First Finance 4

About the issuer         

General information

• Borrower                                           First Finance Plc
• Country                                             Cambodia
• Head office                                       Phnom Penh, Cambodia
• Website                                            https://www.firstfinance.biz/
• Date of incorporation                        26th June 2008

Project terms

• Amount:                                            EUR 100,000
• Maturity:                                           48 months, semi-annually and linearly amortizing                  
• Interest rate:                                     4% p.a.
• # of employees:                                123

Documentation

Information document of the issuer (NL)

Information note of the issuer (BE)

Summary

First Finance (“FF”) is a Cambodia-based mortgage provider for low- and middle-income borrowers. FF operates under a non-deposit taking microfinance license from the National Bank of Cambodia (NBC). The company is owned by several national and international (impact) investors, among which Norfund and Insitor. Amongst its lenders are Oikocredit, Symbiotics, BlueOrchard and Triple Jump.

First Finance’s mission is to build economic stability of low-income Cambodian families by increasing access to home ownership. The company positions itself as “housing solutions partner”, not only providing finance but also providing legal advice, construction planning, and home purchase decision-making services.

First Finance focuses on low- and middle-income salaried employees or self-employed business owners. Its customers are predominantly employed as office or factory workers and civil servants.

The company is active in 85 (out of 165) districts and in 17 provinces (out of 25), through 9 branches, mostly in urban areas. First Finance reaches its clients through referral programs, direct marketing campaigns, public workshops on financing a home, partnerships and online media. First Finance also manages a call-center to provide consultation on property issues to existing and new clients.

The main products of the company are:

-        (First) home loans (mortgages)

-        Home improvement loans (loans for constucting a house on existsing land or to renovate an existing house)

-        Residential Land loans (loans for the purcahse of land for residential purpsose)

-        Home equity loans (loans for consumptive or productive use based on the value of an existing home)

Use of Proceeds

With a loan of EUR 100,000 First Finance will be able to finance 6 families in the Posenchey area (west of Phnom Penh) to either purchase land for residential purposes and/or renovating their existing houses. On average, residential land loan might be EUR 12,000 equivalent while home improvement loan is on average EUR 8,500. Both products can be offered for up to 20 years, though average loan tenor is 10 years.

Mission

The company’s mission is to build the economic stability of low-income Cambodian families by increasing access to home ownership through the provision of finance.

Vision

To help low-middle income families in Cambodia to live in dignity, security, happiness, and stability through home ownership.

Impact

First Finance expects to impact clients as below:

• Members of 6 families (average household size of 4 members) can directly benefit from the project as they can now have access to better shelter.
• Indirect impact includes community members (ie, contractor) can also benefits from the home renovation/improvement by the clients.
• With better shelter, the children can also have stable access to education as they do not have to worry about their constant moving of their shelter.

COVID-19 Update

The Cambodian Government’s rapid response to the Covid-19 crisis has contributed to a relatively low exposure of its citizens to the virus. Cambodia has 273 confirmed cases and no deaths as of August 14. However, the Cambodian economy is hurt by the Government restrictions implemented. After two decades of strong performance, Cambodia’s economic growth is expected to drop to 2.3% in 2020. Cambodia’s economy is expected to rebound to 5.7% in 2021, assuming that the pandemic ends and economic activity normalizes. The sectors hardest hit are tourism, garment making, construction and transport.

Naturally, First Finance’s business is also hurt by the economic downturn. Fortunately, the company’s exposure to the four industries which are impacted the most, is limited to approximately 18.2% of the total portfolio outstanding. The company has taken various measures to deal with the situation, including necessary health & safety measures for its staff. From a business point of view measures include less disbursements of new loans and a stricter acceptance policy for new customers. The company has also updated its 2020 budget with realistic assumptions for growth and portfolio quality.

So far,

• about 23% of First Finance customers have requested to restructure their loans and the company has agreed to restructuring for about 14% of the portfolio outstanding.
• Portfolio at risk (30 days) has risen to 3.4% from 2.2% prior to the crisis
• Liquidity is good given that collection rates are still above 95% and that prepayment have not completely dried up
• As of early June First Finance transitions back to “business as usual” including working from the office again

Additional information on COMPANY:

Management team:

Sothany Chun - Chief Executive Officer

Sothany spent her last 14 years in financial sector, mainly targeitng low income people. Her experiences include Financial management, Markeitng, Communciation, Sale strategy and Operations. Sothany has a Bachelor’s Degree in Management - Accounting, and a Master’s in Organizational Development - MFI Management.

Sakada Heng - Head of Credit

Mr. Sakada Heng is the longest standing First Finance team member, starting as the Credit Admin Officer in 2009 Sakada progressed through a number of roles, to become head of Credit in 2019. Sakada has completed two Bachelor’s degrees, one in Accounting/Finance and one in French language. He completed a Master’s in Risk Management - Insurance, Finance and Banking.

Bunhieng Chheng - Head of Sales

Mr Bunhieng Chheng has full range of experiences in microfinance operations as he worked his way up to current role from the most junior role in the MFI during the last 15 years. He holds bachelor degree in Accounting and Finance.

Voleak Veth - Head of Finance

Ms. Voleak Veth has over nine years of experience in accounting and finance. Voleak has worked in accounting, insurance and the general business. She joined First Finance in 2012. Voleak has completed a Bachelor’s degree in Finance and Banking, a Master’s in Business Administration and is currently pursuing her ACCA qualification.

Vandy Saing - Head of Marketing

Mr. Vandy Saing has over 13 year experiences in micro-finance institution including marketing communication, branding, and product development. He obtained his Bachelor’s Degree in Management Information System from the National University of Management in 2002.

Sineth Chrek - Head of IT

Mr. Sineth Chrek has more than 11 years of experience in infrastructure design and implementation, IT security implementation, MIS administration, IT strategy and project implementation in the field of microfinance and banking. He earned a Bachelor’s Degree in Information Technology from a university in Phnom Penh.

Namkea Hour - Head of Internal Audit

Mr Namkea Hour has more than 10 years experiences in audit including internal audit in manufacturing company and financial institution and being an auditor of the audit firm. He is a Bachelor holder in Finance and Banking and is currently pursuing a professional qualification as Certified Internal Auditor at Institute of Internal Audit (IIA).

Mengse Sean - Head of HR & Admin

Mr. Mengse Sean has had a dynamic career, filled with professional advancement. His areas of expertise include Learning & Development and Human Resources management, including recruitment, HR policy development, personnel admin and compensation and benefits. He holds a master degree in Management.

Highlights or Awards:      

• In 2012, First Finance won an ASEAN Business Award in the category of Growth (for SMEs).
• In 2017, FF was selected as semi-finalist for the European Microfinance Award. The theme of the award is Microfinance for housing.