ABA Bank retains 'B+' credit rating from S&P despite Covid-19 challenges
ABA Bank, the leading Cambodian bank and subsidiary of National Bank of Canada, announces that Standard & Poor's Global Ratings Agency (S&P) on December 7 reaffirmed its long-term issuer rating on ABA at 'B+' with Stable outlook.
The Stable outlook reflects S&P's view that the Bank will sustainably manage rapid loan and deposit growth as the country emerges from the Covid-19 pandemic. The researchers believe that ABA's digital platforms are a competitive advantage that supports loan and deposit expansion. Compared with domestic peers, the bank also employs more sophisticated risk management systems, including cash flow analysis, to support its credit decisions.
Based on the report from S&P, ABA's franchise is strengthening, underpinned by substantial growth in its market share in terms of loans and deposits, physical and digital distribution network, and customer base. Combined with good operating efficiency, these factors support its superior profitability. S&P experts also view management as having the skills, capabilities, and flexibility to navigate volatile operating conditions amid the pandemic and believe the oversight provided by the National Bank of Canada, both in ABA's board and group audits, supports risk-based decision-making at ABA.
The research from S&P mentions the stable business position of ABA and its potential for further growth: "The Bank's large customer deposit base will likely continue to grow at least in line with loans, given its strong digital platforms. Our base case is that the Bank's business franchise trajectory, capitalization, risk profile, as well as funding and liquidity will remain broadly stable over the next 12-18 months."
Zhiger Atchabarov, Chief International Operations Officer at ABA Bank, commented, "International credit rating reflects an independent opinion about the Bank's creditworthiness and reliability. And the rating reaffirmation by S&P this year confirms the steadiness of our business strategy and adaptability to changes. Despite the Covid-related challenges, we were able to maintain the high quality of our assets, execute proper governance, and solidify our financial stability, preparing for further growth."
S&P assigned the credit rating on ABA Bank at 'B' in 2017. The rating was upgraded to 'B+' in 2019 based on the Bank's material and growing market share of loans and deposits, with above-average profitability.
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