First Finance – a new Beginning
I would like to start my note in this Annual Report by congratulating and thanking the management team and owners of First Finance who took over the reins two and half years ago. During 2024 the team continued to invest much effort and time to further enhance the operations, to grow the portfolio and number of clients, to raise debt funds, to create many new jobs, to expand the branch network and to gain better control over the credit and business risks.
Having laid a new foundation for a much larger and more successful First Finance comes at a time that the company is in its 15th year of operation. Therefore, the Board and Management are very happy that at a time of this success we are celebrating our 15th Anniversary.
Strong performance in 2024
The 2024 results show a portfolio of US$ 90 Mn to over 9,000 clients, a growth of nearly 15% from 2023, which is modest compared to previous years but still significant considering the current economic climate and compared to many of its peers. The company’s net profit reached US$ 1 Mn, resulting in a Return on Assets of more than 1% and a Return of Equity of more than 6%, much of an improvement from the previous years. This strong result will ensure that First Finance is steadily increasing its scale and continue to have a social impact to the welfare of our clients, nearly half of them with an income of less than US$300 per month and about 90% of them are female borrowers. No doubt that First Finance has a significant impact to the Cambodian affordable housing sector as a whole.
Embedded environment social governance (ESG) focus
First Finance will continue to focus on achieving ESG objectives and will closely monitor those efforts by having delegated that task to a newly established Sustainability Steering Committee. This committee will oversee the definition of specific KPIs related to ESG objectives, as well as the introduction of several evaluation and monitoring tools that will lead to a significant impact on reaching these objectives. The Board wholeheartedly supports this initiative because it is very important that also First Finance contributes to a reduction of its own GHG emission, as well as that of its clients.
The recognition of our efforts with the Stakeholder-Verified Orange Seal reflects our commitment to gender equality and environmental sustainability.
→ find out more about orange seal at www.orangemovement.global
Increasing market need for affordable housing finance
Despite the apparent wealth of a large segment of people in Phnom Penh and in some of the other larger cities, there are still many families having to live of a low income in those cities and in the rural areas. There is still a clear need to avail loans with a relatively small monthly instalment to those families that wish to build or buy a low-cost house. Considering this widening wealth gap and a steep increase in land prices, the need to support families that require affordable housing has become even more relevant and necessary. There are several affordable housing initiatives have been launched by private sector groups in Phnom Penh and other locations, as well as some measures by The Ministry of Economy and Finance (through tax incentives) to promote home ownership in the affordable segment. This shows that this segment of the housing sector is enjoying more focus, that it is growing and that there is still a meaningful role for First Finance to play in the affordable housing market. First Finance therefore will stay true to its mission to build the economic stability of low-income Cambodian families by increasing access to home ownership through the provision of finance.
Positive outlook 2025
Thanks to these private sector and government initiatives and considering the expected 5-6% growth rate of the economy, the outlook for 2025 seems promising. However, the actual market situation is challenged by a reduction of income for many families leading to a reduction of disposable income across social segments. At the company level there are also some challenges, such as expensive funding, higher credit risk cost, increased competition from larger financial institutions and a stagnating real-estate sector. Going forward, during 2025, First Finance’s portfolio growth will still be significant and higher than many of its peers but modest compared to the previous years. To limit the impact from these challenges it is therefore important that First Finance will continue to focus on improving risk assessment, on reducing the operating cost, on renewing its CPP “Gold” certification, on capacity building and on geographic expansion.
At the start of this special year, during which we will celebrate a milestone anniversary of 15 years, I would like to thank our client-families, our funding partners and the government for their continuing support and to wish the First Finance team a successful 2025!
