General Information 2017 2016

Number of Offices 83 83

Yearly
Number of District Covered 158 157

Numner of Commune Covered 1,193 1,163

Performance
Number of Villages Covered 7,142 6,996

Number of Staff 1,662 1,679

Highlights Number of ATM/CDM

ATM Cards Issued

15

3,834
10

2,269

Fast Payment (Transaction / Amount) (138 / USD 676,818) (119 / USD 55,972)

Loan Outstanding (in million USD) 190.67 142.32

Number of Borrowing Accounts 83,405 78,770

Value of Deposit Collected (in million USD) 97.02 68.79

Financial Performance 2017 2016 (Restated)

Number of Saving Accounts 63,419 60,186

Total Assets (in million USD) 221.02 175.37

 Total Liabilities (in million USD)  190.86 149.17

 Total Equity (in million USD) 30.17 26.19

Social Performance 2017 2016

Net Profit after Tax (in million USD) 4.07 2.02 Borrowers from Rural Areas+Semi-Urban 91.71% 91%

ROA 2.05%  1.38%  Women Borrowers 88.11% 88.41%

ROE 15.15%  9.77%  % of Loans to Vulnerable Clients (without colateral) 25.51% 29.04%

Operational Seft-suffciency 115% 111% Client's Retention Rate 87.27% 83%

CONTENTS

MACRO BUSINESS SCAN 01 04 BUSINESS PERFORMANCE

Cambodia Business Environment .................................................................................................. 11 Product and Service’s Research & Development .................................................................... 43

Bank and Microfinance Development ........................................................................................... 13 Launching Parent Child Account with Life Insurance Package ........................................... 44

KREDIT and CAMLIFE Partnership to Provide Life Insurance to Depositor................... 45

Expanding More Channels for Borrowers Repay Loan via TrueMoney Agents ............ 46

Received Data Quality Award from Credit Bureau Cambodia (CBC) ............................... 47

Official Hand-Over Ceremony Kindergarten by NBC .............................................................. 48

GOVERNANCE 02 Risk Management................................................................................................................................. 49

Staff Capacity Building........................................................................................................................ 51

Board of Directors ................................................................................................................................ 16 Operating Report................................................................................................................................... 52

Committees and Board Level .......................................................................................................... 21 Clients in Their Words ........................................................................................................................ 59

Executive Committee........................................................................................................................... 24 Positive Result Story from Pre-School Construction Project ............................................... 60

Organization Chart .............................................................................................................................. 32 Partners, Lenders and Networks..................................................................................................... 61

Social Performance Management Report.................................................................................... 63

KREDIT OVERVIEW 03 05 EXTERNAL AUDIT REPORT

About KREDIT ....................................................................................................................................... 34 Report of the Board of Directors ..................................................................................................... 67

Vision, Mission, and Core Values ................................................................................................... 35 Report of the Independent Auditors to the Shareholders ...................................................... 71

Milestone ................................................................................................................................................. 36 Balance Sheet ....................................................................................................................................... 74

Operating Provinces and Top Branch Performers ................................................................... 38 Income Statement ................................................................................................................................ 75

Branch Performance ........................................................................................................................... 39 Statement of Changes in Equity ..................................................................................................... 76

Lucky Sticker and Discounted Business Partner ..................................................................... 40 Statement of Cash Flows .................................................................................................................. 77

Interactive Communication Channels ........................................................................................... 41

 Message from Chairman

year 2017 with clear and transparent policies
for its customers under the new interest rate
restrictions, resulting in a higher client retention
rate (87.27%) than the previous year, a 6%
increase in the number of clients from the previous
year, and a 28% increase in loan portfolio over
the previous year, up to US$190.67 million. With
increased operating efficiency through cost cuts
and restructuring, KREDIT finished the year with
a net profit of US$ 4 million, double that of the
previous year.
KREDIT well for stronger growth and stability in
the coming year. We continue to be grateful for
the opportunity to steward the strong financial and
human resources of KREDIT as we look forward
to 2018.
With best wishes and warm regards from the
Shareholders and Directors of KREDIT MFI,

Unfortunately, as expected across the microfinance

Mr. TIM AMSTUTZ, Board Chair
On behalf of the Shareholders and Directors of
KREDIT Microfinance Institution, I am pleased
to present to you KREDIT’s 2017 Annual Report.
This report provides a macro picture of KREDIT’s
accomplishments during 2017, but it also tells
the stories of some of its customers, detailing
the important human impact and benefit of its
commitment to economically empower local
communities and customers.
I would also like to take the opportunity at the
outset to congratulate the management and
staff of KREDIT who continue to demonstrate
great commitment to KREDIT’s borrowers and
depositors, and who are the driving force behind
KREDIT’s accomplishments in 2017.
2017 was a year of many significant challenges
requiring rapid adjustment and adaptation to
unexpected circumstances. Chief among these
was the 18% cap placed on interest rates for
borrowing from microfinance institutions by
the National Bank of Cambodia and the Royal
Government of Cambodia. Along with other MFI’s
and MDI’s, KREDIT had to make rapid changes to
its business model and lending policies in order
to comply with the interest rate cap and to ensure
that it could operate sustainably under this new
restriction. I am proud of the quick, nimble, and
creative response of KREDIT management who
were able to work tirelessly under intense time
pressure to provide a fair solution to its customers
while also maintaining the financial viability of the
company.
As a result of the effective leadership of
KREDIT management under these challenging
circumstances, KREDIT was able to finish the
industry, the interest rate cap also forced KREDIT
and other MFI’s to make some difficult decisions
regarding its lending to its smaller. More vulnerable TIM AMSTUTZ, Board Chair
customers. As a result, the overall percentage of
lending to poorer clients without collateral declined
from 29% in 2016 to 25.5% in 2017. However,
KREDIT’s commitment to fulfilling its mission to
economically empower the most vulnerable at the
bottom of the economic pyramid remains strong.
We continue to design loan products targeted to the
poor, and we continue our commitment to provide
ancillary services to help our more vulnerable
customers overcome barriers to their economic
success by providing financial management
training, agricultural training, and even parenting
training. You will find a detailed description of
these services in this Annual Report.
As we look forward into 2018, I am proud of how
KREDIT has weathered the challenges of 2017,
and have every confidence that the improvements
and adjustments made during the year position

06 Annual Report 2017 Annual Report 2017 07


Mr. CHAN MACH, CEO
Preferable Macro Environment is a Key
Stable political and macro-economic environment was a
key and make 2017 another good year for Cambodian
economic development with growth rate 6.9%, ranking
Cambodia one of the fast growing economy in the
World. The GDP per capita has continued increasing to
USD1,434 with a low inflation rate of 2.9%. Cambodia
export was about USD9.55 billion. Cambodia’s ongoing
efforts to reform public financial management, public
administration and decentralization are positive steps.
These resulted more favorable opportunity for people at
all segments: SME, corporate and low-end to start and
grow their business as well as to improve their living
lifestyle demanding more and new financial services.
The supportive regulations and initiatives from the National
Bank of Cambodia (NBC) lead to more legalization of the
industry, new products and services development, and
stronger protection to the financial users and investors.
With trust from investors and public, mainly proactive
actions and support from NBC, and the performance of
the financial sector which was also good for the year,
the total loan portfolio of Cambodia’s banking sector
reached USD18.5 billion (2.6 million accounts), deposit
collection reached USD16.3 billion (5.1 million accounts)
with 2,164 offices and 1,804 ATM machines.
08 Annual Report 2017
Message from CEO
Company Performance
Under the favorable environment, KREDIT captured
the opportunity and aligned our business operation to
the government strategies as well as industry trend.
Performance of KREDIT for 2017 was even better than
the last few years. Below are performance comparisons,
2016 and 2017:
Commercial Performance
-- Total assets increased 26% from USD175.37
million to USD221.02 million
-- Loan outstanding reached USD190.67 million,
34% increased
-- KREDIT’s non-performing was better compared to
2016 and ranked as one among the best with PAR
30+ 1.06% and write-off 0.36%
-- Even our Yield on Portfolio downed from 21.40%
to 20.55% but in 2017 we used the resources more
efficient with Operating Expense Ratio downed
from 11.37% to 10.15%
-- Return on Asset (RoA) was increased from 1.38%
to 2.05%. Return on Equity (RoE) increased from
11.08% to 15.15%. The Operational-Self-Sufficient
(OSS) Ratio also increased from 111% to 115%
-- FAST Payment performance–KREDIT has also
served many transactions within FAST payment
system among the members, and we positively
believe the increase of the transactions in the
future after good understanding from the public.
-- The performance of partnership with TrueMoney
agent for loan payment was a successful service
with gradual increase numbers of transactions
and as of Dec 2017, the monthly transaction was
about 5,000.
-- Parenting child account was another successful
saving products that KREDIT introduced to the
market and as of Dec 2017, 1,073 parent child
accounts are being with us.
Social Performance Management (SPM)
With strong support from the Boards and Shareholders as
well as good corporation with our development partners
and to align with the government strategies, we continued
our great and lead record in social interventions to the
communities we are working with. Different trainings and
need-based services continued to benefit to our rural
communities under dedicated units. Below are some
social performance report as of Dec 2017:
-- Accumulated numbers of people joined Financial
Training = 40,739 trainees
-- Accumulated numbers of people joined Agriculture
Training = 11,782 trainees
-- Accumulated numbers of people joined Parenting
Training = 147,053 trainees in 129 communes
-- Number of preschool built = 14
-- Number of Hand-Washing Facility with its basic
training for rural schools = 60
-- Sanitation and hygiene packages have been
continued to many rural schools
-- Within the year, we also funded Youth with a
Mission on one of their project, called Child and
Mother Care in Stoeung Treng province.
With some development partners, favorable loan
products have continued lending solar loan, education
loan, and loan for differently people (partner with
Handicap International)
In addition, after receiving the certificate on Clients
Protection Principles (CPP) from the SMART Campaign,
the implementation of CPP has been carefully executed.
Future Plan and Focus
-- Introduce some more new products and services
to the market, so that they generate other
income sources for the company. This includes
partnership with Phillip Bank on digital banking
product development.
-- Expand scope of business model to cover more
on B2B
-- Reduce costs: financial cost and operating
costs through loan automation implementation,
improvement of counter process, improvement of staff
productivity, exploration of cheaper cost of funds, etc.
-- Merge KREDIT Microfinance Institution Plc.
with Phillip Bank – we are having the same
shareholders, and we are going to merge the two
entities into one. We are optimistic to the merged
entity based on company size, products and
services, customer segments, capacity of staff, etc.
-- To comply with CIFRS, KREDIT actively joins
CMA’s task force team to learn and keep update all
standards. We have studied different requirements
of the current accounting standard to the CIFRS. We
understood the complexity of CIFRS 9 requirement
and significant impact to KREDIT, thus we are now
in the process of communicating with an external
consultant to help us on that compliance. We
believe that we will be able to comply with CIFRS
as required by the regulation.
-- We are also in the process to work out on the
credit scoring as required by NBC.
Finally, we would like to thank sincerely all our
customers, creditors, partners, local authorities,
governmental institutions, especially NBC and the
Ministry of Economy and Finance, as well as staff and
management, the Board of Directors and shareholders
for your confidence in KREDIT. We are looking forwards
to upcoming brighter years to come.
Mr. CHAN MACH, CEO
Annual Report 2017 09
 Cambodia Business Environment
Political Situation – Although significant political
developments took place in Cambodia in 2017, the overall
environment was peaceful and stable. Commune council
election was held in July, and for a couple of months later
the major opposition party was dissolved. Cambodia will
01
prepare for national elections in 2018. electronics and auto parts – and that is a very encouraging
Economic Situation – The government has reported that
MACRO BUSINESS SCAN
the economic growth for Cambodia was 6.9% in 2017,
with the industrial sector growing at a rate of 10.5%, the
service sector at 6.2%, and agriculture at 1.5%. They have
projected the growth rate for 2018 to be around 7%. Other
major international bodies including the World Bank (WB),
Asia Development Bank (ADB), and the International
▪ Cambodia Business Environment Monetary Fund (IMF) are projecting similar strong growth
in Cambodia in 2018. In 2017, Cambodia’s Nominal GDP
▪ Bank and Microfinance Development
was KHR 89 trillion (or USD22 billion) making the GDP per
capita for the year at USD1,434. The inflation rate remained
low at around 2.9% in 2017, similar to the average rate of
2.8% for the last 5 years. Cambodian exports grew about
USD9.55 billion.
Cambodia continues to take positive steps with its ongoing
efforts to decentralize and to reform public financial
management and public administration. This helped to
strengthen the economic environment, and Cambodia was
able to attract USD5.2 billion (about 100 projects) in fixed-
asset investments over the course of 2017, seeing a 44%
increase in approved funding for projects in comparison to
2016. Trade between Cambodia and the US, the second
largest buyer of Cambodian products, continued to expand
in 2017, growing by 10% year-on-year to reach USD3.46
billion. Japanese investment in the Kingdom was valued
at USD1.6 billion during the same period. The number of
companies registered to do business in Cambodia in 2017
was 4,899, a huge 98.6% increase over last year’s total of
2,937 businesses. During the year, the government also
planned to reduce its foreign debt and raise capital through
the issuance of bonds.
The World Bank has reported that while exports of clothing
10 Annual Report 2017
and other textile products have moderated, the medium-
term outlook remains positive due to export diversification
and healthy inflows of foreign direct investment (FDI).
Cambodia appears to be on the verge of climbing up
the manufacturing value chains—from garments to
development. It is a key factor in Cambodia’s steady
economic growth.
Tourism and Air Travel - Tourist arrivals reached 5.6
million in 2017, an increase of 11.8% from 2016, which was
more than the average growth of the last 3 years, 6%. The
revenue from tourism was about USD3.63billion, a 13.3%
increase over the previous year. Chinese tourists were
the largest group, representing 22% or 1 million tourists,
followed by Vietnam, Laos, Thailand and Korea. Positive
trends in tourism is also projected for 2018 with Cambodia
expected to welcome at least 6 million international visitors
and reach an anticipated USD4 billion in revenue, while
also catering to 15 million domestic tourists. Angkor
Archaeological Park saw a rise in visitor numbers reaching
nearly 2.5 million, a 12% increase from 2016 and a 72%
jump in ticket sales revenue to USD108 million. A major
investment proposal from Cambodia Airport Investment
Co Ltd to build a new USD1.5 billion, 2,600-hectare airport
for the capital was approved. It is a joint venture between
local conglomerate Overseas Cambodia Investment
Corporation (OCIC) and the Cambodian government’s
State Secretariat of Civil Aviation. More Chinese airlines
are eyeing the Cambodian market as Chinese arrivals
continue to increased to the country.
Garment and Footwear Sector – The garment sector was
responsible for 64% of the total exports in 2017, valued
at close to USD6 billion. This is an 8% increase over the
previous year but a bit slower than last year’s 9% growth.
Footwear exports reached USD700 million, an increase of
25% compared to last year’s increase of 16%. The 2 biggest
importers of Cambodian garments are the EU accounting
for 46% and the US accounting for 24% of garment exports,
Annual Report 2017 11

followed by the more recent import markets of Japan
(16%) and Canada (9%). Although the political climate was
uncertain in 2017, the EU decided to maintain its import
quotas which provided economic stability and growth
in the garment export sector. The Royal Government of
Cambodia also requested that the US government review
its Generalized System of Preference for Duty- Free and
Quota Free (GSP-DFQF) agreement with the kingdom, in
order for its exports to have better preferential access to
North American markets as a less developed country.
The Garment Manufacturers Association in Cambodia
(GMAC) represents 600 factories which employ around
700,000 people with minimum wage of USD170 in 2017,
up from USD152 in 2016. GMAC supplied global brands
including Gap Inc, Sweden-based H&M, and sportswear
brands Nike, Puma and Adidas. In addition to export of
garments and footwear, Cambodia also started producing
and exporting electric equipment as well as car spare
parts, representing about 8% of total exports, an increase
of 74% over the previous year.
Agriculture – Agriculture sector growth in 2017 increased
1.5%. This year, the prices of the main agriculture products
for export – cassava, rubber, and rice – remained depressed
but it was better than 2016. The exports of agricultural
products grew 11% in 2017, with sliced cassava topping
the list for most exported Cambodian commodity, with
more than 2.83 million tons shipped abroad. Cambodia
exported rice amounting to 635,679 tons in 2017, 17.3%
up from last year’s 542,144 tons. China is the biggest
importer of Cambodian agriculture products. More than
a dozen Chinese companies inked deals to purchase
about USD526 million worth of agricultural products
from Cambodia. The Cambodian government signed
MoU’s with three giant Chinese state-owned institutions
creating partnerships that aimed to boost the production
of paddy rice and milled rice for export. “Malys Angkor”
is the top brand of Cambodian premium rice. The Ministry
of Commerce launched a new agency whose aim it is
12 Annual Report 2017
to inspect the production and supply chain of rice
branded as ‘Made in Cambodia’ to guarantee its origin
and provide assurance of quality to foreign buyers. With
Cambodian rice having won multiple international awards
for its quality, the move seeks to prevent the sale of foreign
rice falsely claiming to hail from the Kingdom. Bangladesh
signed an MoU to buy 1 million tons of milled rice from
Cambodia in the next 5 years. In addition, the Government
provided USD30 million in loans to spur rice purchases.
In other agricultural developments, a USD10 million factory
plant was built to process fresh fruit for international export.
The government also has launched a campaign to promote
the use of local products.
Real Estate – Value of construction investment in
Cambodia in 2017 increased about 22.31%, reaching
6.428 Billion. The sector provided daily work to 255,000-
260,000 workers. Condominium prices are expected to fall
3-4% this year as more than a dozen large projects come
online, creating a glut in the housing market.
More Investments – Many more investments have been
observed during the year. The electricity grid spread
to more rural areas in 2017, and the government has a
plan to have nationwide electricity coverage by 2022.
Infrastructure development has grown more rapidly in
2017, with expanded development of roads and improved
official water supply systems. Plans are under way for
expanded ground transportation infrastructure, including
expressways from Phnom Penh to the Sihanoukville
seaport and from Phnom Penh to the Vietnam-Cambodia
border, a skytrain public transportation system in Phnom
Penh, train service from the Phnom Penh rail station
to the airport, and the eventual completion of railway
reconstruction from Phnom Penh to the Thai-Cambodia
border. Online taxi booking services have been started,
including Grab, WeGo, PassApp, and further ideas under
development to create a water taxi system.
Bank and Microfinance Development
The Cambodian banking sector continues growth with
good health. As of Dec 2017, the sector consisted of
39 commercial banks, 15 specialized banks, 7 micro-
deposit-taking institutions (MDI’s), 69 microfinance
institutions (MFI’s), 313 credit rural operators, 11 leasing
players, 15 payment service providers, 1 credit bureau,
6 representative offices, and 2,476 money exchangers.
Total assets of the sector increased 20.2% (year-over-
year) reaching to KHR135.1 trillion (or about USD33
billion). The sector has grown enormously on solid
foundations and through 2017 the total loan portfolio of
Cambodia’s banking sector increased 93 times during
the last 16 years to reach USD18.5 billion (2.6
million accounts), while deposits increased 52 times
to reach USD16.3 billion (5.1 million accounts). There
are 2,164 bank offices nationwide and 1,804 ATM
machines. The rate of non-performing loans is 2.4% for
banks and 2% for the microfinance sector.
In 2017, the demand of KHR currency in the market
increased 11.4% compared to 2016. Because of
intervention by the NBC, by the injection of USD914.6
million worth of KHR into the economy to buy up US
dollars with the local currency, the exchange rate
between local currency, KHR and USD is very stable
with average KHR4,050 per USD1 and variance of
-0.8 - 0.1%.
Two large multinational banks arrived within the year:
BRED Bank, from France and Japan’s Mizuho Bank,
the fourth largest in Japan.
The largest investment in the country by far comes from
China. In order to attract more Chinese investment, the
Royal Government of Cambodia is encouraging the
currency exchange of Khmer Riel and Chinese Yuan.
Now 17 banks accept transactions in Yuan while four
accept savings in Yuan. The NBC also pushes cross-
border trade to be done in local currencies to limit the
use of USD. Interest rates of loan for KHR is about on
par with dollar counterparts. Interest rates on both loan
and saving as a whole have declined during the year.
To support the sector, the NBC issued several new
and important Prakas to exert greater control over the
microfinance sector. Most significantly, a Prakas was
issued to establish a cap on interest rates of not more
than 18% a year on loans. Additional Prakas included
setting a minimum proportion of KHR loans; requiring
a change of company logos for financial players with
similarity to logos of state-owned ministries, and
announcing that all financial players are private not
state-owned. The NBC also announced that crypto
currencies would not be allowed to legally operate
in Cambodia. In order to get direct complaints from
financial service users, the NBC created a hotline and
announced to the public so that financial users can
make direct complaint to NBC if needed. The NBC also
announced that local banks and MFI’s can now issue
corporate bonds or list equity securities on the nascent
Cambodian stock market. Within the year, the NBC
also took licenses back from 11 rural credit operators.
The NBC has implemented some strategies to increase
the value of KHR currency, including revision of policy
to value KHR, a campaign on “I love Khmer Riel”,
increasing the use of KHR in operations and bond
payments, a promotion on the role of KHR in the
economy, and mainstreaming the importance of KHR
to staff.
After the launch of Fast Payment in 2016, In 2017 the
NBC also launched the operation of the Cambodian
Central Share Switch to create easier access to funds.
People holding locally issued debit and ATM cards
may be able to use them to check out at registers
Annual Report 2017 13
 and withdraw money at cash machines owned by More insurance companies arrived or are studying
other banking institutions. Once all domestic financial to enter the Cambodian market: Thai Life Insurance,
institutions are connected, they can then connect Tokio Marine & Nichido Fire Insurance Co, Cambodian
to other national share switches within ASEAN and Investment Management Insurance Agent (CIMIA),
beyond. and a majority owned subsidiary of Cambodian

02
Investment Management plans to launch the Kingdom’s
The NBC is finalizing financial inclusion strategies for first online insurance quote system, allowing users and
the sustainability of financial inclusion. An important potential clients to get immediate access to details

foundation of financial inclusion is education, and NBC
and Ministry of Education Youth and Sport are leading
an initiative to incorporate the concepts into state-
owned curriculum with the printing and distribution of a
financial literacy book to schools nationwide.
GOVERNANCE
on an array of insurance products. Phillip General
Insurance Company was established as a subsidiary
of Phillip Capital which is the majority shareholder
of KREDIT. While AIA has also entered Cambodian
insurance market.

▪ Board of Directors

▪ Committees and Board Level

▪ Executive Committee

▪ Organization Chart

14 Annual Report 2017 Annual Report 2017 15


1 Mr. TIM AMSTUTZ, Chairman
Mr. AMSTUTZ has been KREDIT’s Chairman
since he joined the Board in 2003. He is an
American citizen who was born and raised
in India. He returned to the U.S. to complete
his university studies at Wheaton College in
Illinois, USA. Mr. Amstutz worked for World
Relief in a number of leadership roles since
1982, including various U.S-based positions.
He was responsible for launching and leading a
number of groundbreaking programs for World
Relief in Chicago, including its Legalization and
Immigration programs, its Education Services
program, and ultimately World Relief’s National
Immigration Resource Network of which he was
the Founding Director. During this time, he also
served as Midwest Regional Director for World
Relief’s U.S. operations. Mr. Amstutz moved
with his family to Cambodia in 2001 to serve as
2 Mr. LIM HUA MIN, Director
Mr. LIM is the Executive Chairman of
PhillipCapital Group of Companies and was also
appointed as Chairman of IFS Capital Limited on
20 May 2003. He began his career holding senior
positions in the Stock Exchange of Singapore
and the Securities Research Institute. He has
served on a number of committees and sub-
committees of the Stock Exchange of Singapore.
In 1997, he was appointed as Chairman of the
Stock Exchange of Singapore (SES) Review
Committee, which is responsible for devising
a conceptual framework to make Singapore’s
capital markets more globalized, competitive
and robust. For this service, he was awarded the
16 Annual Report 2017
Board of Directors
3 Mr. ONG TEONG HOON, Shareholder Representative and Director
Country Director
for World Relief
Cambodia. In
2007, he was
appointed as Asia Regional Director, overseeing
World Relief’s work in Cambodia, Indonesia,
India, and China. Mr. Amstutz now serves as
an independent consultant in organizational
leadership and development, serving business
and NGO clients in Southeast Asia. Mr. Amstutz’s
broad management and leadership experience
provides a platform for him to speak and lead
seminars at numerous conferences and events on
trends and developments in microfinance, social
entrepreneurship, organizational development
and leadership. Mr. Amstutz divides his time
between the US and Cambodia.
4 Mr. TAN TECK KEONG MICHAEL, Director
Public Service
Medal (PBM)
in 1999 by
the Singapore
Government. He served as a board member in
the Inland Revenue Authority Singapore from
2004 to 2010.
Mr. Lim holds a Bachelor of Science Degree
(Honours) in Chemical Engineering from the
University of Surrey. In addition, obtained a
Master’s Degree in Operations Research and
Management Studies from Imperial College,
London University.
Mr. ONG started working in the financial sector
in 1977, first as a Money Broker and then, after
a year, with Standard Chartered Bank, as a
Management Trainee. For 25 years with the Bank,
he had been through all aspects of Commercial
Banking, apart from treasury function and he
ended his banking career as Country Manager
for the Bank in Cambodia in 2002.
This was after being the Bank's Chief
Representative in Myanmar and before that,
Regional Manager, Asia Pacific Region covering
Financial Institutions. Almost immediately after
that, he joined Phillip Securities Pte Ltd, and
had covered various functions, including a stint
in Phillip Securities Thailand PLC as its Ag CEO
and was last, the Director OTC Capital prior to
assign to KREDIT PLC in 2012. Currently, he
is also serving on the Board of Phillip Bank PLC,
Mr. TAN is currently Director, Corporate Office
at PhillipCapital. Prior to joining PhillipCapital,
he previously held positions in both industry and
academia including stints as Assistant Professor
at University of Nevada, Reno, United States,
Lecturer at National University of Singapore,
and various IT management and consultancy
positions in Singapore. He holds a PhD in
Information Systems from the National University
of Singapore, a Certified SAP Consultant
Cambodia that
is part of Phillip
Capital Group
and on the Board
of First Finance PLC, which is a micro-mortgage
firm in Cambodia in which Phillip Capital Group
is also a minority shareholder. He's currently
volunteers as Chairman of Methodist School
in Cambodia and board member of ESTEM
EDUCATION, a Private Public Partnership with
Ministry of Education Youth and Sports that
introduces STEM Education to Yukhonthor High
School.
Mr. Ong is a graduate from the University
of Singapore with a Bachelor of Business
Administration and an Associate of the Chartered
Institution of Bankers since 1978.
(Project Systems)
certification from
SAP Germany,
a CDipAF
(Accounting and Finance) qualification from
ACCA (UK), and has passed various CMFAS
modules administered by Institute of Banking &
Finance (Singapore) and Singapore College of
Insurance (Singapore).
Annual Report 2017 17
 5 Mrs. SREYHEM ROBERTS, Director
Mrs. SERYHEM is a Cambodian/Canadian
national with over 20 years of experience working
and consulting with NGOs and businesses
in Cambodia. Her professional activity in
the non-profit and business worlds includes
administration, human resources management,
accounting, business development, and project
6 Ms. ING VARONY, Director
Ms. VARONY is a Cambodian national holding
master in Public Administration from the University
of North Texas, Denton, USA and University
of Cambodia in 2005. She has thirty years of
experience working with NGOs/International
organizations, especially the United States
Agency for International Development (USAID)
where microfinance institutions were her main
responsibility. Prior to that, she worked in the
Poverty Reduction and Economic Management
Unit (PREM) a World Bank program where
the financial reform program introduced to the
Ministry of Economy, Finance, and Councils of
Minister. She has six years work experience with
7
Mr. FONG KIM CHOY (PHILIP), Director
Mr. FONG is the founder of JM Asia Cambodia
Pte Ltd. He is the lead consultant and trainer who
is fully qualified and accredited trainer under the
Singapore Government Work Skills Qualification
Initiatives. He is a C-suited executive with more
than 30 years international business experience
18 Annual Report 2017
8 Mrs. TEA CHANSOTHEARY, Director
management. Mrs. SOTHEARY is a Cambodian national who which is based
She is working has been involved in the Cambodia microfinance in Vancouver,
as a General sector since its infancy more than 20 years ago. Canada.
Manager for First She has a broad wealth of experience having She has done
Trust Co; Ltd, a property holding company. worked for a number of institutions covering consulting work in Finance, Audit, Development
nearly every level of operations including training, and Microfinance both within Cambodia and
human resource, finance and audit and various internationally for organizations such as World
senior management positions. She also served Vision, Child fund, World Relief, PACT, JICA and
as a board member for various institutions and UNDP.
as a shareholder representative.
Beside microfinance, Mrs. Sotheary have served
Currently she resides in Yangon, Myanmar where
she takes care of her family and does freelance
as finance manager for Hagar international; consulting.
the Cambodian country manager for the Ratanak Foundation
government,
Ministry of
Industry, Energy,
and Mine where she helped in developing
the manufacturing public sector. Varony has
9 Mr. ANTHONY NASH, Director
spent with Hagar International for five years as
Mr. NASH is the CEO of Complete Intelligence. for over a decade.
Programming Manager who managed two main
As a thought leader on economics and risk, Previously, Mr.
programs including children and women. She
Mr. Nash is a frequent public speaker and a Nash was VP of
has spent with The Harpswell Foundation (HF)
facilitator of strategic discussions with business Consulting at IHS
for longer than six years as Senior Manager
and government leaders. He is a regular (formerly Global Insight) overseeing Asia and
in Cambodia. Currently she does freelance
contributor to leading global media, which the Middle East. Prior to IHS, Mr. Nash built and
consulting in monitoring and evaluation (M&E).
include regular sessions on CNBC, Bloomberg, led the global research and consulting business
BBC World and Al Jazeera. He is also a key for The Economist (EIU) and initiated their first
contributor to regional economic and industry Asia acquisition (ClearState). He has also been
forums and closed-door corporate executive a social entrepreneur, media entrepreneur, writer
dialogues. Mr. Nash has a longstanding record of and consultant. Mr. Nash has a Master degree in
Mr. Philip is the accomplishment of creating, inspiring, motivating International Relations from the Fletcher School
master trainer and leading culturally diverse teams in developed of Law & Diplomacy at Tufts University and a
with Century 21 and developing markets across EMEA, North BA in Business Management from Texas A&M
Cambodia, a America and Asia, where he has lived and worked University.
member of Century 21 global real estate brand.
Annual Report 2017 19
 Committees at Board Level
To Support the BoD and Management, KREDIT has
established 3 committees at BoD level including: Audit
Committee, Risk Committee, and Social Performance
Committee.
Audit Committee, chaired by an independent
Board member
Roles of the Audit Committee
The Audit Committee performs the following general
functions:
• Establishes and monitors compliance of all
KREDIT operations according to operating
policies, internal financial controls, and the
corporate code of conduct.
• Reviews the findings of audits or examination
conducted by the Internal Audit department
and other agencies.
• Discusses and resolves disagreements
between internal or external auditors and
management.
• Inquires about the external auditor’s opinion
on the competence of financial and accounting
personnel and the internal auditors.
• Reviews the adequacy of internal control
systems over financial reporting.
• Oversees the company’s internal controls for
safeguarding its assets.
• Evaluates the internal auditor’s
objectives.
• Reviews the internal auditor’s work and
assesses their performance and capacity.
• Ensures that the internal auditor’s involvement
in auditing the financial reporting process is
well-coordinated with the work of external
auditors.
20 Annual Report 2017
Results of the Audit Committee in 2017
• The Board Audit Committee met four times
in 2017, in March, June, September, and
December.
• The committee has approved the annual
internal audit department plan for the year
2018.
• The committee and Board Chair approved
the rotation plan of regional internal auditors,
the internal audit department report grading
for each business unit and internal control
report 2017 of National Bank of Cambodia
(NBC)
• The internal audit department reported directly
to the Audit Committee.
• All key operations, business, and management
were audited according to risk-based
methodologies, which provide independent
and objective assurance over the adequacy,
sustainability, and effectiveness of the
company’s governance, internal control and
risk management process.
• The internal audit department examined the
strategies of the company, the adequacy
and effectiveness of the relevant policies,
procedures, and regulatory guidelines.
• The internal audit department discussed the
result of all assessment with management
and reported its observation/findings,
recommendations and opinions, via a structured
process to the Board Audit Committee.
• Within the year 2017, the internal audit
department conducted 143 assessments in
which 134 were on operational scope (14
special cases), 1 on compliance, 1 on HR, 1
on finance, 3 on IT, 2 on Treasury, and 1 on
administration.
It is the opinion of the Audit Committee that the internal
controls, audits procedures, and risk management
process are adequate to safeguard the company’s
assets and to provide sufficient assurance and integrity
of the financial accounts.
Risk Committee, chaired by an independent
Board member
The Risk Committee was established by the Board of
Directors in 2012 according to Board Bylaws Article V. It’s
mission is to assist the board and related departments
of KREDIT to identify, measure, control, and mitigate
risk at all levels of the organization. Its objective is to
discharge the duty of Board of Directors to protect the
interests of the shareholders by overseeing the risk
of the organization, and to make recommendations to
management on any decision and/or activities needed
to mitigate risk for the whole company.
Roles of the Risk Committee:
The Risk Committee performs the following general
functions:
• Critically assesses KREDIT’s business
strategies, processes, and plans from the risk
perspective.
• Analyzes future risks including trends and
provides comments to management.
• Monitors procedures for compliance with
government regulation.
• Reviews all policies and procedures for risk
mitigation.
• Sets out the nature, role, responsibility and
authority of the risk management function with
the outline of the scope of risk management
framework.
• Reviews critical risk management activities of
KREDIT as reported by the management and
ensures that all requirements of the policy are
being complied with.
• Suggests or recommends to management any
pre-emptive action for any external factors
influencing the company’s operation such as
political, economic, or regulatory factors.
• Reviews and estimates the integrity of the risk
control system and ensures that the risk policy
and strategies are managed effectively.
• Reviews and approves risk policies.
• Through reports generated by the Risk and
Compliance Department or ALCO committee,
it makes suggestions or recommendations to
the management for any action to mitigate risk,
risk acceptant or risk transfers.
Achievements of the Risk Committee in 2017
• The Risk Committee met four times in 2017, in
March, June, September and December.
• During the year, there were significant steps
taken as follows:
-- Enhancing the risk culture and
governance in KREDIT to ensure that
our risk management is able to respond
to current and future business operational
risks.
-- Reviewing regular reports on risk and
compliance and report high risk issues or
concerns to the Board
-- Providing oversight of KREDIT’s risk
management framework and significant
inputs for enhancing our internal risk
management practices.
Annual Report 2017 21
 • Reviewed and provided oversight and -- OFAC search engine for blacklist clients Development Fund, current year and • Supported the Mother and Child Health project
accountability for the following activities of was put for implementation accumulated funds, approved by the Board of Youth With A Mission (YWAM) in Stoeung
the Risk and Compliance Department of and set aside by management of KREDIT to Treng province
KREDIT: Social Performance Committee, chaired by an ensure the various strategic social programs • Constructed 14 preschools under support of
-- Assessed risk for new products and independent Board member and initiatives are carried out professionally KREDIT’s Social Development Fund, some of
processes and prudently; and to ensure the results and which are one room, some are two rooms and
-- Supported branches and departments for Roles of the Social Performance Committee: impacts of these fund disbursements are an some are three rooms.
risk assessment integral part of KREDIT’s overall social goals • Supported some funds to Children’s Hospital
-- Conducted AML/CFT refreshment The Social Performance Committee performs the among its most vulnerable clients. at Siem Reap.
training following general functions: • Validates action plans and budgets related • Supported the families of clients who died in
-- Assisted in developing new liquidity risk to social performance management , Krong Svay Reing, Bos Khnor, Krong Kampong
management policy • Sets clear goals and objectives and creates and monitors the implementation of the Cham, and Krong Siem Reap.
-- Introduced counterparty risk assessment strategies to ensure that Board of Directors, activities and programs to ensure quality and • Supported Clear Cambodia to build 3 sets of
tools Management, and Employee are aware of the effectiveness. hygiene and sanitation units in 3 schools of
-- Conducted RMGM assessment with goals and objectives and committed to achieving • Monitors the trend of the endorsed indicators Kampong Cham. Materials included school
assessor from Risk management Initiative them in line with the universal standards as in the context of the market and country latrines, garbage kilns, hand-washing facilities,
in Microfinance (RIM) established by the Social Performance Task developments. In addition, report to the Board and school bio-sand filters.
-- Operation risk policy and procedure were Force (SPTF) a coalition of social lenders on any significant changes and analysis of the • Supported 10 rubbish bins at the Provincial
approved by the Board and socially conscious MFI’s committed to causes of key changes as well as recommend Office of Environment at Prey Veng
-- Information classification and researching and following best practices in appropriate plans and actions to ensure KREDIT province.
management was approved and put for principles of community development. keeps to the core of these social performance • Supported some commune activities.
implementation • Creates and reviews Social Performance expectations and achievements. • Supported Red Cross in Prey Veng.
-- Regularly update on Economic and Indicator to ensure they remain relevant to the • Provided 60 sets of hand washing facilities in
business news strategic growth of KREDIT. Social Activities in 2017 60 different rural primary schools.
-- Input new items in Risk Management • Studies, initiates, proposes and implements • KREDIT celebrated “International Child Rights
Committee and Operational Risk and relevant and impactful initiatives and programs • Launched a process to establish a separate and Child Labor Day”. KREDIT supported 15
Compliance Committee report to achieve both the short-term and long-term NGO in conjunction with plans to merge with schools in 3 provinces and cities to celebrate
-- Implemented online large depositor and social performance goals of KREDIT. Phillip Bank this event.
deposit to other account forms • Comes up with measurements tools to measure • Supported NBC to publish a financial literacy • Supported 10 schools enrollment for the new
-- Conducted annual update on compliance and track the social performance activities of book year.
checklist and annual AML/CFT KREDIT approved by BoD. • Supported library construction at Kampong
Report • Establishes working groups with specific Cham town
-- Successfully summited FATCA report for tasks and authorized to take any independent • Partnered with Handicap International to
the year of 2014, 2015, and 2016 professional advice, as it considers necessary provide special loans to people with disable
-- Revised Whistle blowing policy was to assist the Committee. people people in two provinces, Siem Reap
approved by the Board • Manages the budget of KREDIT’s Social and Kampong Cham

22 Annual Report 2017 Annual Report 2017 23

 Executive Committee
Mr. CHAN MACH
Chief Executive Officer (CEO)
MACH, the first local CEO of KREDIT, was promoted from his Operations
Manager position in 2006. With a Bachelor of Mathematics and experience
as a math teacher, MACH joined KREDIT initially in 1999 as an Auditor and
Trainer. His managerial potential was recognized and he became the Phnom
Penh Branch Manager in 2001. The branch flourished and in 2003 he was
appointed the Operations Director. Under his leadership, KREDIT became
sustainable, tripled its portfolio, and expanded its operations to nearly every
province in Cambodia. MACH has completed 2 Master Degrees: MBA and
MFB. He has attended numerous national and international courses related
to microfinance and banking. MACH serves as board and committee member
for Cambodian Microfinance Association (CMA) and recognized for his
consensus-building leadership.
Mr. HIM VIBOL
Chief Finance Officer (CFO)
VIBOL joined KREDIT as an Internal Auditor in January 2003 and was
quickly promoted to be an Accountant in the Finance Department. Shortly
thereafter, he was promoted to be Finance Officer, responsible for managing
the Finance Department. In January 2006, he was appointed as a Finance
Manager, then as CFO in October 2010. With more than 14-year working
experience in the microfinance sector, Vibol has gained extensive skills in
Financial Management, Treasury Management, Risk Management, Core
Banking Project Management, Corporate Governance, Strategy, Performance
Management, and Leadership. VIBOL was an outstanding university student,
obtaining both his BA in Economics and MBA in Finance and Accounting
degrees. In December 2016, he also awarded the Advanced Diploma in
Accounting and Business from ACCA, UK. A year later in December 2017, he
graduated with full ACCA qualification.
24 Annual Report 2017
Mr. SOUNG ENG CHHAY
Chief Administration Officer (CAO)
ENGCHHAY joined KREDIT in 1996 through the Kampong Cham branch.
He has advanced quickly as a result of his hard work. He initially worked
as the Translator, followed by the Branch Bookkeeper, the Deputy Branch
Manager, Branch Manager, Deputy General Manager, Head of Internal Audit
Department, COO, and he was named to CAO. He obtained a Bachelor's
Degree in Business Administration, specializing in Management, Master's
Degree in Management and is pursuing a Master's Degree in Finance and
Banking.
Mr. KHENG TILEN
Chief Business Officer (CBO)
TILEN joined KREDIT in 2014. He has experienced in banking and
microfinance sectors since 2005 in Marketing, Product and Business
Development, and Branch Management and Support at ACLEDA Bank Plc.
and AEON Microfinance (Cambodia) Co.,Ltd, which are mostly involved in
research and development, competition, sale, customer relation and care,
branding, E-banking service, customer service, project management,
operation compliance, product development, and other management
decisions. He has advanced quickly as a result of his hard work. He initially
worked as the Marketing Officer, followed by the Research and Development
Manager, Account Relationship Manager, Assistant Senior Vice President
of Marketing Division, Business Development Manager, and Branch
Management and Support Manager. He obtained a Bachelor's Degree of
Business Administration, a Bachelor's Degree of Art, English for International
Business and a Master's Degree in Management at Thailand's Burapha
University. Recently, he is pursuing ACCA program from UK.
Annual Report 2017 25
 Mr. HUY BUNHUOT, Head of HR Department
BUNHOUT holds Bachelor’s Degrees
of Law from Royal University of Law
and Economics and Bachelor’s
Degree in Education from Royal
University of Phnom Penh.
attended numerous national and
international courses related
microfinance and banking. He joined
KREDIT in 2000 as Administrative
Assistant and in October 2003, he
SOK KIMCHHAY, Head of IT Department
KIMCHHAY is currently Head of
IT, focusing on supporting
critical technology services mission
in the organization. He oversees
the organization security, data
center, network infrastructure, core
banking, E-Banking Service, and
application development as well as
successful technology utilization by
leveraging the centralized system to
automate the process and reduce
the paperwork for cost efficiency. He
holds the MSIT degree from Norton
26 Annual Report 2017
was promoted to an Administrator.
After that, he was promoted to HR
Officer/Administrator. In Oct 2006,
his substantial achievements were
He recognized, as he was appointed
Head of the Human Resources
to Department.
University and Bachelor of Computer
the Science from Royal University of
Phnom Penh. Besides this, he also
obtained other training and skills
certificates from both national and
international related to microfinance,
banking, security, and compliance.
He received an ASEAN CIO AWARD
as one of the most outstanding Chief
Information Officers in 2015 from
IDG.
Mr. HAY VANHOM ,Head of Treasury Department
VANHOM joined KREDIT in 2002. then as Accountant, Internal Auditor,
He obtained a Bachelor's degree Accounting Manager, Deputy
in Accounting and Finance, and a Finance Manager, Head of Finance
Master's Degree in Auditing. He Department and ultimately was
has attended numerous national promoted to be Head of Treasury
and international courses related Department.
to microfinance and banking. He
initially worked as a Bookkeeper,
Mr. ROM VANARA, Head of Credit and Branch Supervision Department
VANARA a holds the position of Head Management, Counter process
of Credit and Branch Supervision management, Credit process
Department since January 2017. He management, and loan recovery
began his career with KREDIT in management. He obtained the
March 2001 as a Credit Officer. He Diploma of Accounting and Finance at
then served as Assistant to Branch CIDH institution, and then Bachelor’s
Manager, then Branch Manager, and degree of English Literature at
Deputy Operations Manager and Build Bright University. In 2010, he
then in January 2012 because of his graduated with a Master’s Degree in
achievements he was appointed to Finance and Banking at Build Bright
be Head of Operations Department to University.
be in charge of Branch Performance
Annual Report 2017 27
 Mr. EAR NHAR, Head of Logistic and Administration Department
NHAR started working for KREDIT
in 2009 as the Administration Unit
Manager and later on because of
his talent and commitment he was
promoted as Head of Administration
Department in 2013. NHAR
graduated with a Bachelor of Business
Administration majoring in Accounting
from Institute of Technology and
Mrs. SOK CHANTHEARA, Head of Finance Department
THEARA joined KREDIT as Head of
Finance in 2015. She obtained two
Bachelor Degrees in Accounting and
English Teaching in 2006 from RULE
and IFL respectively. In June 2013,
she successfully completed the ACCA
program from the UK and received
full ACCA certification in the same
Mr. HEANG KIM, Head of Marketing Department
KIM has fully devoted his working life
within the microfinance industry since
2002 ranging from management of
marketing and research, customer
service, and donor relation. He set up
and has led the Marketing Department
at KREDIT since 2008, supervising
28 Annual Report 2017
Management (ITM) in 2006, and a
Master of Business Administration in
Finance from National University of
Management (NUM) in 2010. NHAR
was an administrative supervisor for
a human rights organization for over
10 years. He continues to strengthen
his skills through attending numerous
trainings and workshops.
year. Theara has collected extensive
experiences as an external auditor
from PriceWaterhouseCoopers
(PWC). She was in charge of
difference types of clients, including
financial services, corporate, garment
factor, and local & international
NGOs.
4 sections: research, customer
service and field promotion, branding
and communication, and social
performance and donor relation. Kim
holds a BBA in marketing and an
MBA in management.
Mr. KIM RATANA, Head of Product Development Department
RATANA joined KREDIT in Department, and now serves as
December 2005 and was promoted the Head of Product Development
to many different positions, including Department. He graduated with a
Credit Officer, Field Coordinator of Bachelor's Degree from the Royal
the Vulnerable Service Unit, Sub University of Law and Economics
Branch Manager, Assistant to Branch in Economic Science specialized in
Manager, and Branch Manager. Banking and Finance in 2005 and
In Dec 2012, he was promoted to Master of Business Administration
Deputy of Operations Department from Norton University in 2010.
and in August 2014, he was promoted
to a Deputy of Product Development
Mr. YOS VEASNA, Head of Training and Capacity Building Department
VEASNA has more than 13 the position of Head of Training
years professional experience and Capacity Building Department.
in Microfinance. He began his He obtained a Bachelor’s degree
career in 2004 as an auditor with of Finance and Banking at Norton
KREDIT and after three years was University and a Master’s degree of
promoted to Vulnerable Service Unit Finance Management from Royal
Manager, responsible for developing University of Law and Economics.
community bank loans (microloan) to He has attended numerous courses
vulnerable people in rural areas. In related to Microfinance and Banking
2009, he worked as a Senior Trainer operation, Auditing, Training and
and Training Unit Manager in the HR Facilitation skills in Cambodia and
Department, and in 2014 he was overseas.
appointed as Deputy Head of Training
and Capacity Building Department
and in 2015 he was promoted to
Annual Report 2017 29
 Mr. TUN VIBOL, Head of Sales and Customer Service Department
VIBOL joined KREDIT in 2003 as a
Branch Manager of one of KREDIT’s
largest branches. In recognition of
his strong performance in attracting
customers to KREDIT, he was
promoted to be Head of Sales and
Customer Service Department in
2016. Prior to working for KREDIT,
Vibol worked in senior positions
with NGOs for more than five years.
Mr. VORN LENG, Head of Retail Banking Department
LENG has experience in the
commercial banking sector since
2009 in various fields, including
E-Banking, Information Technology,
Business Process Improvement, and
Project Management at ANZ Royal
Bank. He initially worked as Regional
E-Banking Support Officer, System
Engineer, Senior Technology Project
Delivery Officer, and Business
Transformation Analyst to support
and uplift bank operations. Leng
joined KREDIT in 2015 as the Deputy
Head of Electronic Banking Service
30 Annual Report 2017
VIBOL holds Bachelor’s and Master’s
degrees in Business Administration
and has attended numerous courses
related to microfinance and banking,
management and leadership,
marketing and selling skill, motivation,
and training of trainers.
(EBS) Department and in 2016 he
was promoted to Head of Electronic
Banking Service (EBS) Department.
Early in 2017, he was promoted to
Head of Retail Banking Department.
Leng obtained a Bachelor's Degree of
Management Information Systems at
National University of Management.
Leng has also attended numerous
national and international courses
related to banking.
Mr. CHIV SAMRIT, Head of Internal Audit Department
SAMRIT joined KREDIT in May University of Phnom Penh. SAMRIT
of 2017 as Head of Internal obtained a Master’s Degree in
Audit Department. He has more Management from Norton University
than 11 years’ experience in the in 2012. Samrit has also attended
microfinance sector in auditing. He numerous national and international
holds two Bachelor’s Degrees, one courses related to Microfinance,
in Accounting & Finance and another Banking, and Leadership.
one in Physics from the National
Institute of Management and Royal
Mr. HONG RY, Head of Risk and Compliance Department
RY joined KREDIT in 2006, initially Risk Management Excellence
serving in the position of Internal training in Luxembourg and Risk
Auditor and then Senior Internal Management Framework training
Auditor. In 2011, he was promoted in Thailand. He also participated
to Risk and Compliance Unit Manger various training courses in Cambodia
and he becomes Head of Risk and on Risk Management, Auditing, and
Compliance Department in 2017. Ry Compliance. Previously he was an
obtained a BBA degree in accounting accountant for three years with two
in 2004 at Institute of Technology and different companies.
Management and an MBA at Norton
University in 2011. He has attended
Annual Report 2017 31
 Organization Chart

03 KREDIT OVERVIEW

▪ About KREDIT

▪ Vision, Mission, and Core Values

▪ Milestone

▪ Operating Provinces and Top Branch Performers

▪ Branch Performance
Regional Managers

▪ Lucky Sticker and Discounted Business Partner

▪ Interactive Communication Channels

Development Unit
Product

32 Annual Report 2017 Annual Report 2017 33

 About KREDIT Vision, Mission and Core Values

KREDIT is one of largest microfinance institutions The commitment to social development as manifested
(MFIs) in Cambodia established by World Relief US in via its programs and activities has resulted in
1993. appreciation from clients, local authorities, national
and International partners and lenders. It has also
N To contribute to the social and economic
KREDIT is actively providing diverse and innovative won recognition awards and support from some of its

IO
development of communities by enabling the
financing and non-financing services to clients with partners.

majority living in the rural community. With its excellence
core banking system, Oracle Flexcube, KREDIT is able
to develop, adapt, and justify the products and services
with ease. As about 24 years of experience, KREDIT
still focuses on its vision and mission to help the poor
and vulnerable families with ready access to financial
VIS
economically active poor to improve their lives.
Shareholders are Phillip Capital from Singapore and
World Relief Corporation from USA. KREDIT with its
dynamic and pragmatic board, management team, and
committed employees have achieved sustainability
and enabling its clients to achieve socio-economic N

O
help to improve their lives. development by following and practicing Christian

SI
values. To be a reliable and well known financial institution that

MIS
provides diverse and innovative financial solutions

to communities, serving and protecting our clients

while maintaining organizational sustainability with a

commitment to the poor.

%
2
.1
24

S
LUE ▪ Commitment: Working hard to achieve service excellence
A

V
▪ Integrity: Doing what is right
%

C O RE
.88

▪ Team work: Working together to achieve one goal

75

▪ Responsibility: Being accountable for our actions

▪ Dignity: Showing mutual respect for all

Phillip MFIs Pte Ltd. World Relief Corporation

▪ Transparency: Working clearly and ethically

▪ Communication: Relating in an open and friendly way to all

▪ Christian faith: Acting in accordance with Christ’s love

34 Annual Report 2017 Annual Report 2017 35

 Milestone
2017
2016
- Launched loan repayment
service through TRUEMONEY
CAMBODIA partnership.
- Launched Life Insurance
- Launched ATM Service Program with Cambodia Life
2015 - Launched FAST Payment Insurance Plc partnership.
Service - Launched Parent and Child
New Core - Launched Payroll Service account.
Banking System Package - Home Improvement Loan
2014 “Oracle Flex- - Certified Client Protection
Principles
- Working Capital Loan
cube” goes live. - Personal Loan
2012 Successfully
- Data Quality Award from
Credit Bureau Cambodia (CBC)
merged with
PhillipCapital CBIRD,
2011 officially another MFI
became which was also
- Revised vision, the major owned
mission, and core shareholder of by PhillipCapital
2010 values as well as KREDIT Group.
name and logo.
Received Micro - Summited the
Deposit-Taking request to the
Institution (MDI) NBC for approval
license from on the

2004 the NBC, so restructuring

of shareholders:
that KREDIT
can collect PhillipCapital to
Secured the get in while World
saving from the
license from the Relief Canada
public. Social
NBC as a formal and World Hope
performance
1990s microfinance
paper developed to move out.
institution (MFI)
and approved in
Functioned as a principle by the
project of World BoD
Relief
Cambodia.

36 Annual Report 2017 Annual Report 2017 37

 Operating Provinces and Branch Performance
Top Branch Performers
Branch Loan (in USD) Saving (in USD) Branch Loan (in USD) Saving (in USD)

Krong Siem Reap 8,370,972 3,294,256 Krong Takhmao 1,952,110 1,408,149

1 Top Performer
st
Bati 5,295,303 601,652 Leuk Dek 1,900,193 401,786
Mr. Ou Dara,
Sourt Nikom 4,524,086 1,107,555 Kralanh 1,893,278 203,357
Siem Reap Branch Manager
Memot 4,153,386 995,315 Krong Steung Traeng 1,890,317 125,660
Secret Successful Keys:
Po Sen Chey 4,136,618 993,983 Chhouk 1,861,577 485,114
• Work commitment and work hard.
• Success comes from contribution from every staff who work with full Krong Paoy Paet 4,133,190 308,718 Preah Sihanouk 1,847,503 2,491,831
commitment and share good experience reminding to each other. Tuol Kouk 4,117,231 5,663,777 Moung Ruessei 1,839,544 231,176
• Senior staff always encourage and motivate new staff to work with
full commitment and integrity. Chamka Leu 3,946,089 753,200 Baribour 1,833,333 843,107
3 Top Performer
rd
• Improving our knowledge and skill to stand strongly at the competitive Mongkol Borei 3,898,063 988,116 Krong Chbar Mon 1,785,088 432,612
Mr. Youn Hing, market.
Krong Battambang 3,848,484 2,054,422 Tuek Phos 1,751,888 269,388
Sourt Nikom Branch Manager • Sharing and remining my staff about loan policy, procedure, guideline,
Secret Successful Keys:
and memo. Krong Soung 3,637,747 1,157,559 Prey Veng 1,674,340 687,252
• Work commitment and work hard. • Quality focused and fast customer service oriented. Prey Chhor 3,477,861 744,251 Stueng Trang 1,646,601 429,056
• Best productivity comes from everyone • Shared achievement, happiness and sadness with the staff. Krong Kampong Cham 3,425,865 2,654,474 Chhloung 1,619,992 393,760
in the branch-Inspiring staff to love • Teamwork, Segregation of duty, Staff Motivation. L aos
KREDIT whole-heartedly. • Leading by example. HQ Operation Unit 3,235,978 41,015,097 Sambour 1,598,978 68,732
• Teamwork results from participating, Oddor Meanchey Puok 3,228,834 926,447 Pailin 1,591,776 211,070
sharing, supporting,and constructing.
• Management skill: Following up and Poi Pet Preah Vihear Head Office 3,171,656 4,192,767 Kong Pisey 1,588,313 83,927
monitoring for best achievement. Rotanakiri Peam Ro 3,140,488 1,428,771 Pursat 1,561,985 689,442
Siem Reap Steung Traeng
• Motivation are the best ways Banteay Meanchey Siem Reap
to boost productivity. Svay Antor 2,984,165 551,083 Rotonak Mondol 1,552,419 42,025
Battambang To Bavet 2,929,332 247,981 Beak Anloung 1,538,468 7,695
nl
e
Sa
Pailin
p Kampong Thom
Bosknor 2,912,969 526,376 Sampov Lun 1,519,636 186,772

Modolkiri Sa Ang 2,910,247 537,650 Krong Kracheh 1,519,355 654,047

Pursat
Kratie
Kampong Trabaek 2,787,037 903,897 Krakor 1,516,705 307,840
Kampong
Chhnang
Kampong Cham Mean Chey 2,678,113 2,098,167 Snuol 1,469,833 138,066
Ba Phnum 2,610,745 490,915 Baray 1,387,713 523,551
Phnom Penh
Koh Kong
Kampong
Kampong Chhnang 2,587,691 1,491,454 Kanchriech 1,380,377 430,302
Prey Veng
Speu Kandal Vi etnam Kampong Tralach 2,538,519 360,628 Kampong Leaeng 1,370,615 222,320
Svay Rieng
Batheay 2,532,664 274,507 Bakan 1,367,154 339,072
Th

Takeo
ai

Sihanouk Ville Kampot Odong 2,455,664 312,192 Romeas Haek 1,351,432 384,723
la
nd

Kep Krek 2,450,397 212,877 Angk Snuol 1,320,388 139,314

Ou Reang Ov 2,318,236 178,539 Pea Reang 1,320,242 494,564
2nd Top Performer
Ban Lung 2,238,375 56,165 Krong Kampot 1,299,897 257,649
Mr. Prom Ty,
Operating Provinces Bati Branch Manager Preah Sdach 2,225,935 138,704 Kampong Trach 1,289,482 221,294

Secret Successful Keys: Tram Kak 2,202,636 276,686 Angkor Chey 1,272,665 287,585

ATM location • Work commitment and work hard. Kaoh Thum 2,193,065 382,840 Ponhea Krek 1,242,107 407,590
• Recognizing staff’s achievement and productivity Kamchay Mear 2,184,985 78,555 Kampong Popil 1,240,130 93,222
• Building staff contribution with full commitment Stueng Mean Chey 2,119,235 570,362 Krong Stueng Saen 1,118,315 156,000
Potential Provinces and knowledge.
Cheung Prey 2,083,465 112,575 Dambae 1,108,690 17,183
• Management skill: Following up and monitoring .
Serei Saophoan 2,068,387 339,345 Thma Koul 1,096,852 126,719
• Teamwork, Staff motivation.
Kampong Chrey 2,043,493 129,941 Kiri Vong 1,044,363 355,172
• Self-development.
Krong Svay Rieng 2,000,471 715,370 Stoung 936,742 189,006
Kamrieng 1,998,768 169,542 Prey Nob 810,674 45,401
Krong Daun Keo 1,964,982 580,302

38 Annual Report 2017 Annual Report 2017 39

 Lucky Sticker and Discounted Business Partner Interactive Communication Channels

WEBSITE
www.kredit.com.kh

CALL CENTER 273,600 Visitors

+(855) 23 930 000 / 89 989 818

45%
Shopping Place

E-MAIL
info@kredit.com.kh

21% 8%
Others
INSTAGRAM
Hotel @kreditmicrofinance

99 follows
3%
FACEBOOK

on
ati
@kreditmfi

uc
Restaurant 2%
ge Ed 140,000 likes
15% 6%
Ga
ra
140,000 follows
re
Health Ca
TWITTER
@KreditMfi
111 follows

LINKEDIN
kredit-microfinance-institution
2,387 follows

ប���ះត���ពិ��ស YOUTUBE GOOGLE+

@KREDIT Microfinance @KREDIT Microfinance
�យ��ន់��បង�ាញ 6 follows
63 follows
កាត��ធីអឹម �ៀវ�

ឬ ប័ណ�ព័ត៌មានគណនី

Branches : 83 24 years CDM : 2

of record as a ATM : 13
professional financial
service player

40 Annual Report 2017 Annual Report 2017 41


In 2017, a year of partnership, KREDIT continued to
develop quality of products and services by increased
its cooperation and partnership with various institutions
to provide additional benefits to its clients.
Product and Service’s
Research & Development
savings plan for their children’s future.
In addition to this new deposit product, KREDIT also
developed an improved loan service payment option by
partnering with True Money Cambodia to receive loan

04
At the end of 2017, KREDIT strengthened the quality repayments at any time through its nationwide network.
of its products by signing a partnership agreement with
Cambodia Life Insurance Plc. “CAMLIFE” to add the KREDIT also launched other kinds of loan products,

BUSINESS PERFORMANCE
option of providing a Life Insurance Program with its
Parent Child Account. This added component provides
participants in KREDIT’s Parent Child Account with
greater assurance and security concerning their
including a Home Improvement Loan, Consumption
Loan, Working Capital Loan, and Personal Loan.
Moreover, existing loan products have been enhanced
in order to provide greater flexibility to client’s needs.

▪ Product and Service’s Research & Development

Products and Services
▪ Launching Parent Child Account with Life Insurance Package

▪ KREDIT and CAMLIFE Partnership to Provide Life Insurance to Depositor

s
ice
erv
▪ Expanding More Channels for Borrowers Repay Loan via TrueMoney Agents

it S
ed
▪ Received Data Quality Award from Credit Bureau Cambodia (CBC)

Cr
▪ Official Hand-Over Ceremony Kindergarten by NBC

▪ Risk Management

ice
ice

sfe
▪ Staff Capacity Building

ce

erv
rv

ran
rvi
Se

lS
Se

yT
▪ Operating Report

sit

yro
M

ne
po

AT

Pa
Mo
De
▪ Clients in Their Words

▪ Positive Result Story from Pre-School Construction Project

ce
▪ Lenders, Partners, and Networks

rvi
Se
▪ Social Performance Management Report

nt
me
y
Pa
st
Fa
42 Annual Report 2017 Annual Report 2017 43
 Launching Parent Child Account with
Life Insurance Package
From beginning of the year 2017, KREDIT has launched
a new product so called “Parent Child Account” or in
Khmer “Kon Laar” with the benefit of life insurance
package.
Parent Child Account developed to help parents or
guardians who want to save money for their children or
relatives until they turn 18 . With this account, KREDIT
offers clients optional insurance without medical
checkup. The clients can start saving in this account
from only KHR 20,000 or USD 5 or THB 200 and enjoy
a good interest rate.
Being an owner of the Parent Child account, clients
do not need to pay for life insurance package at all,
as the payment is responsible by KREDIT. The Life
insurance that KREDIT pays for at the time of account
opening includes death and Total Permanent Disability
�ើក គណនីកូនល� ������ះ
នឹងទទួល�ន �រ���ក់ខ�ស់
រួម�មួយ �បូប ដ៏��ស់��ត
មួយ���ម
44 Annual Report 2017
KREDIT and CAMLIFE Partnership to Provide
Life Insurance to Depositor
(TPD). However, clients can choose the option without The year 2017 is a significant year of partnership. On protection: death and total permanent disability to
insurance by getting the high interest rate up to more January 06, 2017, KREDIT Microfinance Institution Plc. KREDIT’s clients who open Parent Child Account.
than 8% per annum. and Cambodia Life Insurance Plc. “CAMLIFE” signed
a partnership agreement on Parent Child Account with The partnership between KREDIT and CAMLIFE is a
During the promotion campaign of this product, Life Insurance Program. crucial and strategic cooperative alliance to build more
thousands of leaflets, posters, banners, and confidence among all clients who want to save money
announcement have been spread out to the public and Under this agreement, CAMLIFE provides life for their children and have peace in mind for their future.
potential clients. More than 1,073 children school bags
have been also given to clients who opened account as
a gift to their children.
At the end of 2017, KREDIT gets trust from the clients
to open Parent Child Account about 1,073 accounts
(PCA with insurance, 537 accounts) with amount
US$ 108,602.78 from 82 branches through all the
nationwide.
The Warm Handshake between CEO of KREDIT and CEO of CAMLIFE in the Signing Agreement Ceremony
Annual Report 2017 45
 Expanding More Channels for Borrowers Received Data Quality Award from
Repay Loan via TrueMoney Agents Credit Bureau Cambodia (CBC)
Another remarkable milestone in 2017 is Loan Payment bring only the sheet of repayment schedule and then In November 2017, Credit Bureau Cambodia (CBC) KREDIT has received many other awards including:
Service. In August 2017, KREDIT Microfinance make a repayment via True Money agents. officially granted KREDIT its “Data Quality Award”,
Institution Plc. and True Money, payment service signifying KREDIT as a committed financial institution -- Two-time recipient of Awards from CGAP on
provider with 25 provinces operation, announced their Through the partnership, KREDIT’s clients could access which provides high quality, accurate, punctual, and “High Level Compliance with International
partnership agreement on Bill Payment Service. diverse options of service payment, which are more complete data to CBC. The data in the CBC database Standard for Financial Report (ISFR)”
convenient and economical by exposing themselves is the key to daily business decision making and trust -- “Seal of Pricing Transparency” Award from
KREDIT’s loan clients can make their loan repayment into up to date technology payments expanded by The building with business partners as well as regulators. MFTransparency.org
to KREDIT through more than 5,000 True Money Agent. KREDIT adheres to clear policies and procedures -- Awards from the Mix Market as being Socially
agents nationwide. It is another option to make loan with data management, clear identification on types of Transparent and Responsible MFI
repayment to KREDIT during working hour, non- At the end of 2017, Money transfer transaction total information needed, and methods to collect, to encode, -- Certificate from SMART Campaign certifying
working hour, weekend, and holiday. The clients can about 5,000 with amount USD 745,030.57. to store, and to disseminate the data to mitigate data KREDIT’s adherence to Client Protection
leakage. In addition to this significant recognition, Principles

The Warm Handshake between CEO of KREDIT and Managing Director of TrueMoney Cambodia in the Signing KREDIT CEO received CBC's Data Quality Award from H.E. CHEA Serey, Assistant Governor and Director
Agreement Ceremony General of the National Bank of Cambodia

46 Annual Report 2017 Annual Report 2017 47

 Official Hand-Over Ceremony of Risk Management
Kindergarten by NBC
Preschool is the starting point that allows our small kids to school building, KREDIT also supports hand-wash The Risk Committee was established by the Board managing risks, the Risk Management and Compliance
be brave to go to school, and it is also a foundation for the facilities and school materials to students at Dong Kdar of Directors meeting on 1st May 2012 according to Unit was established in March 2011 and became a full
future children’s education”, said H.E Rath Sovannorak, Primary School, Stoeung Trong District, Kampong Cham Board Bylaws article V. This committee is led by one department in 2013 with the purpose of establishing
Director General of Bank Supervision on behalf of H.E Province. independent director, who is assigned by the Board of proactive and robust risk management mechanisms to
Chea Chanto, Governor of National Bank of Cambodia. Directors. Its mission is to assist the Board and related mitigate risks more effectively. In its risk management,
“KREDIT’s involvement to build the preschool is really KREDIT has practiced many different social activities departments with the aim of identifying measures KREDIT has adapted the 3 lines of defense model to
big contribution to the educational, economic, and with clients and communities; we are working by and controlling and mitigating risk at all levels of the embed a strong risk culture in day-to-day business
social development in Cambodia”, he added. setting aside 5-10% from our yearly net profit. organization. Its primary objective is to protect the operations and decision-making.
Until 2017, there are 14 preschools have interests of the shareholders by discharging the duty
The 3-room kindergarten was supported been built with the support from KREDIT. of the Board to oversee the risk of the organization From its overall risk assessment conducted by using
by KREDIT about USD15,000 and make recommendations to management on any Risk Management Graduation Model (RMGM) with an
together with community decision and/or activities which are needed to mitigate external assessor from Risk Management Initiative in
contribution. Besides risk for the whole company. Microfinance (RIM), it shows that KREDIT achieved
a strong score of adherence in the six categories
In addition to the existing internal controls of KREDIT in measured.

KREDIT MFI Score Summary

Foundations

100.0%

80.0%

60.0%
Official Roof: Financial and Social
Goals
Floor: Strategic Risk
Management
40.0%
Hand-Over
20.0%
Ceremony of 3-room kindergarten by
0.0%
H.E Roath Sovannorak,
Director General of Bank Supervision of NBC
Pillar 3: Operational Risk Pillar 1: Credit Risk
Management Management

Pillar 2: Financial Risk

Management

In this scoring, KREDIT did not see any significant risks
in its operations particularly in the area of financial risk,
credit risk, and operational risk with few items to be
improved.
Financial Risk Management
Financial risk management is monitored under the
ALCO committee. The purpose of managing the
financial risk is to maximize profitability of its assets and
minimize the impact of negative market development on
the institution with consideration for cost effectiveness.

48 Annual Report 2017 Annual Report 2017 49

 Staff Capacity Building

Financial risk management covers liquidity risk, interest Significant Achievement of Risk and Compliance KREDIT’s Core Values define our commitment to its staff are qualified enough to perform their roles and
rate risk, foreign exchange risk, investment portfolio Department in year 2017 working hard, working together, and being accountable duties with efficiency and effectiveness. The training
risk, capital adequacy risk (CAR), debt covenant risk on our actions to achieve one goal with service includes internal, external, overseas, and degree
and others. The controls and tools to manage financial Here are some highlights on the risk management and excellence. Acting in accordance with Christ’s love, courses.

risk includes the related policies and procedures, limits, compliance activities carried out by the Risk Department KREDIT has continued taking care of and treating
all staff fairly and equally. KREDIT also cares for the As of the end of 2017, the Training and Capacity Building
risk management tools, and risk monitoring tools. So in 2017.
working environment and benefits as well as the career Department provided 97 internal courses as well as
far, our financial risk is maintained in a positive position
development of staff. more than 30 other courses including external courses,
with the liquidity ratio greater than 100%, low impact -- Assessed risk for new products and
degree scholarship programs, and international training
from interest rate change, FX exposure between ±20%, processes
KREDIT provides different types of training to ensure programs.
and all regulatory and debt covenants are complied -- Supported branches for risk assessment
with. -- Conducted AML/CFT refreshment training Course Title Number of Courses Number of Participants
completely
▪ Internal Course
Credit Risk Management -- Assisted in developing new liquidity risk
Orientation Training 12 305
Generally, credit risk remains the most fundamental management policy
risk to which the lending industry in general and -- Introduced counterparty risk assessment Internal Specialized Course 24 697

microfinance industry monitor. Credit risk is mainly tools Refresher Training 61 2,354
managed by credit policies and procedures, adhering -- Conducted RMGM assessment with ▪ External Training
to established limits, risk management tools, and assessor from Risk management Initiative in External Specialize Course 23 179
risk-monitoring tools. The Credit Committee regularly Microfinance (RIM)
▪ General English Program
tracks and monitors the various credit risk limits and -- Operation risk policy and procedure were
General English Program - 17
indicators, portfolio quality, PAR 0+ for Loan disbursed developed and subsequently approved by the
within 3 months, trend of multiple debt clients, trend of Board ▪ Degree Scholarship Program

early pay off clients, and risk by products. At the end of -- Information Classification and Management Degree Scholarship Program 5 6
2017, the overall repayment rate was in a good position was approved and put for implementation ▪ International Training Program
at 99.35%. -- Regular internal and Board updates on International Training Program 2 3
economic and business news
Operation and Compliance Risk Management -- Input new items in Risk Management
The primary areas monitored under operational Committee and Operational Risk and
risk include People Risk, Process Transaction Risk, Compliance committee report
System Risk, and External Event Risk. These risk -- Implemented online account forms for
factors are closely monitored by the Operational and large depositors and deposits to other
Compliance Risk Committee. KREDIT’s Operation accounts
Risk Policy and Procedure tracks and monitors all the -- Conducted annual update on compliance
operation risk indicators, the loss and incident cases, checklist and annual AML/CFT Report
serous audit finding cases, new emerging risks, risk -- Successfully submitted FATCAT report for the
control self- assessment (RCSA) at departmental and years 2014, 2015, and 2016
branch management levels, and other operational -- Revised Whistle Blowing Policy was approved
and compliance risk issues. Also, KREDIT’s Business by the Board
Contingency Plan (BCP) is another effective tool to -- OFAC engine search for black list clients was
manage the operational and compliance risk. put for implementation

50 Annual Report 2017 Annual Report 2017 51

 Operating Report

Operational area and office outreach Percentage of Percentage of

34% 29%
The year 2017 was one of continued progress for KREDIT, marked with significant expansion as well as Loan Outstanding Borrowing Account
strengthening the quality of its products and services. As of the end of the year, KREDIT was operating through 33% by Purposes by Purposes
27%
83 offices in 20 provinces and cities, 158 districts, 1,1193 commune, and 7,142 villages.

19% 20% Education Loan

Education Loan
The coverage areas (2013- 2017) Mortgage
18%
Social Loan
Description 2013 2014 2015 2016 2017 10% Business Loan
0%
4% Mortgage
Description Agriculture
Agriculture 5% 1%
Number of Office 66 72 81 83 83 Business Loan Social Loan

Number of Province 15 17 20 20 20 Consumer Loan Consumer Loan

Number of District 110 135 152 157 158

Note: Social Loan includes community bank loan, emergency, solar, and latrine loan.

Number of Commune 857 975 1,114 1,163 1,193

Number of Village 2017 5,402 6,070 6,660 6,996 7,142

Loan Performance Monthly Disbursement of Year 2017

By the end of 2017, the loan outstanding of KREDIT grew by 34% reaching to USD190.67 million. We are proud In 2017 KREDIT disbursed loan totaling USD 190,672,501 to 83,405 borrowing accounts. The monthly
of this success, as this growth was achieved even after the 18% interest rate cap was imposed earlier in the year. disbursement trends for the year are shown in the following chart:
We are also proud of our customers who benefitted from the lower cost of borrowing. However, the number of
borrowing accounts was a bit lower than 2016, down to 83,405 in 2017. The largest sectors of loan utilization
were in Consumer loans at 34%, followed by Business loans at 33 %, and Agriculture loans at 19%.

Trend of Loan Performance Trend Disbursement FY-2017

200.000 190.67 100,000

93,081 92,919
180.000 90,000
83,555 83,405
25.00 7,148 8,000
160.000 80,000 7,090
6,767 6,623
73,115 142.32 6,509 6,274 7,000
6,134
140.000 70,000 20.00 5,800 5,682 5,752
128.57 5,331 6,000

120.000 60,000 15.00 4,287 5,000

100.48 4,000
100.000 50,000 22.39
10.00 20.24 3,000
18.40 18.17 18.07
74.202 16.35 15.77 16.44 15.43 16.34 16.15
80.000 40,000 2,000
5.00 10.08
60.000 30,000 1,000

0.00 -
40.000 20,000 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17

20.000 10,000 Portfolio Lent Out Per Month (in USD million) Nº of Clients Per Month

0.000 0
2013 2014 2015 2016 2017

Loan oustanding (in million USD) Active borrowing accounts

52 Annual Report 2017 Annual Report 2017 53

 Loan Quality Structure Number of Loan Productivities
During the year, KREDIT’s loan quality was higher than the industry standard performance. As of December 2017,
the portfolio at risk (PAR30+) ratio of KREDIT was 1.06% and the percentage of write–off was only 0.36%.

250
Loan Quality
205
200
175
156
150 137
131 126
116
1.20% 1.12% 99
100 88
1.06% 81
71 71
56
50
1.00% 50

-
0.80% -
2013 2014 2015 2016 2017

0.61%
Borrowers or borrowing account/CO&LSO Borrowers or borrowing account/Front line staff Borrowers or borrowing account /Total staff
0.60%

0.36%
0.40% 0.31%
0.28%
0.25%

0.20%
0.08% 0.10%
0.06% Value Loan Productivities
0.00%
2013 2014 2015 2016 2017

PAR30+ Write-Off
350,000

312,578

300,000

Staff Productivity and Workload

248,381
KREDIT has improved its staff productivity over the past years. On average, loan outstanding per Credit Officer/ 250,000
230,465 228,374
Loan and Saving Officer (LSO) as well as per total staff has increased as shown below:
200,497
200,000
184,123

158,136
147,119 144,142
Description 2013 2014 2015 2016 2017 150,000
121,443
Number and Value of Loan 114,725

100,000
84,766
Outstanding/CO&LSO (in USD) 184,123 230,465 228,374 248,381 312,578 74,649 79,433 77,736

Borrowers or borrowing account/CO&LSO 175 205 156 137 126 50,000

Outstanding /Front line staff (in USD) 121,443 147,119 144,142 158,136 200,497 -
2013 2014 2015 2016 2017
Borrowers or borrowing account/Front line staff 116 131 99 88 81
Loans/CO&LSO (in USD) Loans /Front line staff (in USD) Loan /Total staff (in USD)
Outstanding /Total staff (in USD) 74,649 79,433 77,736 84,766 114,725

Borrowers or borrowing account/Total staff 71 71 56 56 50

54 Annual Report 2017 Annual Report 2017 55

 Deposit
KREDIT has continued its good growth for savings mobilization. As of December 2017, KREDIT is managing
63,419 savings accounts, an increase of 5.37% from last year, with a total value of savings collected at USD 97.02
million, an increase of 41%.
The below chart shows the relationship between loan and savings performance from one year to another. Savings
to Loan has increased by 49%, which is higher compared to 2016 when it was 26%.
Percentage of Trend Saving to Loan Outstanding

350 60%

Deposit Performance 300

97.02 50%

250
40%
68.79
200
190.67
53.65 30%
120 70,000 150
35.59 142.32
63,419 16.217 128.57 20%
60,186
100
60,000 100.48
100
74.202
10%
50
50,000 22% 35% 42% 48% 49%
80
0 0%
40,000 2013 2014 2015 2016 2017
60 30,947
28,149 %saving to loan Loan Outstanding (in million USD) Value fo Deposit Collected (in million USD)
30,000
97.02
40
68.79 20,000
53.65 ATM/CDM Service (K Card)
20 9,023
35.59 10,000
KREDIT introduced its K Card in 2016, and we are happy to see continued growth in the use of our ATM/CDM
0
16.217
0 services. KREDIT now has 15 ATM/CDM machines available in 13 provinces and cities. As of December 2017, a
2013 2014 2015 2016 2017
total of 3,834 K Cards had been issued and used by clients, with more than 1,500 new ATM card users added just
Value of deposit collected (in million USD) Active saving accounts in 2017. The K Card holders enjoy a very special and convenient service through KREDIT’s business partners
nationwide.

Nº Accumulated ATM Cards Issued in 2017

Percentage of Money Percentage of Saving 4,500

Collected by Products Account by Products 4,000 3,834

3,624
3,486
3,500 3,353 3,263
2,828 2,904
13% 12% 3,000 2,699
2,513 2,625
Saving Term Deposit
2,328 2,399
2,500

2,000

1,500

Term Deposit Saving 1,000

87% 88% 500

-
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17

56 Annual Report 2017 Annual Report 2017 57

 Clients in Their Words

FAST Payment Service KREDIT has a unique corporate social responsibility (CSR) approach. Community development projects are being
By the end of 2017, we performed 138 transactions of FAST Payment service with total cash transactions KHR undertaken by the Social Performance and Community Development Unit with collaboration from each branch
2,732.32 million or about USD 676,818 in which 45 were outgoing and 93 were incoming transactions. and related stakeholders to conduct project assessment to ensure the projects address the critical community
needs. These projects are directly supported by funds set aside from 5-10% of KREDIT’s profits in its Social
Monthly Trends in KHR for Outgoing Transaction Development Fund and from external donors who want to empower vulnerable clients with tools and skills to
enhance their opportunity for economic stability and growth.
50,000,000.00 9
44,761,100.00 8
45,000,000.00 8
7 Here are clients’ stories in their own words sharing about how they are getting better livelihoods after receiving
40,000,000.00 7
6 6
loan and enhanced training from KREDIT:
35,000,000.00
6
30,000,000.00 5 5
5
25,000,000.00 24,568,000.00 23,018,000.00
4 4
20,000,000.00
16,105,500.00 3
15,000,000.00 13,000,000.00
10,000,000.00 2
1 1 8,000,000.00
5,532,800.00
3,473,500.00 1 1 1
5,000,000.00
1,202,200.00 402,000.00 408,000.00 0-
- 0 PICH BUNLENG is married with four children. He said, “We raised
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17
chickens with old traditional methods, and they often got sick and died.
AMOUNT No. Trxn We often couldn’t sell any at the market”. After receiving agriculture
training on animal raising, as well as parenting training, he has seen

Monthly Trends in KHR for Incoming Transaction strong positive impacts on his family and their livelihoods. He has
learned how to look after the chickens using modern methods, and reduce the cost
of feed and vaccinations of his chickens because now he can do it by himself most of
1,200,000,000.00 27 30 the time. He said,” I can check what diseases that my chickens got. Sometimes I can
26
1,000,000,000.00 993,638,000.00 25 cure them and sometimes I need to take them to see the veterinarian”. When he can
857,685,000.00
800,000,000.00 20 sell his chickens, he can earn $25-$50 a month, which is a great help to his family.

600,000,000.00 15
11
400,000,000.00 8 307,444,000.00 10
7
4 4
200,000,000.00 90,100,000.00 2 119,490,000.00 160,000,000.00 2 5
1 1 52,405,382.00
1,985,100.00 0- 6,096,000.00 1,000,000.00 2,000,000.00
- 0
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17

AMOUNT No. Trxn

LEIB CHHEAN is married with four children. Before she received

financial literacy training, her family didn't have enough money for
the household expenses because they would buy whatever they
Payroll Service
wanted and didn't think about the importance of saving. After the
KREDIT launched its Payroll Service to serve its business customers and help clients save time in preparing and
training, she and her family are better able to manage their money.
managing payroll for staff, so that the company or organization can focus on their business operations. KREDIT’s
She said, “KREDIT supported me and helped me to improve my savings, and now
Payroll Service gives peace of mind and improves the operating efficiency for companies or organizations who
I can manage my income and expenses better”. She started a small business from
wish to reduce the administrative and record keeping burden of payroll by out-sourcing this function to KREDIT’s
a community bank loan from KREDIT. She said “I have increased the income for my
professional team.
family, and now my livelihood is better than before”.

58 Annual Report 2017 Annual Report 2017 59

 Positive Result Story from Pre-School Partners
Construction Project
With strong encouragement and support from the Board clients live. KREDIT believes our financial services and products alone are not enough to help our poor clients to move out of
of Directors and Shareholders, 5-10% of KREDIT profits the poverty; the poor need much more than that. With this belief and to fill in the gaps, KREDIT has worked with
are allocated from annual net income to implement Preschool construction is one of projects designed among partners whose visions are similar to bring holistic approaches to our poor clients.
social programs. KREDIT’s Social Performance and KREDIT’s community development projects. Over the
Community Development Unit carefully analyzes past several years, KREDIT has also supported canal
community needs among our clients and uses criteria renovation, school fence construction, reconstruction
of best practices in community development to ensure for clients suffering from natural disaster and fire, hand
that we meet the real needs of communities where our washing facilities construction and other projects

MEAS CHENDA; preschool teacher at Phnom Kjorng Primary school

revealed that “ I am very happy to have a nice preschool building with
variety of training and learning materials. My students are very joyful and
have good attendant rate and thank to KREDIT community development
project to support us”. “Nowadays, I have 27 pupils, aged from 3-4 year
olds with regular attendance 22 to 24 pupils every day”, she added.

JET SREYNEANG, 36 year old married woman living with her husband
at Prasat Phnom Kjorng commune. “I always sent my son to preschool
and look at him during learning every day. I am very happy to see his
learning improvement from day to day”. He has a good communication
with his friends, brave, clever and be a good son compared to other pupil
at other preschool”, she said.

60 Annual Report 2017 Annual Report 2017 61

 Lenders and Networks Social Performance Management Report
KREDIT believes in the power of partnership, and our financial services alone are not enough to move our To fulfil its vision and mission, KREDIT still keeps its
poor and poorest clients out of poverty because they usually need support and services through many different eyes on both the financial and social objectives of the
specialized interventions. Because of this holistic approach to poverty and development, KREDIT works with company, and is strongly committed fulfilling both of
many different development players to equip our poor clients with other complementary services. We collaborate these important goals. Because of its firm commitment
to its social mandate, KREDIT has been allocating
together to provide many different services needed by our clients based on specializations of each individual
5-10% of its annual profits to be utilized for Corporate
organization. You can find links to our partners in KREDIT’s website.
Social Responsibility (CSR) projects under the banner
of Community Development Programs. KREDIT has
a unique CSR approach. Its community development
projects are being undertaken by a dedicated unit within
the company: the Social Performance and Community
Development Unit, with collaboration with each branch
of KREDIT and related stakeholders to conduct project
assessments to ensure that the selected projects
address critical community needs.
Governance of SPM
The Social Performance Management Committee
(SPMC) was formed in 2013 to be in charge of
designing and monitoring implementation of KREDIT’s
SPM work. In addition, the SPMC and KREDIT’s Board
of Directors offer strong expertise and are actively
involved in monitoring and evaluating the community
development programs. Seed funding is provided
to support local initiatives in communities that are
served by using KREDIT’s Community Development
Fund following strict criteria that are clearly stated in
the Social Performance and Community Development
Charter. The Charter describes the nature of the social
development fund, sets out the specific criterial for
eligible projects or activities to be supported, and also
provide a general process for use of the funds.
Our Social Performance
As a responsible microfinance institution, KREDIT has
learned that in order to achieve its financial goals and
put into practice its mission, this must translate into
benefits for its clients. KREDIT is fully committed to
being client-centric by endorsing the Smart Campaign
implementing Client Protection Principles (CPP).
Through this commitment and effort, KREDIT has
been granted CPP certification since 2016. KREDIT
is strongly committed to sharpening the focus of
its permanent programs from time to time to reach
62 Annual Report 2017
our social mission goals and protecting our clients,
becoming the main player in the microfinance sector
for implementing strong social performance and
community development projects.
A - Social Responsibility Towards Clients
KREDIT has learned that strong financial performance
alone does not necessarily translate into benefits for
clients. Because of this, KREDIT has developed a
strong in-house client training program with three main
topics which are supported by funding from ERIKS.
These are:
Parenting Training: KREDIT has been on a long
journey to develop parenting curriculum in order to
promote child rights and child protection. The training
is delivered by our specialized staff to KREDIT staff,
vulnerable families of our poor clients, local authorities
and our related stakeholders. KREDIT believes that
parenting training plays an important role in modelling
and educating communities on child rights, the value of
education, parental responsibilities, positive discipline/
non-violence, child rights and child nutrition. To make
sure the training has more effective and positive
impact to the community, KREDIT has been working
with Commune Committees for Women and Children
(CCWC’s) by providing them training of trainer services
(TOT) to ensure that CCWC’s have a strong capacity to
deliver training to their community.
Sok Sophy is
married with four
children, two of
whom are currently
attending school in
Grade 5 and Grade
4. She received
many trainings from
KREDIT, including
parenting, financial
management and agriculture. She said, “After I
joined the parenting training and learned about the
importance of education, I felt so guilty about my first
child who did not graduate high school.” Now she is
Annual Report 2017 63
 committed to ensure a better education outcome for
these two younger children who are still at school. “I
want my children to study higher level, even though
our income is not much. After parenting training, I have
committed to keep my two children in classes, so they
can graduate from Grade 12”. She has so far started
investing more time and financial resources in their
education. “I spend two hours every day to read and
teach them mathematics, and I spend more than before
on school materials and extra classes for English and
mathematics”.
Agriculture Training: Under partnership with District
Agriculture Officers, KREDIT conducts special
agriculture training to targeted clients and communities
in need. The training is designed to equip rural
households with their most preferred agriculture
skill which to the rural context. The participants are
empowered to discuss and select their own topic
that they wish to learn. The trainings are conducted
for 2 days at the house of a community member. In
addition, we also establish field demonstration farms
and on-going technical supports to our participants.
In addition to training on new techniques for adapting
to climate change, the training also promotes the best
and environmentally friendly agriculture technology to
the whole community. The training is useful for the rural
areas to help clients provide meat and vegetables for
home consumption and thereby reducing expenditures
for families.
Financial Education Training: KREDIT has a long
history of providing financial education to its clients,
staring since 2007 using our internal curriculum.
Later on, under partnership with Good Return, the
CAFÉ Program (Consumer Awareness and Financial
Empowerment) was introduced and used as a financial
education tool. The training is designed to help the
clients to understand how to use their loan appropriately
as well as empowering them to ask for more information
about loan and negotiate loan terms with financial
service providers. Since the training has been found
to be very useful, KREDIT also customized the CAFÉ
curriculum and is now providing financial education
64 Annual Report 2017
awareness to students at high schools and secondary
schools so they can have better knowledge and start
having good experience with money management.
In addition, KREDIT has developed the following
customized social loan products which are designed to
serve and empower our more vulnerable clients:
In-House Micro Insurance: For clients who are
community bank loan recipients and who die, KREDIT
will write off the balance of their loan and additionally
provide a financial assistance package of money to
their family for the funeral ceremony. Over the past 6
years, 366 group loan clients and their families have
been beneficiaries of this service, and we have written
off loans totaling $112,310.
Education Loan: KREDIT aims to providing financing
to students to give them an opportunity to enroll in
higher education for their brighter future. Education
loan is a type of social product that are designed to help
studenst pay for their tuition at university, institutes,
vocational training, etc. The loan features are very
special by offering special terms and conditions.
Loan for People with Disabilities: KREDIT is in a
unique partnership with Handicap International (HI) to
offer another social loan type to people with disabilities.
KREDIT staff have received related training in order to
have appropriate communication with them when they
come to get any services at a KREDIT office as well as
in the field. Target KREDIT offices have been renovated
and equipped with new signs, toilet facilities, main
pathway gate, ramp etc. which are suitable for clients
with disabilities. Under this partnership, we are now
serving people living with disabilities in 2 provinces:
Kampong Cham and Siem Reap.
Solar Loan: Solar loans are another social product
which are designed to provide financial assistance to
rural households for purchasing solar electricity home
systems. Through the solar loan from KREDIT, our rural
households do not need to pay the full amount of money
to buy the solar electrical system. The clients also have
a chance to discuss and select the good solar system
they prefer from KREDIT’s solar partners.
KREDIT is also strongly committed to protecting its
clients by endorsing and following Client Protection
Principles developed and certified by the Smart
Campaign:
Client Protection Principles: With a high commitment
to a client centric focus, KREDIT has endorsed the
CCP developed by the Smart Campaign to build sound
lending practices that protect its clients, build stronger,
long-lasting relationship with clients, increase client
retention as well as reduce financial risk and help
KREDIT flourish by using recommended tools from the
Smart Campaign. In late 2016, KREDIT was awarded
the Client Protection Certification by the global Smart
Campaign. This award signifies that KREDIT has met
adequate standards of care to implement all the Client
Protection Principles throughout its operation, product
offerings and treatment of clients. Those principles are:
• Appropriate product design and delivery
• Prevention of over-indebtedness
• Transparency
• Responsible pricing
• Fair and respectful treatment of clients, staff
ethics, and non-discrimination
• Privacy of client data
• Mechanisms for complaints resolution
B - Social Responsibility Towards Community
Community Development Program: KREDIT is keen
to see the development and prosperity of the clients
and communities that we are working with. With a
strong encouragement and support from the Board of
Directors and shareholders, 5-10% of KREDIT’s annual
net income is allocated to implement this program.
Potential funded activities are evaluated based on real
needs of vulnerable communities where KREDIT works,
using concrete indicators and criteria for conducting
project assessment. Over the past few years, KREDIT
has supported small scale community infrastructure
projects such as canal renovation, school fence
construction, preschool construction, and washing hand
construction. We have funded other short-term needs
for clients suffering from natural disaster and house
burning, as well as other community development
activities requested from ministries, churches, LNGOs
and other associations which also benefit our clients in
same areas where KREDIT works.
Improved Hygiene and Sanitation: In order to support
child rights and child protection, hand washing facilities
are supported to rural primary schools and preschool.
Based on project evaluation reports, children have
improved their hygiene and have better health and less
sickness thanks using the hand washing basins and
sinks provided by KREDIT. Each school is committed
to maintaining these facilities to ensure the ongoing
health and hygiene of students.
Social and Environmental Policy: : KREDIT
recognizes the importance and relevance of social
and environmental risk management in microfinance
institutions. KREDIT is committed to identifying and
addressing all short, medium, and long-term social
and environmental risks associated with its activities
by effective and sound social and environmental risk
management at the microfinance level. This policy
outlines the ways that KREDIT will put into practice
its commitment to promote environmental and social
sustainability.
KREDIT’s Exclusion List: This list clearly excludes
prohibited activities or businesses in accordance with
international conventions and national legislation and
regulations pertaining to exploitative forms of forced or
child labor, trade in weapons and munitions, gambling,
sex trafficking, trade in wildlife or wildlife products as
regulated under the Convention on International Trade
in Endangered Species of Wildlife and Flora (CITES),
production, trade, storage or transport of radioactive
materials or significant volumes of hazardous
chemicals, illegal fishing, illegal commercial logging,
tobacco-related business, and other illegal activities.
Annual Report 2017 65
 Report of the Board of Directors

The Board of Directors (“the Board” or “the Directors”) has pleasure in submitting their report together with the
audited financial statements of KREDIT Microfinance Institution Plc. (“the Company”) for the year ended 31
December 2017 (“the year” or “the financial year”).

Principal Activity

05
The principal activity of the Company is to provide credit to local customers through its head office in Phnom Penh
and its various provincial and district offices in the Kingdom of Cambodia.
The Company received a licence from the National Bank of Cambodia (“NBC”) to conduct a deposit- taking
business on 29 December 2010.

EXTERNAL AUDIT REPORT Financial Results

The financial results of the Company for the year ended 31 December 2017 is set out in the income statement.

Dividends
No dividend was declared or paid and the Directors do not recommend any dividend to be paid during the financial
year.
▪ Report of the Board of Directors
Share Capital
▪ Report of the Independent Auditors to the Shareholders On 9 May 2016, the Company requested to the National Bank of Cambodia (“NBC”) to convert its subordinated
debts amounting to US$3,000,000 to its share capital with a share premium amounting to US$2,078,655. This
▪ Balance Sheet
request was approved by the NBC and the Ministry of Commerce on 29 August 2016 and 22 May 2017 respectively.
▪ Income Statement On 8 May 2017, Company submitted another request to the NBC to increase the share capital from US$6,790,400
to US$18,395,200 by converting from the retained earnings and share premium amounting to US$6,714,715
▪ Statement of Changes in Equity and US$4,890,085 respectively. This request was approved by the NBC and the Ministry of Commerce on 7
September 2017 and 5 December 2017 respectively.
▪ Statement of Cash Flows
Reserves and Provision
There were no material movements to or from reserves and provisions during the financial year other than as
disclosed in the financial statements.

Bad and Doubtful Loans

Before the financial statements of the Company were prepared, the Board of Directors took reasonable steps
to ascertain that management action had been taken (or that “the Company had taken action”) in relation to the
writing off of bad loans and the making of allowance for doubtful loans, and satisfied themselves that all known
bad loans had been written off and adequate provision had been made for bad and doubtful loans.
At the date of this report, the Board of Directors is not aware of any circumstances which would render the amount
written off for bad loans or the amount of provision for doubtful loans in the financial statements of the Company
inadequate to any substantial extent.

Current Assets
Before the financial statements of the Company were prepared, the Board of Directors took reasonable steps to
ensure that any assets, other than debts, which were unlikely to be realised in the ordinary course of business at
their value as shown in the accounting records of the Company had been written down to an amount which they
might be expected to realise.

66 Annual Report 2017 Annual Report 2017 67

 At the date of this report, the Board of Directors are not aware of any circumstances, which would render the Directors’ Interests
values attributed to the assets in the financial statements of the Company misleading. The Directors who held office at the end of the financial year and their interests in the shares of the Company is
as follows:
Valuation Methods
At the date of this report, the Board of Directors are not aware of any circumstances which have arisen which
render adherence to the existing method of valuation of assets and liabilities in the financial statements of the
2017 2016
Company as misleading or inappropriate.
Holding Number of Amount Holding Number of Amount
Contingent and Other Liabilities
% shares US$ % shares US$
At the date of this report, there does not exist:
Mr. Lim Hua Min 75.88 279,176 13,958,800 72.10 84,628 4,231,588
(a) any charge on the assets of the Company which has arisen since the end of the financial year which
secures the liabilities of any other person; and
(b) any contingent liability in respect of the Company that has arisen since the end of the financial year other
than in the ordinary course of its business operations.
Directors’ Benefits
No contingent or other liability of the Company has become enforceable, or is likely to become enforceable During and at the end of the financial year, no arrangements existed to which the Company is a party with the
within the year of 12 months after the end of the financial year which, in the opinion of the Directors, will or may object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or
substantially affect the ability of the Company to meet its obligations as and when they fall due. debentures of the Company or any other body corporate.
Since the end of the previous financial year, no Director of the Company has received or become entitled to
Change of Circumstances
receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and
At the date of this report, the Board of Directors are not aware of any circumstances, not otherwise dealt with
receivable by the Directors as disclosed in the financial statements) by reason of a contract made by the Company
in this report or the financial statements of the Company, which would render any amount stated in the financial
or a related corporation with a firm of which the Director is a member, or with a Company in which the Director has
statements misleading.
a substantial financial interest other than as disclosed in the financial statements.
Items of Unusual Nature
The results of the operations of the Company for the financial year were not, in the opinion of the Board of Responsibilities of the Board of Directors in respect of the financial statements
Directors, substantially affected by any item, transaction or event of a material and unusual nature. The Board of Directors is responsible for ascertaining that the financial statements present fairly, in all material
There has not arisen in the interval between the end of the financial year and the date of this report any item, respects, the financial position of the Company as at 31 December 2017, and its financial performance and its
transaction or event of a material and unusual nature likely, in the opinion of the Board of Directors, to affect cash flows for the year then ended. In preparing these financial statements, the Board of Directors is required to:
substantially the results of the operations of the Company for the current financial year in which this report is
made. (i) adopt appropriate accounting policies which are supported by reasonable and prudent judgments and
estimates and then apply them consistently;
The Board of Directors (ii) comply with Cambodian Accounting Standards and the guidelines of the National Bank of Cambodia
The members of the Board of Directors who serve during the year and at the date of this report are: relating to the preparation and presentation of financial statements or, if there have been any departures
▪▪ Mr. Timothy Mark Amstutz, Chairman in the interest of true and fair presentation, ensure that these have been appropriately disclosed,
▪▪ Mr. Ong Teong Hoon, Member explained and quantified in the financial statements;
▪▪ Mr. Tan Teck Keong Michael, Member (iii) oversee the Company’s financial reporting process and maintain adequate accounting records and an
▪▪ Ms. Ing Varony, Member effective system of internal controls;
(iv) assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related
▪▪ Ms. Srey Hem Roberts, Member
to going concern and using the going concern basis of accounting unless management either intends
▪▪ Ms. Tea Chansotheary, Member
to liquidate the Company or to cease operations, or has no realistic alternative; and
▪▪ Mr. Fong Kim Choy, Member
(v) control and direct effectively the Company in all material decisions affecting the operations and
▪▪ Mr. Anthony Nash, Member performance and ascertain that such have been properly reflected in the financial statements.
▪▪ Mr. Lim Hua Min, Member

68 Annual Report 2017 Annual Report 2017 69


The Board of Directors confirms that they have complied with the above requirements in preparing the financial
statements.
Approval of the financial statements
I, the undersigned, on behalf of the Board of Directors, hereby approve the accompanying financial statements
which comprise the balance sheet as at 31 December 2017, and the related income statement, statements of
changes in equity and cash flows for the year then ended, and notes as set out on pages 9 to 59 which, in our
opinion, present fairly, in all material respects, in accordance with Cambodian Accounting Standards and the
guidelines of the National Bank of Cambodia relating to the preparation and presentation of financial statements.
On behalf of the Board of Directors
70 Annual Report 2017
Report of the Independent Auditors
to the Shareholders
Principal Activity
We have audited the financial statements of KREDIT Microfinance Institution Plc.​ (“the Company”), which
comprise the balance sheet as at 31 December 2017, the income statement, the statements of changes in equity
and statement of cash flows for the year then ended and notes, comprising significant accounting policies and
other explanatory information as set out on pages 9 to 59.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position
of the Company as at 31 December 2017, and its financial performance and its cash flows for the year then ended
in accordance with Cambodian Accounting Standards and guidelines of the National Bank of Cambodia relating
to the preparation and presentation of financial statements.
Basis for Opinion
We conducted our audit in accordance with Cambodian International Standards on Auditing (“CISAs”). Our
responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in Cambodia, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Other Matter
The financial statements of the Company as at and for the year ended 31 December 2016 were audited by
another auditor who expressed an unmodified opinion on those statements on 20 April 2017.
Other Information
Management is responsible for the other information. The other information obtained at the date of this auditors’
report is the information included in the Report of the Board of Directors as set out on pages 1 to 5, and the annual
report, which is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditors’ report,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
Annual Report 2017 71
 with Cambodian Accounting Standards and the guidelines of the National Bank of Cambodia relating to the
preparation and presentation of financial statements, and for such internal control as management determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
We communicate with those charged with governance 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.
For KPMG Cambodia Ltd

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our
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 these financial statements.

As part of an audit in accordance with CISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery,
intentional omissions, misrepresentations, or the override of internal control.

• 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 Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However,
future events or conditions may cause the Company to cease to continue as a going concern.

72 Annual Report 2017 Annual Report 2017 73

 Balance Sheet Income Statement

As at 31 December 2017 For the year ended 31 December 2017

Note US$ KHR’000 US$ KHR’000 Note US$ KHR’000 US$ KHR’000
(Note 4) (Note 4) (Note 4) (Note 4)
ASSETS
Interest income 20 32,925,996 132,922,246 30,965,050 125,005,907
Cash on hand 5 7,286,765 29,416,670 5,254,257 21,211,436 Interest expenses 21 (12,124,770) (48,947,696) (10,574,872) (42,690,758)
Balance with the
National Bank of Cambodia 6 12,829,363 51,792,138 9,623,116 38,848,519 Net interest income 20,801,226 83,974,550 20,390,178 82,315,149
Balance with other banks 7 5,223,301 21,086,466 13,372,445 53,984,560
Loans to customers 8 188,659,327 761,617,703 140,733,565 568,141,402 Fee and commission income 22 1,370,983 5,534,658 206,308 832,865
Other assets 9 3,808,778 15,376,037 3,154,222 12,733,593 Fee and commission expense (235,864) (952,183) (220,823) (891,462)
Property and equipment 10 1,913,274 7,723,887 2,367,758 9,558,639
Intangible assets 11 732,149 2,955,686 844,576 3,409,553 Net fee and commission income 1,135,119 4,582,475 (14,515) (58,597)
Investment in Credit Bureau
(Cambodia) Co., Ltd. 17,500 70,648 17,500 70,648 Other income 23 605,375 2,443,899 307,141 1,239,928
Deferred tax assets 17(a) 552,404 2,230,055 - -
Total net operating income 22,541,720 91,000,924 20,682,804 83,496,480
TOTAL ASSETS 221,022,861 892,269,290 175,367,439 707,958,350
Personnel expenses 24 (10,843,436) (43,774,951) (10,902,980) (44,015,330)
LIABILITIES AND EQUITY Depreciation and amortisation 25 (1,009,832) (4,076,692) (946,903) (3,822,647)
Liabilities Other operating expenses 26 (4,957,684) (20,014,170) (4,805,459) (19,399,638)

Deposits from customers 12 97,024,955 391,689,743 68,799,548 277,743,775 (16,810,952) (67,865,813) (16,655,342) (67,237,615)
Borrowings 13 83,971,719 338,993,830 74,509,512 300,794,900
Deferred income 14 2,477,683 10,002,406 288,612 1,165,126 Grant income 27 302,016 1,219,238 260,135 1,050,165
Deferred grants 15 48,930 197,530 56,462 227,936
Other liabilities 16 6,034,620 24,361,761 4,798,271 19,370,620 Profit before allowance for
Current income tax liabilities 17(b) 1,299,371 5,245,562 592,777 2,393,041 bad and doubtful loans 6,032,784 24,354,349 4,287,597 17,309,030
Deferred tax liabilities 17(a) - - 128,378 518,262
Allowance for bad and
Total liabilities 190,857,278 770,490,832 149,173,560 602,213,660
doubtful loans 8 (1,046,488) (4,224,672) (1,382,678) (5,581,871)
Equity
Profit before income tax 4,986,296 20,129,677 2,904,919 11,727,159
Share capital 18 18,395,200 74,261,422 5,869,054 23,693,371
Share premium 18 - - 2,811,431 11,349,747 Income tax expense 17(c) (918,696) (3,708,776) (887,857) (3,584,279)
Donated capital - - 95,896 387,132
Subordinated debts 19 - - 3,000,000 12,111,000 Net profit for the year 4,067,600 16,420,901 2,017,062 8,142,880
Reserves 2,575,030 10,395,396 2,228,337 8,995,797
Retained earnings 9,195,353 37,121,640 12,189,161 49,207,643

Total equity 30,165,583 121,778,458 26,193,879 105,744,690

TOTAL LIABILITIES AND EQUITY 221,022,861 892,269,290 175,367,439 707,958,350

74 Annual Report 2017 Annual Report 2017 75

 Statement of Cash Flows

(1,099,004)

(95,896)

121,778,458
2,017,062

26,193,879
105,744,689
25,275,821

30,165,583
26,193,879

4,067,600
-
Total
US$
For the year ended 31 December 2017
Statement of Changes in Equity

(346,696)

(7,061,408)
10,518,795

2,017,062

12,189,161
49,207,643

37,121,640
9,195,353
12,189,161

-
-

4,067,600
Retained
earnings
US$ US$ KHR’000 US$ KHR’000
(Note 4) (Note 4)
1,881,641 Cash flows from operating activities
346,696

346,693
2,228,337
8,995,796

10,395,396
2,575,030
2,228,337

-
-

-
Reserves
US$
For the year ended 31 December 2017

Profit before income tax 4,986,296 20,129,677 2,904,919 11,727,159

Adjustments:
Depreciation and amortisation 1,009,832 4,076,692 946,903 3,822,647
Allowance for bad and doubtful loans 1,046,488 4,224,672 1,382,678 5,581,871
Subordinated

(3,000,000)
3,000,000
12,111,000
3,000,000

3,000,000

-
-
-
-

-
-
Grant income (302,016) (1,219,239) (260,135) (1,050,165)
debts
US$

Gain on disposals of
property and equipment (5,532) (22,333) (4,405) (17,783)
Property and equipment written off 1,914 7,728 390 1,574
Pension fund obligations 482,290 1,947,005 592,273 2,391,006
(95,896) Net interest income (20,801,226) (83,974,550) (20,390,178) (82,315,149)
(1,099,004)

95,896
387,132
1,194,900

95,896

-
-
-

-
-
Donated
capital
US$

(13,581,954) (54,830,348) (14,827,555) (59,858,840)

Changes in:
Balances with the Central bank (3,516,997) (14,198,117) (1,247,032) (5,034,268)
Loans to customers (46,783,452) (188,864,796) (14,326,546) (57,836,266)
Other assets (505,111) (2,039,133) (243,457) (982,836)
(4,890,085)
2,811,431
11,349,747
2,811,431

2,811,431

2,078,654

-
-
-
-

-
-
premium
Share

Deposits from customers 28,225,407 113,945,968 14,561,492 58,784,743

US$

Other liabilities 446,925 1,804,236 689,791 2,784,685

Cash used in operations (35,715,182) (144,182,190) (15,393,307) (62,142,782)

Income tax paid (892,884) (3,604,572) (706,005) (2,850,142)
Grant received 294,484 1,188,832 192,754 778,148
5,869,054
23,693,371
5,869,054

5,869,054

74,261,422
921,346

18,395,200
4,890,085
-
-

6,714,715
-

Pension fund paid (482,290) (1,947,005) (9,727) (39,268)

capital
Share

US$

Interest received 32,776,825 132,320,043 30,791,041 124,303,433

Interest paid (11,431,242) (46,147,924) (9,844,795) (39,743,437)
Transfer from share premium to share capital

Net cash (used in)/ generated from

operating activities (15,450,289) (62,372,816) 5,029,961 20,305,952
As at 31 December 2016 (Restated)

Cash flows from investing activities

to share capital and reserves
Net profit for the year (Restated)

Purchase of property and equipment (438,249) (1,769,211) (753,188) (3,040,620)

Transfer from retained earnings
(KHR’000 equivalents - Note 4)

(KHR’000 equivalents - Note 4)

At 1 January 2016 (Restated)

Purchase of intangible assets (11,865) (47,900) (40,022) (161,569)

Proceeds from disposals, of
As at 31 December 2017

property and equipment 10,811 43,644 5,780 23,334

Net profit for the year

Fixed deposit with other banks (17,642) (71,222) - -

At 1 January 2017

Net cash used in investing activities (456,945) (1,844,689) (787,430) (3,178,855)

Transfers
Transfers

76 Annual Report 2017 Annual Report 2017 77

 US$ KHR’000 US$ KHR’000
(Note 4) (Note 4)
Cash flows from financing activities
Proceeds from borrowings 48,924,045 197,506,369 26,467,309 106,848,526
Repayments of borrowings (39,461,839) (159,307,445) (18,922,825) (76,391,445)

Net cash generated

from financing activities 9,462,206 38,198,924 7,544,484 30,457,081

Net increase in
cash and cash equivalents (6,445,028) (26,018,579) 11,787,015 47,584,178
Cash and cash equivalents
at the beginning of the year 22,230,018 89,742,583 10,443,003 42,294,163
Currency translation differences - - - (135,758)

Cash and cash equivalents

at the end of the year (Note 29) 15,784,990 63,724,004 22,230,018 89,742,583

Significant non-cash transactions

2017 2016
US$ KHR’000 US$ KHR’000
(Note 4) (Note 4)

Conversion from subordinated debt to

share capital and share premium 3,000,000 12,111,000 - -
Conversion of donated capital to other
liabilities 95,896 387,132 - -
Conversion from share
premium to share capital 4,890,085 19,741,273 - -
Conversion from retained earnings
to share capital and reserve 7,061,408 28,506,904 - -

Note: If you need the full exretnal audit report of KREDIT, Please visit: www.kredit.com.kh

78 Annual Report 2017 Annual Report 2017 79