Bond Issuer Prasac’s 3Q Earnings Snagged by Higher Impairment Allowance

The MDI’s net profit dipped nearly 25 percent in the third quarter ended September 30, 2022, although net interest income demonstrated growth in the period
Prasac Microfinance Institution Plc in Phnom Penh, November 17, 2022. Kiripost/Siv Channa
Prasac Microfinance Institution Plc in Phnom Penh, November 17, 2022. Kiripost/Siv Channa

Listed bond issuer Prasac Microfinance Institution Plc recorded a 24.8 percent drop in net profit at $35.3 million in the third quarter ended September 30, 2022 (Q322) compared to $46.9 million in the corresponding period last year.

According to its filing with Cambodia Securities Exchange (CSX), higher impairment allowance, surging 853 percent year-on-year, and personnel expenses pulled down earnings in the reporting period.

Net interest income for the quarter was up 12.4 percent year-on-year at $88.1 million from $78.4 million, while revenue totalled $156.3 million as opposed to $136.4 million a year ago.

Interest income represented 96.6 percent of the total revenue, while 99.9 percent of the total interest income was generated from loans.

Compared to the same period, Prasac, a microfinance deposit-taking institution, said there was not much fluctuation in revenue by segment.

Return on average assets and return on average, equity dipped to 0.78 percent and 4.76 percent in Q322 from last year.

For the cumulative nine-month period ended September 30, 2022, net profit climbed 16.2 percent at $134.1 million against $115.4 million last year.

Net interest income and revenue rose 18.1 percent and 17.2 percent year-on-year to $258.5 million and $454.6 million, respectively.

As of September 30, 2022, total assets stood at $4.7 billion, increasing 9.6 percent from $4.3 billion as at end-December.

Prasac issued 1.27 million fixed rate bonds with a coupon rate of 7.5 percent on April 23, 2020 to raise 127 billion riel (approximately $30.5 million). The bonds have a three-year maturity period and are guaranteed by the Credit Guarantee and Investment Facility.

Prasac chairman, Jun Kwi Sang said the institution has demonstrated strong growth on all main parameters, including the total assets, deposits and loans, profit as well as financial technology.

He shared that the deposit balance increased to $2.8 billion and gross loan portfolio stood at $4.2 billion.

“The shareholder’s equity also reached $808 million. Registered capital was $400 million in the reporting period,” he added.

Due to its MDI status, Prasac focuses more on micro-, small- and medium enterprises, and plans to expand its business operations by taking advantage of a supply gap for banking services in Cambodia, particularly in rural areas, it said.