by the shareholder and approved by the relevant authorities to supervise the overall operations of the Bank. However, day-to-day operation is managed and performed by the management team and employees with the CEO as the leader. The ultimate authority for appointing and/or removing Director shall be vested with Shareholder, acting in accordance with the prevailing in the Letter of Appointment of Director.
3. Chief Executive Officer (“CEO”)
The CEO as the top executive of the Bank shall be responsible for performing the following duties:
a) Perform tasks assigned by the BoD and committees of the BoD as well as any other acts as stipulated by laws or regulations. b) Monitor and control the Bank’s operations to ensure compliance with policy, goals, strategies, operating plan and annual budget of the Bank as well as compliance with applicable laws and regulations.
d) Structure and manage the organization under the BoD’s given guidelines as well as build and c) Report significant operating performances to the BoD on regular basis. retain capable management team to effectively perform duties according to the Bank’s strategies and objectives. e) Seek business opportunities which are consistent with vision and missions and strategic directions of the Bank.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 23 Internal Control & Risk Management
Daun Penh Specialized Bank Plc. believe that a critical component of safe and sound bank management
is constituted by an effective and efficient system of internal controls, which help ensure the goals and objectivesSuch a system of the can Bank also areensure met, that that the long-term Bank will profitability comply with & allsustainability relevant laws targets and regulations are achieved as as well well as policies,maintain internal accurate procedures & reliable and financial guidelines; records and and decrease reporting. the risk of unexpected losses or damage to the Bank’s assets and reputation.
Framework of the internal control system
and effectiveness of performance, including but not limited to preventing the possible damages or loss of Daun Penh Specialized Bank Plc., aim at improving internal control system to ensure 1). The efficiency information; 3). Compliance with applicable laws and regulations. the Bank’s assets / reputations; 2). Reliability, completeness and timeliness of financial and management We understand the importance of having our board of directors and top management, internal and
internal control systems and continually evaluating their effectiveness. external auditors, compliance officers and other bank supervisors to focus attentions on strengthening Therefore, we have demonstrated understanding of roles and responsibilities with proper documentations and formalized approval processes as clear guidance for practices. We furthermore believe that segregation
regard, the Bank has established and documented clearly an organizational structure with clear ofroles duties & responsibili in particularties. has The mainly Bank contributedhas also set upin thea simple efficiency e-library of internal so that controleveryone for ofthe our Bank. Bank With staffs this can access to all those documents later on and during working hours.
Corporate governance policy was developed to ensure the principle of a segregation of duties and responsibilities between 1). the Shareholder, 2). the Board of Directors, and 3). Management - the Chief
FrameworkExecutive Officer of risk (“CEO”). management system
prior management of analyzing and evaluating complex risks is very important. Therefore, the risk Sincemanagement the main activities business are activities the Bank’s are businessexposed toactivities credit & that financial identify risks the due source to various and scope external of risks, variables, develop risk & compliant culture and take prior response in order to prevent and improve the healthy growth of assets and procured assets.
The Bank developed and set up risk management structures at Board Level including: 1. Board ALCO, Risk & Compliance Committee, 2. Credit Committee, 3. Audit Committee. At Management level, there are (i) Executive Committee who have weekly meeting and (ii) Credit Committee which is basically dealing with credit evaluations & approval, and that was guided by numbers of policies & procedures including: Credit Risk Management Policy, Credit Policy. Furthermore, there are quite numbers of other policies that were also established to guide performances and behaviors such as Fraud Risk Management and Investiga-
tionManagement Procedure, Policy, Conflict Product of Interest Development & Code Policy,of Business etc. Conduct Policy, Finance & Accounting Policy, Salary & Other Fringe Benefit Policy, Proxy Policy, Whistleblowing Policy, AML/CFT Policy, Customer Complaint
24 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Our Products
Banking with us... Banking with the best customer experiences
Auto Loan EASY Term & Conditions with QUICK Approval Personal Loan SOFT TITLE is also Accepted as Loan Collateral Business Loan (Start-up/Expansion) NO PENALTY for Early Pay-Off Housing Loan & Home improvement Loan FREE of Charge for Loan Repayment Via FREE Comprehensive Insurance Package for Auto Loan
DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 2525 Business Loan
Currencies: Riel or US Dollar Loan Size: Up to 2 billion Riels or USD 500,000 Interest Rate: From 0.83% per month Loan Tenor: Up to 10 years
26 DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 Housing Loan
Currencies: Riel or US Dollar Loan Size: Up to 2 billion Riels or USD 500,000 Interest Rate: From 0.83% per month Loan Tenor: Up to 16 years
DAUNDAUN PENHPENH SpecializedSpecialized BankBank Plc.Plc. ANNUALANNUAL REPORTREPORT 20202020 27 Home Improvement Loan
Currencies: Riel or US Dollar Loan Size: Up to 2 billion Riels or USD 500,000 Interest Rate: From 0.83% per month Loan Tenor: Up to 16 years
28 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Auto Loan
Auto Loan
Currencies: Riel or US Dollar Loan size Up to 20 million Riel KHR/ USD 5,000 Up to 400 million Riel KHR/ USD 100,000 Interest rate From 1.49% per month From 0.65% per month Loan Tenor Up to 60 months Up to 84 months
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 29 Our Customers will follow the tagline, “Every Step, Together. Daun Penh Specialized Bank of Cambodia has been contributing to the financial sector in Cambodia. The bank capacity. As a result, the bank has gained continuous” for all customerssupport from and both business existing partners and new who customers need financialthrough services.word-of-mouths The bank of offers customers various who types have of loan been products successful to customers in bank based loans, on alongtheir actual with theneeds, efforts cash fromflow andour employees who consistently deliver bank service in professional manners. Customers can get the loan from a bank to use for the following purposes:
- Business Loan (for start-up or expansion business or for support working capital) - Housing Loan (including buying or constructing house on their owned land) - Home improvement loan - Auto Loan - Personal Consumption Loan
Since the beginning of 2020, Covid-19 pandemic impacts the global economic downturn, as well as in Cambodia, but this has not been a major obstacle for the Bank to continue its loan disbursement to meet customer demand and to save customers’ business. In addition, the Bank has been involved in advising and findingtenors, (iii) appropriate interest rate, solutions and (iv) to other its customers loan terms who & conditions,have been trulyfor the experiencing new bank difficultiesloan, and causedprovide by some the Covid-19 pandemic. As a result, our clients are very satisfied with the offer of reasonable: (i) loan size, (ii) loan favorable solutions of loan restructure for existing loan customers who have been experiencing difficulties, that make it easier for them to repay their loans and better re-manage their cash flow.
30 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Our Customers (continued)
Mrs. Mom Sorady and Mr. Lorn Sothy Business Loan A business woman in Preaek Traeng Village, Samraong Thum Commune, Kien Svay District, Kandal Province; “We have received a loan of USD 26,000 from Daun Penh Specialized Bank Plc. in early 2020 to expand our existing business. This loan is not only an active working capital that makes our business grow but helps to increase our number of customers everyday. However we also noticed that our annual income is also increasing. With reasonable loan terms and condition as well as attentive and responsive services from the Bank., These are the important factors that help change my business situation for the better.”
DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 3131 Our Customers (continued)
Mr. Bou Vibol and Mrs. Thlang Sreypov Home Improvement Loans My wife and I are owners of rental land in Phum Kamboul , Sangkat Kamboul, Khan Kamboul, Phnom Penh. “We have always wanted to have a dream home for a long time, until 2020, after consulting with Daun Penh Specialized Bank Plc. we decided to borrow USD50,000 from the Bank to build a new house on our own land for living. The Bank has provided excellent loan terms & conditions; therefore, my wife and I can really
afford a solid daily cash flow, a better and more modern lifestyle.”
DAUN PENH Specialized Bank Plc. 32 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Our Customers (continued)
ឥណ䞶នគេហ⯒⾶ន
អតិថិជន៖ លោក ណយ វ➶ ន់㮶ត និង អ䮓កស្殸 គឹម ស⯒殶ន
Mr. Noy Vannath and Mrs. Thuok Koemsrean Housing Loan He is a civil servant and his wife is running a grocery store; “My wife and I saved up to buy a new house to live in. It was awesome that we got to know Daun Penh Specialized Bank Plc. in 2020 and we also got a Bank loan of USD 30,000 to buy a new house for living in Phum Knhe, Sangkat Sangkat Trapeang Krasang, Khan Pou Senchey, Phnom Penh. We are very pleased and happy that we were able to achieve our goal of buying a new home quickly and give us the life we desire. In addition, with the favourable loan terms & condition and customer services that the Bank has prepared for us, we are able to better manage our daily income and expenses day by day.”
DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 3333 Corporate Social Responsibility 2020
1. What does Corporate Social Responsibility mean to us?
Corporate Social Responsibility (CSR) is the commitment of a business to consider its impact on society and the environment and to operate in a responsible way.
At Daun Penh Specialized Bank Plc. we are highly committed to developing our professional competence for our employees; to perform the duties in a professional manner and provide customers with our expertise
Wein financial strongly services believe atin anthe affordable value of honesty price and and the strong best possiblemoral principles customer at experiences. any time or any given situation to uphold ourselves to a consistent standard, operating with full transparency and accountability when conducting our business. We are accountable for all our actions towards our customers, shareholders, stakeholders, and communities as a whole. We believe that accountability is the key to success and trustworthiness.
We approach CSR as we approach our business in general. We decide which areas to focus on based on input from all our stakeholders - customers, colleagues, suppliers, partners, and shareholders.
2. How do we contribute to society?
goals and reach their potential. We believe that our business ethics, other charitable activities, and Asocial-cultural bank’s main &role environmental in society is activitiesto provide play financial an important services roleto help and people mainly and contribute businesses to our achieve Corporate their Social Responsibility, which covers economic responsibility, legal responsibility, ethical responsibility, and discretionary responsibility.
A. Our Business Ethics
We have done and are continuing to implement as follows:
For Customers
• • • Advising them on their financial plan & improving their financial literacy • LendingHelping customerscustomers inat creatingthe right financial time, right security loan size & avoiding & right loan financial tenor stress • LendingHelping customerswith fair and to managecompetitive cash pricing flow & expand their business • Improving living standards and personal / family quality of life • Listening to customer’s concern & feedback via customer survey • Developing suitable products for customers
3434 DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 Corporate Social Responsibility 2020 (continued) For Employees • Building capacity & professional competence • Providing equal job opportunity • Building a healthy working environment • Promoting code of business conduct/professional conduct • • Promoting transparency & culture of compliance • Raising awareness on conflict of interest
Promoting integrity, simplicity, innovation, accountability & confidentiality as our Core Values
For Communities & Society
• Enabling job creation via staff recruitment & lending to the clients for biz expansion • Avoiding lending to illegal/prohibited businesses • Paying all applicable taxes responsibly & timely manner • • Encourage staff to be a volunteer in community activities Combating financial crime (AML, fraud, and the financing of terrorism)
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 35 Corporate Social Responsibility 2020 (continued)
Oknha ING Bunhoaw, Chairman of the Board of Daun Penh Specialized Bank Plc. and Lok Chumteav donated USD 100,000 (1st phase) to the Government’s Campaign for Combating with the pandemic, Covid-19.
B. Our Charity
• Donating in-kind of building construction in hospitals & schools • Donating foundation to support hospital & Encouraging staff to participate in blood donation • Donating national & international charitable agencies for natural disaster recovery program, environmental development & preservation programs, water resources programs, and disaster recovery programs, etc. • Sponsoring health care treatment for the low-income people
Members of the Board of Directors, management and staff of Daun Penh Specialized Bank Plc. volunteer to donate blood & cash to Children’s Hospital Kantha Bopha.
36 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Corporate Social Responsibility 2020 (continued)
C. Our Social Cultural & Environmental Activities
• Promoting Khmer traditional, cultural, and religious activities • Donating to meet the need of pagodas / churches • Promoting natural and environmental protection among staff
Oknha ING Bunhoaw, Chairman of the Board, Lok Chumteav Heng Sokha and his family donated USD150,000 for the construction of a Buddhist secondary school to be used as an achievement in the pagoda for the training & building of monks’ capacity.
Oknha ING Bunhoaw, Chairman of the Board of Daun Penh Specialized Bank Plc. and Lok Chumteav donated USD 200,000 to the Government to help the flood victims.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 37 DIRECTORS’ REPORT
38 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 DIRECTORS’ REPORT
The Directors have pleasure in submitting their report and the audited financial statements of Daun Penh Specialized Bank Plc. (“the Bank”) for the financial year ended 31 December 2020. Principal activity
The principal activity of the Bank is in credit operations for valuable consideration, including leasing, guarantees and year. commitment in Cambodia. There have been no significant changes in the nature of these activities during the financial Change of name
On 17 June 2020, the Bank changed its name from CAMKO Specialized Bank Plc. to Daun Penh Specialized Bank Plc. Results of operations US$ KHR’000
Profit for the financial year 1,093,931 4,424,951 Dividends
The Directors do not recommend the payment of any dividend for the current financial year. Reserves and provisions
There were no material transfers to or from reserves or provisions during the current financial year. Bad and doubtful loans
were made out, the Directors took reasonable steps to ascertain that proper action had been taken in relation to the Before the statement of profit or loss and other comprehensive income and statement of financial position of the Bank known bad loans and that adequate allowance had been made for doubtful loans. writing off of bad loans and the making of allowance for doubtful loans and satisfied themselves that there were no At the date of this report, the Directors are not aware of any circumstances which would render it necessary to write any material extent. off bad loans or the amount of the allowance for doubtful loans in the financial statements of the Bank inadequate to Current assets
out, the Directors took reasonable steps to ensure that for any current assets which were unlikely to be realised in the Before the statement of profit or loss and other comprehensive income and statement of financial position were made ordinary course of business, their values as shown in the accounting records of the Bank have been written down to an amount expected if realised.
At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Bank misleading.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 39 DIRECTORS’ REPORT (continued)
Valuation methods
At the date of this report, the Directors are not aware of any circumstances, which have arisen and which may render adherence to the existing method of valuation of assets or liabilities of the Bank misleading or inappropriate.
Contingent and other liabilities
At the date of this report, there does not exist:
liabilities of any other person, or (i) any charge on the assets of the Bank which has arisen since the end of the financial year which secures the
(ii) any contingent liability of the Bank which has arisen since the end of the financial year. No contingent or other liability has become enforceable, or is likely to become enforceable, within the period of 12 ability of the Bank to meet its obligations when they fall due. months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the 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 in the financial statements of the Bank, which would render any amount stated in the financial statements as misleading. Items of an unusual nature
- tially affected by any item, transaction or event of a material and unusual nature. The results of the operations of the Bank during the financial year were not, in the opinion of the Directors, substan transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the There has not arisen in the interval between the end of the financial year and the date of this report any item, results of the operations of the Bank for the financial year for which this report is made. Share capital
During the financial year, the registered and issued share capital of the Bank was increased from US$15,000,000 to US$18,000,000 by way of issuance of 3,000,000 new ordinary shares of US$1 each by converting its borrowing from Bank of Cambodia and Ministry of Commerce on 17 June 2020 and 3 August 2020 respectively. Daun Penh Land Co., Ltd. amounting to US$3,000,000 for working capital purposes. It was approved by the National The newly issued shares rank pari passu in all respects with the existing shares of the Bank. There were no other issues of shares during the financial year.
No option to take up unissued shares in the Bank was granted during the financial year and there were no shares under options at the end of the financial year in respect of shares in the Bank.
40 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 DIRECTORS’ REPORT (continued) Directors
The Directors who have held for office since the date of the last report are: Retired Director:
Sam Pheakdei, Chairman (resigned on 25 November 2020) Leang Kimhouth, Director (resigned on 25 November 2020)
Directors on board:
Oknha Ing Bunhaow, Chairman (appointed on 25 November 2020) Vorn Samedy, Director (appointed on 25 November 2020) Ing Seavmeng, Director (appointed on 25 November 2020) Tech Menh, Independent Director (appointed on 25 November 2020) Dr. Phai Touch, Independent Director (appointed on 25 November 2020)
The effective date of the approval by National Bank of Cambodia was on 25 November 2020.
Directors’ benefits
During and at the end of the financial year, no arrangements subsisted to which the Bank is a party, with the object or of the Bank or any other body corporate. objects of enabling the Directors of the Bank to acquire benefits by means of the acquisition of shares in or debentures
Since the end of the previous financial year, the Directors have not received or become entitled to receive any benefit by reason of a contract made by the Bank or a related corporation with the Director or with a firm of which the Director is a member, or with a Bank in which the Director has a substantial financial interest, except for any benefit which may be deemed to have arisen by virtue of those transactions as disclosed in Note 26 to the financial statements. Directors’ responsibility in respect of the financial statements
The Directors are responsible to ascertain that the financial statements give a true and fair view of the financial position of the Bank as at 31 December 2020, and of its financial performance and cash flows for the financial year then ended. In preparing these financial statements, the Directors are required to: (a) adopt appropriate accounting policies which are supported by reasonable judgements and estimates and then apply them consistently;
(b) comply with the disclosure requirements of the Cambodian International Financial Reporting Standards (“CIFRSs”) and the guidelines issued by the National Bank of Cambodia relating to the preparation
and presentation of financial statements or, if there have been any departures in the interest of true and fair statements; presentation, ensure that these have been appropriately disclosed, explained and quantified in the financial
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 41 DIRECTORS’ REPORT (continued)
Directors’ responsibility in respect of the financial statements (continued)
The Directors are responsible to ascertain that the financial statements give a true and fair view of the financial position of the Bank as at 31 December 2020, and of its financial performance and cash flows for the financial year then ended. In preparing these financial statements, the Directors are required to: (continued) (c) maintain adequate accounting records and an effective system of internal controls;
will continue its operations in the foreseeable future; and (d) prepare the financial statements on a going concern basis unless it is inappropriate to assume that the Bank (e) control and direct effectively the Bank in all material decisions affecting its operations and performance and
ascertain that such decisions and/or instructions have been properly reflected in the financial statements.
The Directors confirm that they have complied with the above requirements in preparing the financial statements Significant event during the financial year
The significant event during the financial year is disclosed in Note 29 to the financial statements. Statement by the Directors
with Cambodian International Financial Reporting Standards and the guidelines issued by the National Bank of Cam- In the opinion of the Directors, the financial statements set out on pages 8 to 36 have been drawn up in accordance bodia so performance as to give a true and fair view of the financial position of the Bank as at 31 December 2020, and of its financial and cash flows for the financial year then ended. Signed on behalf of the Board,
______Rath Sarun
Chief Executive Officer Phnom Penh, Cambodia Date: 29 March 2021
42 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 INDEPENDENT AUDITORS’ REPORT
DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 4343 INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDER OF DAUN PENH SPECIALIZED BANK PLC. (Incorporated in Cambodia) (Registration No: 00017370)
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Daun Penh Specialized Bank Plc. (“the Bank”), which comprise statement of financial position as at 31 December 2020, and statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the financial year then ended, and a summary of significant accounting policies, as set out on pages 44 to 75.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Bank accordance with Cambodian International Financial Reporting Standards and the guidelines issued by the National as at 31 December 2020, and of its financial performance and cash flows for the financial year then ended in Bank of Cambodia.
Basis for Opinion
We conducted our audit in accordance with Cambodian International Standards on Auditing (“CISAs”). Our respon- sibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial State provide a basis for our opinion. ments section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to Independence and Other Ethical Responsibilities
We are independent of the Bank in accordance with the Code of Ethics for Professional Accountants and Auditors of the Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Kampuchea Institute of Certified Public Accountants and Auditors (“Code of Ethics”) and the International Ethics Indepen the Code of Ethics and the IESBA Code. dence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with Information Other than the Financial Statements and Auditors’ Report Thereon
The Directors of the Bank are responsible for the other information. The other information comprises the Directors’
Report but does not include the financial statements of the Bank and our auditors’ report thereon. form of assurance conclusion thereon. Our opinion on the financial statements of the Bank does not cover the other information and we do not express any
44 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDER OF DAUN PENH SPECIALIZED BANK PLC. (Incorporated in Cambodia) (Registration No: 00017370) (continued) Information Other than the Financial Statements and Auditors’ Report Thereon (continued)
In connection with our audit of the financial statements of the Bank, our responsibility is to read the other information Bank or our knowledge obtained in the audit or otherwise appears to be materially misstated. and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Statements
accordance with Cambodian International Financial Reporting Standards and the guidelines issued by the National The Directors of the Bank are responsible for the preparation and fair presentation of these financial statements in Bank of Cambodia. The Directors are also responsible for such internal control as the Directors determine is necessary to fraud or error. to enable the preparation of financial statements of the Bank that are free from material misstatement, whether due continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern In preparing the financial statements of the Bank, the Directors are responsible for assessing the Bank’s ability to basis of accounting unless the Director either intends to liquidate the Bank, or to cease operations, or has no realistic alternative but to do so.
Auditors’ Responsibilities for the Audit of the Financial Statements
free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our Our objectives are to obtain reasonable assurance about whether the financial statements of the Bank as a whole are opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with CISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is • Identify and assess the risks of material misstatement of the financial statements of the Bank, whether due to resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement omissions, misrepresentations, or the override of internal control.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 45 INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDER OF DAUN PENH SPECIALIZED BANK PLC. (Incorporated in Cambodia) (Registration No: 00017370) (Continued)
Auditors’ Responsibilities for the Audit of the Financial Statements (continued)
As part of an audit in accordance with CISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (continued)
• Obtain an understanding of internal control relevant to the audit 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 Bank’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant Bank or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence required to draw attention in our auditors’ report to the related disclosures in the financial statements of the obtained up to the date of our auditors’ report. However, future events or conditions may cause the Bank to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements of the Bank, including the manner that achieves fair presentation. disclosures, and whether the financial statements of the Bank represent the underlying transactions and events in a We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Other Matters
This report is made solely to the shareholder of the Bank, as a body. We do not assume responsibility to any other person for the content of this report.
BDO (Cambodia) Limited
Phnom Penh, Cambodia Date: 29 March 2021
46 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Note 2020 2019 US$ KHR’000 US$
ASSETS
Cash on hand 5 140,288 567,465 143,211 Balances with National Bank of Cambodia 6 1,293,285 5,231,338 838,444 Balances with other banks 7 6,095,993 24,658,292 3,537,980 Loans to customers 8 29,502,401 119,337,213 18,358,475 Other receivables 9 366,196 1,481,263 251,278 Deferred tax assets 10 51,910 209,976 8,616 Property, plant and equipment 11 135,781 549,235 202,685 Intangible asset 12 14,990 60,635 - Right-of-use assets 13 103,293 417,821 197,411
TOTAL ASSETS 37,704,137 152,513,238 23,538,100
LIABILITIES AND EQUITY
LIABILITIES
Borrowings 14 19,424,698 78,572,904 9,930,016 Other payables 15 500,389 2,024,074 85,479 Deferred income 16 259,563 1,049,934 159,156 Lease liabilities 13 108,829 440,214 205,449 Current tax liabilities 232,148 939,039 73,421
TOTAL LIABILITIES 20,525,627 83,026,165 10,453,521
EQUITY
Share capital 17 18,000,000 72,810,000 15,000,000 Regulatory reserve 18 507,515 2,052,899 250,238 Accumulated losses (1,329,005) (5,375,826) (2,165,659)
TOTAL EQUITY 17,178,510 69,487,073 13,084,579
TOTAL LIABILITIES AND EQUITY 37,704,137 152,513,238 23,538,100
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 47 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020
Note 2020 2019 US$ KHR’000 US$
Interest income 19 2,798,159 11,318,553 1,373,910 Interest expense 20 (1,033,098) (4,178,881) (134,209)
Net interest income 1,765,061 7,139,672 1,239,701
Reversal of impairment for loans to customers 8 9,095 36,789 12,475 Other operating income 21 1,466,388 5,931,539 614,827 Personnel expenses 22 (1,307,794) (5,290,027) (958,024) Depreciation 23 (171,868) (695,205) (135,663) General and administrative expenses 24 (441,400) (1,785,463) (305,710)
Tax expense 25 (225,551) (912,354) (82,813) Profit before tax 1,319,482 5,337,305 467,606
Profit for the financial year 1,093,931 4,424,951 384,793 Other comprehensive income, net of tax - - -
Total comprehensive income for the financial year 1,093,931 4,424,951 384,793
48 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 Share Regulatory Accumulated Note capital reserve losses Total US$ US$ US$ US$
Balance as at 1 January 2019 15,000,000 95,425 (2,395,639) 12,699,786
- - 384,793 384,793 total comprehensive income Profit for the financial year, representing Transaction with owner Transfer to regulatory reserve, representing - 154,813 (154,813) - total transaction with owner Balance as at 31 December 2019 15,000,000 250,238 (2,165,659) 13,084,579
- - 1,093,931 1,093,931 total comprehensive income Profit for the financial year, representing Transactions with owner Conversion of borrowing to share capital 17 3,000,000 - - 3,000,000 Transfer to regulatory reserve - 257,277 (257,277) -
Total transactions with owner 3,000,000 257,277 (257,277) 3,000,000
Balance as at 31 December 2020 18,000,000 507,515 (1,329,005) 17,178,510
(KHR’000 equivalent) 72,810,000 2,052,899 (5,375,826) 69,487,073
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 49 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 Note 2020 2019 US$ KHR’000 US$
Cash flows from operating activities
Profit before tax 1,319,482 5,337,305 467,606 Adjustments for: Amortisation of intangible asset 12 3,270 13,227 - Depreciation of property, plant and equipment 11 74,480 301,272 47,215 Depreciation of right-of-use assets 13 94,118 380,707 88,448 Derecognition of property, plant and equipment 13,062 52,836 - Finance cost 11,780 47,650 14,336 Interest expense 20 1,033,098 4,178,881 134,209
Reversal of impairment for loans to customers 8 (9,095) (36,789) (12,475)
Operating profit before working capital changes 2,540,195 10,275,089 739,339
Changes in working capital Loan to customers (11,134,831) (45,040,391) (10,208,182) Other receivables (114,918) (464,843) (112,215)
Other payables 567,767 2,296,618 109,772
Cash used in operations (8,141,787) (32,933,527) (9,471,286) Income tax paid (110,118) (445,427) (18,007) Interest paid (1,085,548) (4,391,042) (122,016)
Placement of statutory deposit (445,800) (1,803,261) (40,000)
Net cash used in operating activities (9,783,253) (39,573,257) (9,651,309) Cash flows from investing activities
Purchase of property, plant and equipment 11 (20,638) (83,481) (165,675)
Purchase of intangible asset 12 (18,260) (73,861) - (38,898) (157,342) (165,675)
Net cash used in investing activities Cash flows from financing activities
Withdrawal of placement with other banks - - 3,430,000 Drawdown of borrowings 12,494,682 50,540,988 10,030,016 Repayments of borrowings - - (100,000)
Payments of lease liabilities 13 (108,400) (438,478) (100,400)
Net cash from financing activities 12,386,282 50,102,510 13,259,616 Net increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year 2,564,131 10,371,910 3,442,632 Cash and cash equivalents at end of financial year 3,715,435 15,028,935 272,803
50 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 6,279,566 25,400,845 3,715,435 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 (continued) Cash and cash equivalents comprise the following:
Note 2020 2019 US$ KHR’000 US$
Cash on hand 5 140,288 567,465 143,211 Balances with National Bank of Cambodia (excluding statutory deposit) 6 43,285 175,088 34,244 Balances with other banks 7 6,095,993 24,658,292 3,537,980
6,279,566 25,400,845 3,715,435
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Borrowings Lease liabilities (Note 14) (Note 13) US$ US$
At 1 January 2019 - 178,108
- Drawdown of borrowings 10,030,016 - Cash flows: - Repayments of borrowings (100,000) - - Payment of lease liabilities - (100,400)
- Addition - 113,405 Non-cash flows: - Unwinding of interest - 14,336
At 31 December 2019 9,930,016 205,449
- Drawdown of borrowings 12,494,682 - Cash flows: - Payment of lease liabilities - (108,400)
- Conversion of borrowing to share capital (3,000,000) - Non-cash flows: - Unwinding of interest - 11,780
At 31 December 2020 19,424,698 108,829
(KHR’000 equivalent) 78,572,904 440,214
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 51 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 1.CORPORATE INFORMATION
The Bank was registered on 23 January 2007 as a private limited company in the Kingdom of Cambodia.
The Bank obtained its license from the National Bank of Cambodia (“NBC”) to operate as a Commercial bank on 1 June 2007. On 6 July 2011, the Bank obtained its license from the NBC to operate as a specialised bank on 1 July 2011.
Sangkat Veal Vong, Khan Prampir Meakkara, Phnom Penh, Kingdom Of Cambodia. The registered office and principal place of business of the Bank is S2-21 & S2-22, Charles de Gaulle Blvd (Street 217),
The financial statements are presented in United States Dollar (“US$”), which is also the Bank’s functional currency.
The financial statements were authorised for issue by the Board of Directors on 29 March 2021. 2.PRINCIPAL ACTIVITY
The principal activity of the Bank is in credit operations for valuable consideration, including leasing, guarantees and commitment year. in Cambodia. There have been no significant changes in the nature of these activities during the financial 3.BASIS OF PREPARATION
Reporting Standards (“CIFRSs”) as issued by the National Accounting Council of the Ministry of Economy and Finance The financial statements of the Bank have been prepared in accordance with Cambodian International Financial and the guidelines issued by the NBC relating to the preparation and presentation of financial statements. 4.BASIS OF ACCOUNTING
The accounting policies adopted are consistent with those of the previous financial year except for the effects, if any, of the adoption of new CIFRSs during the financial year. The new CIFRSs adopted during the financial year are disclosed in Note 30 to the financial statements. year and elected to apply the practical expedient to all rent concessions relating to leases with similar characteristics and The Bank has also early adopted Amendment to CIFRS 16 Covid-19-Related Rent Concessions in the current financial similar circumstances.
The financial statements of the Bank have been prepared under the historical cost convention except as otherwise stated in the financial statements.
In compliance with the requirements of the NBC, all assets, liabilities, profit and loss items in foreign currencies at the end of the reporting year are converted into thousand Khmer Riel (“KHR’000”) using the official exchange rate announced by the NBC at the end of the reporting year, US$1 = KHR4,045 (2019: US$1 = KHR4,075). Such conversions should not be this or any other rate of exchange. construed as representations that the US$ amounts have been, could be, or could in the future be, converted into KHR at
52 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 5.CASH ON HAND
2020 2019 US$ KHR’000 US$
Cash on hand 140,288 567,465 143,211
(a)Cash on hand is classified as financial assets measured at amortised cost.
(b) The currency exposure profile of cash on hand is as follows: 2020 2019 US$ KHR’000 US$
United States Dollar 82,336 333,049 138,217 Khmer Riel 57,952 234,416 4,994
140,288 567,465 143,211
6.BALANCE WITH NATIONAL BANK OF CAMBODIA
2020 2019 US$ KHR’000 US$
Statutory deposit 1,250,000 5,056,250 804,200 Current account 43,285 175,088 34,244
1,293,285 5,231,338 838,444
(a) mandatory reserve deposits and cash maintained with the NBC in compliance with the Law on Banking and Financial Balance with NBC is classified as financial assets measured at amortised cost. Balances with NBC represent Institutions (“LBFI”).
(b) Statutory deposit
(i) Capital guarantee In compliance with Prakas B7-06-208 dated 13 September 2006 on the amendment to Article 9 and Acticle 13 of Prakas B7-00-05 on licensing of specialized bank, the Bank is required to maintain a statutory deposit of 5% of its capital in a permanent account with the NBC. This deposit is not available for use in the Bank’s day-to-day operations and is refundable should the Bank voluntarily cease its operations in Cambodia.
(ii) Reserve deposits In compliance with Prakas B7-020-230 dated 13 March 2020 and 29 August 2018 respectively, the Bank is required to maintain a reserve against deposits and borrowing at a daily average balance equal to 7% (2019: 8%) in Khmer riels and 7% (2019: 12.5%) in foreign currencies with the NBC.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 53 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 6.BALANCE WITH NATIONAL BANK OF CAMBODIA (continued)
(c) The currency exposure profile of balance with NBC is as follows: 2020 2019 US$ KHR’000 US$
United States Dollar 1,275,372 5,158,880 825,502 Khmer Riel 17,913 72,458 12,942
1,293,285 5,231,338 838,444
(d) Weighted average effective interest rate of balance with NBC of the Bank as at the end of each reporting period are as follows:
2020 2019 % %
Fixed rate 0.3 0.7
7. BALANCES WITH OTHER BANKS 2020 2019 US$ KHR’000 US$
Acleda Bank 400,237 1,618,959 188,952
Cathay United Bank 19,008 76,887 193 AmretForeign Microfinance Trade Bank of Cambodia 897,109169,484 3,628,806 685,563 1,079,9702,246,485
Phnom Penh Commercial Bank 4,610,107 18,647,883 22,332 LOLC Microfinance 48 194 48 6,095,993 24,658,292 3,537,980
(a) Balance with other banks is classified as financial assets measured at amortised cost. 2020 2019 (b) The currency exposure profile of balances with other banks is as follows: US$ KHR’000 US$
United States Dollar 5,109,452 20,667,733 1,386,610 Khmer Riel 986,541 3,990,559 2,151,370
6,095,993 24,658,292 3,537,980
(c) Weighted average effective interest rate of balances with other bank of Cambodia of the Bank as at the end of each reporting period are as follows: 2020 2019 % % Fixed rate 0.4 0.2
54 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 8. LOANS TO CUSTOMERS
2020 2019 US$ KHR’000 US$
Individual loans 29,083,977 117,644,688 17,368,306 Corporate loans 419,160 1,695,502 1,000,000 Impairment for loans to customers (736) (2,977) (9,831)
29,502,401 119,337,213 18,358,475
(b)(a) Loans toto customerscustomers areare classifiedinterest bearing as financial and theassets normal measured trade creditat amortised terms grantedcost. by the Bank is 30 days (2019: 30 days). They are recognised at fair value plus transaction costs that are directly attributable to its acquisition or issue on initial recognition.
(c) Impairment for loans to customers is recognised based on the general approach within CIFRS 9 using the forward looking expected credit loss model. The methodology used to determine the amount of the impairment is based
monthon whether expected there credit has been losses a significantalong with increasegross interest in credit income risk sinceare recognised. initial recognition For those of inthe which financial credit asset. risk hasFor those in which the credit risk has not increased significantly since initial recognition of the financial asset, twelve that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis areincreased recognised. significantly, lifetime expected credit losses along with the gross interest income are recognised. For those
Management exercised significant judgement in determining the probability of default by loans to customers, appropriate forward looking information and significant increase in credit risks. Lifetime expected loss provision for loans to customers are as follows:
Stage 2 Stage 3
Stage 1 Lifetime ECL Lifetime ECL 12-month no credit credit ECL impaired impaired Total 31 December 2020
Gross carrying amount (US$) 28,907,260 155,623 440,254 29,503,137
Impairment (US$) (720) - (16) (736) 31 December 2019
Gross carrying amount (US$) 18,155,862 - 212,444 18,368,306 Impairment (US$) (9,831) - - (9,831)
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 55 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 8. LOANS TO CUSTOMERS (continued)
this happens, the Bank assess whether or not the new terms are substantially affects the original term. The Bank do (c) The Bank sometimes renegotiates or otherwise modifies the contractual cash flows of loan to customers. When this by considering, among others, the following factors:
(i) If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the borrower is expected to be able to pay.
(ii) Whether any substantial new terms are introduced, such as a profit share/equity-based return that substantially affects the risk profile of the loan.
(iii) Significant extension of the loan term when the borrower is not in financial difficulty. credit risk associate with the loan. (iv) Insertion of collateral, new guarantor, other security or credit enhancements that significant affect the
The risk of default of such loans after modification is assessed at the reporting date and compared with the risk under the original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the original loan. The Bank monitors the subsequent performance of modified assets are moved from stage 3 or stage 2 (Lifetime ECL) to stage 1 (12-month ECL). This is only case for assets assets. The Bank may determine that the credit risk has significantly improved after restructuring, so that the which have performed in accordance with the new terms for six consecutive months or more.
(d) Movements in the impairment for loans to customers are as follows:
2020 2019 US$ KHR’000 US$
Balance at beginning of year 9,831 39,766 162,656 Reversal for the year (9,095) (36,789) (12,475) Written-off - - (140,350)
Balance at end of year 736 2,977 9,831
(e) The currency exposure profile of loans to customers is as follows: 2020 2019 US$ KHR’000 US$
United States Dollar 25,061,998 101,375,783 15,094,168 Khmer Riel 4,441,139 17,964,407 3,274,138
29,503,137 119,340,190 18,368,306
56 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 8. LOANS TO CUSTOMERS (continued)
(f) Loans to customers are further classified as follows: 2020 2019 US$ KHR’000 US$ By maturity Within one year 15,482 62,625 1,002,109
From one to five years 10,148,485 41,050,622 2,649,365
Over five years 19,339,170 78,226,943 14,716,832 29,503,137 119,340,190 18,368,306
By economic sector Household/Family 9,971,380 40,334,232 5,382,024 Other categories 1,200,727 4,856,941 709,481 Trade and commerce 18,331,030 74,149,017 12,276,801
29,503,137 119,340,190 18,368,306
By relationship Individual loans 28,112,175 113,713,748 17,164,161 Staff loans 1,390,962 5,626,442 1,204,145
29,503,137 119,340,190 18,368,306 By performance Normal loans: Secured 28,565,208 115,546,266 17,155,862 Unsecured 342,052 1,383,600 1,000,000 Special mention loans: Secured 129,607 524,260 - Unsecured 26,016 105,235 - Sub-standard loans: Secured 229,419 928,000 212,444 Doubtful loans: Secured 210,835 852,829 -
29,503,137 119,340,190 18,368,306 By exposures Non-large exposures 29,503,137 119,340,190 18,368,306
A “large exposure” is defined under NBC Prakas as the overall gross exposure of the aggregate balance of loans and outstanding loans or commitments and the authorised loans or commitments. advances with one single beneficiary, which exceeds 10% of the Bank’s net worth. The exposure is the higher of the (g) Weighted average effective interest rate of loans to customers of the Bank as at the end of each reporting period are as follows: 2020 2019 % % Fixed rate 11.5 10.4
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 57 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 9. OTHER RECEIVABLES 2020 2019 US$ KHR’000 US$ Other receivables
Interest receivables 200,788 812,187 89,770 Advances 28,395 114,858 36,222 Other receivables 39,018 157,828 34,437
Total receivables 268,201 1,084,873 160,429
Prepayments 97,995 396,390 90,849
366,196 1,481,263 251,278
(a) Total receivables are classified as financial assets measured at amortised cost. 2020 2019 (b) The currency exposure profile of other receivables is as follows: US$ KHR’000 US$
United States Dollar 267,227 1,080,933 147,076 Khmer Riel 98,969 400,330 104,202
366,196 1,481,263 251,278
(c) Impairment for other receivables is recognised based on the general approach within CIFRS 9 using the forward looking expected credit loss model. The methodology used to determine the amount of the impairment is based on
whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those expected credit losses along with gross interest income are recognised. For those in which credit risk has increased in which the credit risk has not increased significantly since initial recognition of the financial asset, twelve month determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are rec- significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are ognised.
10. DEFERRED TAX ASSETS The components and movements of deferred tax liabilities/(assets) are as follows: Recognised in profit or At loss At 1.1.2020 (Note 25) 31.12.2020 US$ US$ US$ Property, plant and equipment 3,728 (11,449) (7,721) Net unrealised exchange gain 1,618 (4,555) (2,937) Provision expense on loan - (8,498) (8,498) Unearned income (31,831) (20,082) (51,913) Prepayment 17,869 1,290 19,159
(8,616) (43,294) (51,910)
(KHR’000 equivalent) (34,852) (175,124) (209,976) 58 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 10. DEFERRED TAX ASSETS (continued)
The components and movements of deferred tax liabilities/(assets) are as follows: (continued) Recognised in profit or At loss At 1.1.2019 (Note 25) 31.12.2019 US$ US$ US$
Property, plant and equipment - 3,728 3,728 Net unrealised exchange gain - 1,618 1,618 Unearned income - (31,831) (31,831) Prepayment - 17,869 17,869
- (8,616) (8,616)
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 59 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020
11.PROPERTY, PLANT AND EQUIPMENT
Leasehold Furniture and Computers Construction in improvement Motor vehicles fittings equipment process Total US$ US$ US$ US$ US$ US$ Cost Balance as at 1.1.2019 336,352 36,740 52,176 135,386 - 560,654 Additions 68,949 2,420 11,830 69,414 13,062 165,675 Written-off (284,073) - (19,253) (94,795) - (398,121)
Balance as at 31.12.2019 121,228 39,160 44,753 110,005 13,062 328,208 Additions 820 - 17,096 2,722 - 20,638 Derecognition - - - - (13,062) (13,062)
Balance as at 31.12.2020 122,048 39,160 61,849 112,727 - 335,784
Accumulated depreciation Balance as at 1.1.2019 297,159 4,544 45,793 128,933 - 476,429 Depreciation for the year 19,045 7,400 3,659 17,111 - 47,215 Written-off (284,073) - (19,253) (94,795) - (398,121)
Balance as at 31.12.2019 32,131 11,944 30,199 51,249 - 125,523 Depreciation for the year 32,245 7,848 8,264 26,123 - 74,480
Balance as at 31.12.2020 64,376 19,792 38,463 77,372 - 200,003
Carrying amounts Balance as at 31.12.2020 57,672 19,368 23,386 35,355 - 135,781
(KHR’000 equivalent) 233,284 78,344 94,596 143,011 - 549,235
Balance as at 31.12.2019 89,097 27,216 14,554 58,756 13,062 202,685
60 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 11. PROPERTY, PLANT AND EQUIPMENT (continued)
(a) All items of property, plant and equipment are initially measured at cost. After initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is calculated to write down the cost of the assets to their residual values on a straight line basis over their estimated useful lives. The principal depreciation periods are as follows:
Leasehold improvement 5 years Motor vehicles 5 years
Computers equipment 5 years Furniture and fittings 5 years the Directors on 13 December 2019. (b) In the previous financial year, the Bank had written off certain fully depreciated assets. This had been approved by 12. INTANGIBLE ASSET Computer software US$ Cost Balance as at 1.1.2019/31.12.2019 - Additions 18,260
Balance as at 31.12.2020 18,260
Accumulated amortisation Balance as at 1.1.2019/31.12.2019 - Amortisation for the year 3,270
Balance as at 31.12.2020 3,270
Carrying amounts Balance as at 31.12.2020 14,990
(KHR’000 equivalent) 60,635
Balance as at 31.12.2019 -
(a) Intangible assets are initially measured at cost. After initial recognition, intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses.
(b) Computer software comprises accounting software, which is not integral to hardware of the Bank and can be method. separately identified. Computer software is amortised over its estimated useful life of 5 years using the straight line
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 61 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 13. LEASES The Bank as lessee Right-of-use assets Carrying amount Buildings US$ Balance at 1.1.2019 172,454 Addition 113,405 Depreciation (88,448)
Balance at 31.12.2019 197,411 Depreciation (94,118)
Balance at 31.12.2020 103,293
(KHR’000 equivalent) 417,821 Lease liabilities Carrying amount Buildings US$
Balance at 1.1.2019 178,108 Addition 113,405 Interest expense 14,336 Lease payments (100,400)
Balance at 31.12.2019 205,449 Interest expense 11,780 Lease payments (108,400)
Balance at 31.12.2020 108,829
(KHR’000 equivalent) 440,214
Represented by: 2020 2019 US$ KHR’000 US$
Current liabilities 16,579 67,063 88,220 Non-current liabilities 92,250 373,151 117,229
108,829 440,214 205,449
(a) The right-of-use assets are initially measured at cost, which comprise the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement date of the leases.
After initial recognition, right-of-use assets are stated at cost less accumulated depreciation and any accumulated impairment losses, and adjusted for any re-measurement of the lease liabilities. The right-of-use assets are depreciated on the straight-line basis over the earlier of the estimated useful lives of the right-of-use assets or the end of the lease term. The lease terms of right-of-use assets are as follows:
Buildings 2 to 10 years
(b) Included in right-of-use assets of the Bank are certain buildings with a carrying amount of US$103,293 (2019: US$197,411), which are subject to fixed charges created to secure lease liabilities of the Bank 62 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 13. LEASES (continued)
The Bank as lessee (continued)
(c) The following are the amounts recognised in profit or loss: 2020 2019 US$ KHR’000 US$
Depreciation of right-of-use assets 94,118 380,707 88,448 Interest expense on lease liabilities (included in general and administrative expenses) 11,780 47,650 14,336
105,898 428,357 102,784
period based on contractual undiscounted repayment obligations as follows: (d) The table below summarises the maturity profile of the lease liabilities of the Bank at the end of the reporting Weighted average incremental borrowing rate Within 1 - 2 2 - 5 More than 31 December 2020 per annum 1 year years years 5 years Total % US$ US$ US$ US$ US$
Lease liabilities 7.3 23,700 16,000 48,000 56,000 143,700
(KHR’000 equivalent) 95,866 64,720 194,160 226,519 581,265
31 December 2019
Lease liabilities 7.3 108,400 23,700 48,000 72,000 252,100
(e) rates of interest in a lease are not readily determinable as well as the lease terms. The incremental borrowing rates Management exercises significant judgement in determining the incremental borrowing rates whenever the implicit used are based on prevailing market borrowing rates over similar lease terms, of similar value as the right-of-use asset in a similar economic environment. Lease terms are based on management expectations driven by prevailing market conditions and past experience in exercising similar renewal and termination options.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 63 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 14.BORROWINGS
2020 2019 US$ KHR’000 US$
Term loan I 22,041 89,156 3,022,041 Term loan II 2,000,000 8,090,000 2,000,000 Term loan III 10,911,001 44,134,999 4,907,975 Term loan IV 1,491,656 6,033,749 - Term loan V 5,000,000 20,225,000 -
19,424,698 78,572,904 9,930,016
(b)(a) BorrowingsTerm loan I -are term classified loan from as financialDaun Penh liabilities Land Co, measured Ltd., a shareholder at amortised of thecost. Bank. This term loan is unsecured and repayable within 5 years from the drawdown date. On 17 June 2020, the Bank received approval from the National
Bank of Cambodia to increase the share capital from US$15,000,000 to US$18,000,000 by capitalising the borrowing (c) fromTerm shareholder, loan II - term which loan from amounted Cathay to United US$3,000,000. Bank (Cambodia) Corporation Limited. This term loan is secured by a
fixed charge over a shareholder’s land and repayable within 3 years form the drawdown date. shareholder’s land and repayable within 3 years from the drawdown date. (d) Term loan III - term loan from Foreign Trade Bank of Cambodia. This term loan is secured by a fixed charge over a (e) Term loan IV - term loan from Phnom Penh Commercial Bank. This term loan is unsecured and repayable within 2 years from the drawdown date.
(f) Term loan V - term loan from Daun Penh Pte Ltd., a related party of the Bank. This term loan is unsecured and repay- able within 5 years from the drawdown date.
(g) Term loans bear interest at rates ranging from 5.88% to 8.50% (2019: 5.88% to 8.25%) per annum.
(h) Fair value of the borrowings of the Bank are categorised as Level 2 in the fair value hierarchy. There is no transfer
(i) betweenBorrowings levels that in are the not hierarchy carried during at fair thevalues financial and whose year. carrying amounts are reasonable approximation of fair values are as follows:
2020 2019 Carrying Fair Carrying Fair amount value amount value US$ US$ US$ US$
9,930,016 8,134,287
(KHR’000Term loans equivalent) (fixed rates) 78,572,90419,424,698 78,479,869 19,401,698
Fair values of the borrowings are estimated by discounting future contracted cash flows at the current market interest 64rate availableDAUN PENH Specializedto the Bank Bank forPlc. similarANNUAL financial REPORT instruments. 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 14.BORROWINGS (continued)
(j) The following table sets out the carrying amounts, the weighted average effective interest rates as at the end of each reporting period and the remaining maturities of the borrowings of the Bank that are exposed to interest rate risk:
Weighted average effective interest rate Within 1 - 2 2 - 5 31 December 2020 per annum 1 year years years Total % US$ US$ US$ US$
Term loans Fixed rates 8.2 4,955,500 7,947,157 6,522,041 19,424,698
(KHR’000 equivalent) 20,044,998 32,146,250 26,381,656 78,572,904
31 December 2019
Term loans Fixed rates 6.9 - 3,453,988 6,476,028 9,930,016
based on contractual undiscounted repayment obligations as follows: (k) The table below summarises the maturity profile of the borrowings of the Bank at the end of each reporting period On demand One to five 31 December 2020 within one years Total US$ US$ US$
Term loans 6,468,839 16,744,303 23,213,142
(KHR’000 equivalent) 26,166,454 67,730,706 93,897,160
31 December 2019
Term loans 652,341 11,139,198 11,791,539
(l) The currency exposure profile of borrowings is as follows: 2020 2019 US$ KHR’000 US$
United States Dollar 10,772,041 43,572,906 5,022,041 Khmer Riel 8,652,657 34,999,998 4,907,975
19,424,698 78,572,904 9,930,016
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 65 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 15. OTHER PAYABLES
2020 2019 US$ KHR’000 US$
Accrued 33,594 135,888 38,809
Interest payables 64,643 261,481 12,193 StaffOther benefit tax payables payables 141,223 10,570 571,247 42,756 3,3517,771 Others 250,359 1,012,702 23,355
500,389 2,024,074 85,479
(a) Other payables are classified as financial liabilities measured at amortised cost.
(b) The currency exposure profile of other payables is as follows: 2020 2019 US$ KHR’000 US$
United States Dollar 446,352 1,805,494 46,192 Khmer Riel 54,037 218,580 39,287
500,389 2,024,074 85,479
repayment obligations is repayable on demand or within one year. (c) Maturity profile of other payables of the Bank at the end of the reporting period based on contractual undiscounted 16.DEFERRED INCOME
Deferred income represent the unearned interest income, which form part of the integral effective interest rate of a
financial instrument. Deferred income is recognised as an adjustment to the effective interest rate and recorded as 17.part SHAREof “interest CAPITAL income” in the statement of profit or loss and other comprehensive income.
2020 2019 Number US$ Number US$
Registered 18,000,000 18,000,000 15,000,000 15,000,000 Ordinary shares of US$1 each Registered and issued: At 1 January 15,000,000 15,000,000 15,000,000 15,000,000 Issued pursuant to: - new issue 3,000,000 3,000,000 - -
At 31 December 18,000,000 18,000,000 15,000,000 15,000,000
(KHR’000 equivalent) 72,810,000
66 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020
17. SHARE CAPITAL (continued)
During the financial year, the registered and issued share capital of the Bank was increased from US$15,000,000 to US$18,000,000 by way of issuance of 3,000,000 new ordinary shares of US$1 each by converting its borrowing from Bank of Cambodia and Ministry of Commerce on 17 June 2020 and 3 August 2020 respectively. Daun Penh Land Co., Ltd. amounting to US$3,000,000 for working capital purposes. It was approved by the National The owner of the Bank is entitled to receive dividends as and when declared by the Bank and is entitled to one vote per ordinary share at meetings of the Bank. All ordinary shares rank pari passu with regard to the Bank’s residual assets.
18. REGULATORY RESERVE
Regulatory reserve is maintained in addition to the allowance for doubtful loans that has been assessed and recognised in accordance with CIFRSs and which has been transferred from the retained earnings, in accordance with NBC’s Prakas No. B7-017-344 Pro Kor dated 1 December 2017 and Circular No. B7-018-001 dated 16 February 2018.
NBC guidelines require financial institution to classify their loan portfolio into the following five classes and ensure that the minimum mandatory level of specific allowance is made: Classification Number of days past due Allowance
Short-term loans (less than one year): General Normal 0 - 14 days 1%
Specific Special mention 15 - 30 days 3% Sub-standard 31 - 60 days 20% Doubtful 61 - 90 days 50% Loss 91 days or more 100%
Long-term loans (more than one year): General Normal 0 - 29 days 1%
Specific Special mention 30 - 89 days 3% Sub-standard 90 - 179 days 20% Doubtful 180 - 359 days 50% Loss 360 days or more 100%
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 67 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020
18. REGULATORY RESERVE (continued)
NBC guidelines require financial institutions to classify their loan portfolio into the following five classes and ensure that the minimum mandatory level of specific allowance is made: (continued) In accordance with Article 73 of Prakas No. B7-017-344 Pro Kor, the Bank shall compare the allowance calculated in accordance with above requirements and the Bank’s allowance recorded under CIFRSs:
(a) If the regulatory allowance is lower, the Bank records the allowance calculated in accordance with CIFRSs; and
(b) If the regulatory allowance is higher, the Bank records the allowance calculated in accordance with CIFRSs and transfer the difference from retained earnings to regulatory reserve in equity.
19. INTEREST INCOME
2020 2019 US$ KHR’000 US$
Loans to customers 2,763,439 11,178,111 1,353,926 Deposits and placements with banks 34,720 140,442 19,984
2,798,159 11,318,553 1,373,910
Interest income is recognised using the effective interest method. Where an account is determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
20. INTEREST EXPENSE
2020 2019 US$ KHR’000 US$
Term loans 1,033,098 4,178,881 134,209
21. OTHER OPERATING INCOME
2020 2019 US$ KHR’000 US$
Penalty fees 12,814 51,833 13,369 Recovery of loans 1,360,131 5,501,730 561,000 Other income 93,443 377,976 40,458
1,466,388 5,931,539 614,827
68 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020
22. PERSONNEL EXPENSES
2020 2019 US$ KHR’000 US$
Others 1,283 5,190 9,153 Salaries and benefits 1,306,511 5,284,837 948,871
1,307,794 5,290,027 958,024
23. DEPRECIATION
2020 2019 US$ KHR’000 US$
Amortisation of intangible asset 3,270 13,227 - Depreciation of property, plant and equipment 74,480 301,272 47,215 Depreciation of right-of-use assets 94,118 380,706 88,448
171,868 695,205 135,663
24. GENERAL AND ADMINISTRATIVE EXPENSES
2020 2019 US$ KHR’000 US$
Bank charges 11,780 47,650 14,336 Office supplies and stationery 25,698 103,948 18,858 Donation 7,386 29,876 - Marketing and advertising 19,233 77,797 1,269 Miscellaneous 61,632 249,300 90,137 Motor vehicles operating cost 45,643 184,626 48,426 Professional fees 141,102 570,760 66,354 Repairs and maintenance 5,985 24,209 3,252 Security expenses 11,378 46,024 9,681 Travel and entertainment 8,594 34,763 14,079 Utilities expenses 20,353 82,328 17,038 Others 82,616 334,182 22,280
441,400 1,785,463 305,710
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 69 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 25. TAX EXPENSE
2020 2019 US$ KHR’000 US$ Income tax expense: Current year 272,267 1,101,320 91,429 Over provision in prior year (3,422) (13,842) -
268,845 1,087,478 91,429
Deferred tax expense (Note 10): Origination and reversal of temporary differences (43,294) (175,124) 1,223 Over provision in prior year - - (9,839)
(43,294) (175,124) (8,616)
Total tax expense 225,551 912,354 82,813
Under the Cambodian Law on Taxation, the Bank has an obligation to pay tax on profit at 20% (2019: 20%) of the taxable profit or a minimum tax at 1% (2019: 1%) of total revenue, whichever is higher. - ble tax rate of the Bank is as follows: The numerical reconciliation between the tax expense and the product of accounting profit multiplied by the applica 2020 2019 US$ KHR’000 US$
Profit before tax 1,319,482 5,337,305 467,606 Tax at Cambodian statutory tax rate of 20% (2019: 20%) 263,896 1,067,461 93,521
Tax effects in respect of:
Non-allowable expenses (34,923) (141,265) 19,211 Tax incentives and allowances - - (20,080)
228,973 926,196 92,652 Over provision of deferred tax in prior year - - (9,839) Over provision of income tax in prior year (3,422) (13,842) -
Total tax expense 225,551 912,354 82,813
70 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 26. RELATED PARTY DISCLOSURES
(a) The Bank had the following transactions with a related party during the financial2020 period. 2019 US$ KHR’000 US$ Shareholder Daun Penh Land Co., Ltd. Drawdown of borrowing - - 3,122,041 Repayments of borrowing - - 100,000 Conversion to share capital 3,000,000 12,135,000 - Interest expense 31,218 126,277 64,936
Common control Daun Penh Pte. Ltd. Drawdown of borrowing 5,000,000 20,225,000 - Interest expense 15,342 62,058 -
TheBalances related with party a related transactions party at described the end of above the reporting were carried period out are on disclosednegotiated in commercial Note 14 to the terms. financial statements.
(b) Compensation of key management personnel
2020 2019 US$ KHR’000 US$
27.Short CAPITAL term employee AND FINANCIAL benefits RISK MANAGEMENT 94,777 383,373 96,798
(a) Capital management
The objectives of the Bank on managing of capital are to meet the NBC’s requirement, continue as a going concern and support the development of the business by maintain strong capital.
The Bank manages its capital structure and makes adjustments to it, in response to changes in economic conditions. In order to maintain or adjust the capital structure, the Bank may adjust the dividend payment to shareholder, return capital to its shareholder or issue new shares. No changes were made in the objectives, policies or processes during
Thethe financial Bank monitors years ended and maintains 31 December a prudent 2020 level and of31 total December debts and 2019. to ensure compliance with any externally imposed capital requirements.
The table below summarises the composition of regulatory capital:
2020 2019 US$ KHR’000 US$
Share capital 18,000,000 72,810,000 15,000,000 Regulatory reserve 507,515 2,052,899 250,238 Accumulated losses (1,329,005) (5,375,826) (2,165,659)
17,178,510 69,487,073 13,084,579
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 71 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
(b) Financial risk management
The financial risk management objective of the Bank is to optimise value creation for its shareholders whilst minimising the potential adverse impact arising from volatility of the financial markets. for the Bank. The management then establishes the detailed policies such as authority levels, oversight responsibilities, The Directors are responsible for setting the objectives and underlying principles of financial risk management approved by the Directors. risk identification and measurement and exposure limits in accordance with the objectives and underlying principles
Information on the management of the related exposures is detailed below: The Bank is exposed mainly to foreign currency risk, interest rate risk, credit risk and liquidity and cash flow risk. (i) Foreign currency risk
because of changes in foreign exchange rates. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate The Bank hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At
the end of each reporting period, such foreign currency balances (in Khmer riel) amounted to US$1,062,406 (2019: US$2,169,306) for the Bank.
(ii) Interest The sensitivity rate risk analysis for the foreign currency risk of the Bank is not presented as the effect is not significant.
Interest rate risk is the risk that the fair value or future cash flows of the financial instruments of the Bank would Thefluctuate exposure because of the of changesBank to interestin market rate interest risk arises rates. primarily from loans and borrowings. The Bank manages
instruments to hedge any debt obligations. its interest rate exposure by closely monitoring the debt market. The Bank does not use derivative financial
(iii) TheCredit sensitivity risk analysis for the interest rate risk of the Bank is not presented as the effect is not significant.
The Bank assumes exposure to credit risk which is the risk that a counterparty will be unable to pay the amounts in full when due. The Bank structures the levels of credit risk undertaken by placing limits on the amount of risk accepted in relation to one borrower, or Bank of borrowers, and the geographical and industry segments. Procedures of risk limit setting, monitoring, usage, control are governed by internal regulations. Such risks are monitored on a regular basis.
Exposure to credit risk is managed through regular analysis of the ability of the borrowers and potential borrowers to meet the interest and capital repayment obligations and reviewing these lending limits where appropriate. Exposure to credit risk is also managed in part by obtaining collateral and corporate or personal guarantees as well as by providing for loan losses.
The Bank determines a financial asset to be in default when contractual payments are past due and when internal or external information indicates that financial asset is not recoverable. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
72 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
(b) Financial risk management (continued)
(iii) Credit risk (continued)
a. Risk limit control and mitigation policies
The Bank operates and provides loans to individuals or small-medium enterprises within the Kingdom of Cambodia.
The BankBank managesemploys limitsa range and of controls policies theand concentration practices to mitigate of credit creditrisk whenever risk. The it most is identified. traditional of these is the taking of security in the form of collateral for loans to customers, which is common practice. The Bank implements
secured for loans to customers is collateral pledge over properties (land, building and other properties). guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral type b. Maximum exposure to credit risk before collateral held or other credit enhancements
Note 2020 2019 US$ KHR’000 US$ Credit exposure relating to assets on the statement of financial position: Balances with other banks 7 6,095,993 24,658,292 3,537,980 Loans to customers 8 29,503,137 119,340,190 18,368,306 Other receivables 9 268,201 1,084,873 160,429
35,867,331 145,083,355 21,066,715
The above table represents a worst case scenario for credit risk exposure to the Bank as 31 December 2020, without taking into account any collateral held or other credit enhancements. For assets in the statement of
c.financial Repossessed position, collateral the exposure set out above is based on net carrying amounts.
collateral held as security. During the financial year ended 31 December 2020, the Bank did not obtain any assets by taking possession of
(iv) Liquidity and cash flow risk
Liquidity and cash flow risk arises from the Bank’s management of working capital. It is the risk that the Bank will encounter difficulty in meeting its financial obligations when due.
The Bank actively manages its operating cash flows and the availability of funding so as to ensure that all operating, investing and financing needs are met. In liquidity risk management strategy, the Bank maintains a level of cash and cash equivalents deemed adequate to finance the Bank’s activities.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 73 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020
28. TAXATION CONTINGENCIES
The taxation system in Cambodia is relatively new and is characterised by numerous taxes and frequently changing legislation, which is often unclear, contradictory, and subject to interpretation. Often, differing interpretations exist among numerous taxation authorities and jurisdictions. Taxes are subject to review and investigation by a number of
adequately authorities,provided for who tax liabilitiesare enabled based by law on itsto imposeinterpretation severe fines,of tax penaltieslegislation. and However, interest charges.the relevant These authorities facts may createmay have tax risks in Cambodia substantially more significant than in other countries. Management believes that it has
29.differing SIGNIFICANT interpretations EVENT and DURING the effects THE could FINANCIAL be significant. YEAR
The World Health Organisation declared the 2019 Novel Coronavirus infection (“COVID-19”) a pandemic on 11 March 2020.
Asactively at the monitoring date of authorisation and managing of itsthe operations financial statements, to minimise the any COVID-19 impact arising situation from is the still COVID-19 evolving pandemic. and unpredictable. Consequently, the Bank is unable to estimate the financial effects of COVID-19 pandemic at this juncture. The Bank is 30. ADOPTION OF NEW CIFRSs
30.1 New CIFRSs adopted during the current financial year
The Bank adopted the following amendments during the financial year. Effective Date Amendments to References to the Conceptual Framework in CIFRS Standards 1 January 2020
Amendments to CIFRS 9,3 DefinitionCIAS 39 and of aCIFRS Business 7 Interest Rate Benchmark Reform 1 January 2020 AmendmentAmendments to to CIFRS CIAS 116 and Covid-19-Related CIAS 8 Definition Rent of Material Concessions 1 June 2020 (early1 January adopted) 2020
Adoption of the above amendments did not have any material effect on the financial performance or position of the Bank.
74 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 30. ADOPTION OF NEW CIFRSs (continued)
30.2 New CIFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2021
The following are accounting standards and amendments that have been issued but have not been early adopted by the Bank.
Effective Date Interest Rate Benchmark Reform - Phase 2 (Amendments to CIFRS 9, CIAS 39, CIFRS 7, CIFRS 4 and 1 January 2021
CIFRS 16)Annual Improvements to CIFRS Standards 2018 - 2020 1 January 2022 Amendments to CIFRS 3 Reference to the Conceptual Framework 1 January 2022 Amendments to CIAS 16 Property, Plant and Equipment - Proceeds before Intended Use 1 January 2022
Amendments to CIAS 37 Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022 AmendmentsCIFRS 17 Insurance to CIAS Contracts 1 Classification of Liabilities as Current or Non-current 1 January 2023 Amendments to CIFRS 17 Insurance Contracts 1 January 2023 Amendments to CIFRS 4 Insurance Contract - Extension of the Temporary 1 January 2023 Exemption from Applying CIFRS 9 Amendments to CIFRS 10 and CIAS 28 Sale or Contribution of Assets between an Investor and its Deferred
Associate or Joint Venture The Bank is in the process of making an assessment of the potential impact from the adoption of these accounting standards and amendments hence the Directors are not yet in a position to conclude on the potential impact on the results and the financial position of the Bank.
DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 75 Keys Partners
Payment Service Partners
The DP Bank and True Money (Cambodia) Plc. has collaborated on bill payment service through True Money Agent. This partnership helps all bank’s customers to reduce travel cost and get fast, convenient and free of charge services for their loan repayment through the nearest True Money agent countrywide.
Hence, the DP Bank strongly encourages all customers to make repayment at your nearest True Money agent.
76 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 Keys Partners (countinued) Loan Introducing Freelancer (LIF)
Refers to any neutral and legal person who are interested in registering to be the DP Bank’s independent loan introducer. They are obligated to obey terms and conditions as a LIF of the DP Bank whose main task is to introduce any potential prospect/ customers to get to know, be interested in and then to apply for any of the DP Bank’s loan.
Mr. So Sophean Loan Introducing Freelancer (LIF)
I’m a plot seller, living in Phum Chambak, Voa Sar Commune, Samrong Tong District, Kompong Speu Province. “ I knew Daun Penh Specialized Bank Plc. and then entered into Loan Introducing Freelancer agreement with the Bank in October 2020. In addition to my daily business, I can also easily earn extra income by simply introducing clients to borrow money with Daun Penh Specialized Bank Plc. Whenever I meet a customer who wants to buy a plot of land or someone who is looking for a loan, I’ve just shared with them the initial loan information, and then the Bank will contact and consult in detail with them directly. Every month, I earn extra income from working as a Loan Introducing Freelancer, and it really helps to make my life better.”
DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 7777 Keys Partners (countinued) Merchants
Refers to the local motorcycle or car suppliers/dealers who cooperates with the DP Bank to provide basic information of auto loans to customers to get to know, be interested in, and then decide to use auto loan service of the DP Bank.
Mr. Lymeng Deyameun Merchant
Currently , I am a used car dealer and owner of an auto shop, namely “Bi,” which is located in #55, St. 230, Phum 8, Sangkat Phsar Daeum Kor, Khan Tuol Kork, Phnom Penh. “ Previously, I experienced some challenges on auto documents processing and clearing payment with my customers. But after meeting & consulting with Daun Penh Specialized Bank Plc. I decided to cooperate with the Bank through a partner merchant agreement. This business partnership really helped me to get instant cash payments and ease
card and license plates quickly. Of course, I my customer to get vehicle identification friendly staff and special terms & conditions amof the very Bank’s satisfied auto loan.”with the prompt service,
78 DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 DAUN PENH SPECIALIZED BANK PLC. HEADQUARTERS Nº S2-21 and S2-22, Charles de Gaulle Blvd (Street Nº 217), Sangkat Veal Vong, Khan Prampir Meakkakra, Phnom Penh.
DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 7979 DAUN PENH SPECIALIZED BANK PLC. KAMBOUL BRANCH No.194 & 196, National Road No. 4, Phum Trapeang Kol, Sangkat Kantaok, Khan Kamboul, Phnom Penh
8080 DAUNDAUN PENH PENH Specialized Specialized Bank Bank Plc. Plc. ANNUALANNUAL REPORT REPORT 2020 2020 DAUN PENH Specialized Bank Plc. ANNUAL REPORT 2020 81 Nº. S2-21 and S2-22, Charles de Gaulle Blvd (Street No. 217), Sangkat Veal Vong, Khan Prampir Meakkakra, Phnom Penh