Having experienced a solid start in both business and consumer banking in its first year of operations in Cambodia, Hong Leong Bank is planning to expand and capitalise on the emerging economy in Cambodia.

With another four branches opening up by January 2015, and with a strong growth outlook for the next three to five years, the Malaysia-based bank is planning to become one of the heavyweights in the Cambodian market. Hong Leong’s CEO, Joe Farrugia, sat down with the Post to discuss the bank’s place within the industry.

In its short time of operation, the bank already has over 1,000 customers. Farrguia says, “Like all start-up banks, we are still covering set-up costs whilst generating sound revenue returns. We are here for the long-term and will continually develop.”

With total assets amounting to almost $90 million, the bank is well placed to take advantage of the emerging market and the growing consumer class in the Kingdom.

Farrugia sees a burgeoning middle class that has been growing with considerable speed over the past 10 years, creating an increasing number of consumers. As the middle class in Cambodia grows, so too will the number of small- and medium-size enterprises (SMEs), precipitated by the rise of entrepreneurs, the target market for Hong Leong.

“We strive to become Cambodia’s SME bank through a specialist sales approach focusing in key industries, as well as introducing a strong high-tech retail network,” Farrugia said.

He sees the banking industry booming over the next few years due to the aforementioned growth of SMEs, fuelled also by a new generation of young people who are already seeking greater independence in their lives.

“More than 70 per cent of Cambodians are under the age of 35” and “with the growing middle class, rapid urbanisation and changing of lifestyles – we are starting to see many young Cambodians now wanting a level of independence, hence looking for their own home”, he explained, adding that the bank has a healthy home loan book due to this class materialisation.

As the consumer and entrepreneurial generation grows, so too does the number of successful businessowners who require banking services.

Farrugia says that while Hong Leong provides a full set of business and corporate loan facilities, the majority of their financing is in the SME and commercial segment, which is typically in the range of $100,000 to $5 million.

Focusing on providing local businesses with the necessary financial tools to build success has paid dividends. “We have performed very well in both SME loans and housing loans and have seen steady growth in customer deposits,” he said.

These local businesses are the “backbone of the Cambodian economy”. However, the bank also sees further growth occurring in other sectors too, particularly around construction and general infrastructure in the Kingdom.

Farrugia has been working in Cambodia for the past eight years, and says he has seen considerable trust develop between banks and consumers. Consumers now see banks as a “safe place to keep their money and as a partner to support and realise their business and personal goals”.

With the banking sector proliferating, and competition in the market increasing (37 commercial banks) and becoming more competitive, banks such as Hong Leong will need to offer more technological services such as online electronic services and internet banking, which they plan to roll out in the first quarter of 2015 followed by mobile phone banking.

As the “economy continues to evolve, we will certainly explore the opportunity to introduce structured-type products into the Cambodian market”, he says. “Over the next two months, we will have five branches equipped with the latest technology.”

In a further effort to reach the wider market in the Kingdom, Hong Leong will be expanding into the provinces in the bank’s next growth phase of growth in about 12 months from now.