Cambodia’s Advanced Bank of Asia (ABA Bank) has received government regulatory approval to receive an investment of US$220 million from its parent Montreal-based National Bank of Canada, boosting the subsidiary’s equity to US$2.2 billion.

The new funding, ABA Bank says, will be used to accelerate its technology investments, enhance its digital banking and support small and medium-sized enterprises (SMEs), which form the backbone of Cambodia’s economy.

ABA Bank dominates Cambodia’s exploding market for quick response (QR) payments and has more than four million customers out of the country’s population of 17 million, with 3.8 million using its mobile application.

The bank’s net income, according to its Canadian parent, grew 1% from a year earlier to C$343 million (US$252.6 million) in the 12 months to October last year. 

Revenues grew 9% to C$726 million in the same period, it notes, “partly offset by higher interest rates on deposits and lower interest rates on loans given a competitive environment in Cambodia”.

And the bank’s provisions for credit losses rose 3% to C$32 million reflecting “higher provisions for credit losses on non-impaired loans, partly offset by lower provisions for credit losses on impaired loans”.

The announcement of the capital injection comes six months after National Bank of Canada issued a statement saying it was “currently not engaged in any process or negotiations for the sale of ABA Bank … nor has it hired any advisers.”

National Bank of Canada was previously reported to be considering the sale of a minority or majority stake in ABA Bank, or even a full exit – as Australia and New Zealand Banking Group did in 2018 when it withdrew from Cambodia’s ANZ Royal Bank, selling its 55% stake to J Trust, a Japanese corporate management group.

The Canadian bank was reported in March to have valued its ABA Bank subsidiary at more than US$2 billion. The subsidiary, established in 1996, is a leading bank in Cambodia with average assets of C$23 billion in 2023 – up 22% from a year earlier. National Bank of Canada has been a shareholder since 2014.

”This capital infusion is a clear example of the foreign direct investment in the economy thanks to the continuous trust of our shareholders,” says Askhat Azhikhanov, ABA Bank’s chief executive officer. “The additional capital enables us to continue providing loans to SMEs, keep investing in cutting-edge technologies, and deliver exceptional financial services while contributing to Cambodia's economic progress.”