SME Credit Application Assessment November 2019 Confidential A

SME Credit Application & Assessment November 2019 “Confidential”: A sharing session for the UN-ESCAP Regional Workshop

Executive Summary Bank Evolution 2014 2015 2016 2017 2018 Asset Growth 27. 1% 23. 2% 20. 9% 20. 1% 21. 4% Credit Growth 27. 1% 25. 7% 20. 5% 17. 2% 24. 3% Deposit Growth 29. 0% 17. 4% 21. 8% 25. 1% 27. 9% (source: NBC Report) 400+ FIs 20%+ Credit Growth National Bank of Cambodia “NBC” Commercial Banks (43) Banking Institutions Micro Finance Institutions “MFI” Other Covered Institutions A Confidential Pack by JTRB for sharing in the UN-ESCAP Regional Workshop in Cambodia Specialized & Rep Banks (19) MFI/MDI (81) Rural Credit Operators (273) Financial Leasing (15) 2

Where SME fits under JTRB Structure J Trust Royal Bank Personal Banking Business Banking Corporate Banking Premier Banking Business Banking Multi National Corporate (MNC) Everyone else SME Large Local Corporate A Confidential Pack by JTRB for sharing in the UN-ESCAP Regional Workshop in Cambodia 3

Credit Assessment Method Policydriven Credit Decision Judgemental A Confidential Pack by JTRB for sharing in the UN-ESCAP Regional Workshop in Cambodia 4

Credit Assessment Method The 5 C’s of Credit On-boarding Criteria KYC & Other Policies A Confidential Pack by JTRB for sharing in the UN-ESCAP Regional Workshop in Cambodia 5

The 5 Cs of Credit 1. Character What is the borrower’s reputation and track record. Are we confident that the borrower is honest and will keep their promises? 2. Capacity Is the business profitable? Is cash flow sufficient to comfortably make the loan payments? Can they produce financial statements? Do they have experience running the business? Do they have a good team working for them? Is the business operating well? 3. Capital Do they have sufficient equity in the business to provide a buffer against hard times? Do the owners have “skin in the game”? 4. Conditions of the industry/borrower: How attractive is the industry? What is the outlook? Does the borrower have a unique product or service? Is there growing demand? Conditions of the loan: tenor, covenants, etc 5. Collateral Our “second way out” if the borrower is unable to repay their loan. Collateral-backed loans are generally considered to be less risky. What is the quality of the collateral, how confident are we in the valuation of the collateral? A Confidential Pack by JTRB for sharing in the UN-ESCAP Regional Workshop in Cambodia 6

Our Requirements On-boarding Criteria… Other Requirements… q. Credit Appetite q. Credit Size q 2 Years of Profitable Operations q. Register with relevant Ministries (Business License; Patent Tax…) q. Meet KYC Policy q. Meet AML/CTF Policy q. Within Portfolio Cap of specific Threshold q. Credit Bureau check A Confidential Pack by JTRB for sharing in the UN-ESCAP Regional Workshop in Cambodia 7

Conclusion Assessment Method: Judgemental & Policy-guided All other Requirements by the various Policies (KYC; Onboarding; AML…) The 5 C’s of Credit 1 st Way Out + 2 nd Way out A Confidential Pack by JTRB for sharing in the UN-ESCAP Regional Workshop in Cambodia 8

Thank You! By Sophy K. Copyright @ JTRB