Cambodia’s ACLEDA Bank to weather its covenant breaches: S&P

Funding is ‘strong’ thanks to its position as one of the country’s largest banks.

ACLEDA Bank should be able to weather its covenant breaches, according to S&P Global Ratings.

The Cambodian bank’s non-performing loan (NPL) ratios were not in line with a few debt covenants on some of its borrowings as of 30 June 2024.

However, ACLEDA’s reported NPL ratio of 5.7% is lower than the industry average. It also had fewer restructured loans related to the pandemic than the overall banking system, which reflects better underwriting standards and a diversified customer base, S&P said in a report.

“We believe the bank has sound financial strength relative to its peers,” S&P said. “We also believe it will weather this episode of covenant breaches with no major dent in its financial risk profile.”

ACLEDA Bank is expected to secure the necessary waivers from its lenders in order to deal with its covenant breaches.

The bank’s funding is strong, thanks to its status as one of the biggest and oldest banks in Cambodia, S&P said.

“ACLEDA has the largest branch network of all Cambodian banks. This boosts its ability to mobilize deposits and retain strong customer loyalty,” it said, adding that the bank also acts as the main bank for the Cambodian government's payroll requirements.