National Bank announced an additional investment of USD 63 million (CAD 83.5 million) in the Cambodia-based ABA Bank (Advanced Bank of Asia Limited), increasing its stake to 100%. Founded in 1996, ABA Bank is one of Cambodia's leading financial institutions. It has assets of almost USD 4 billion (CAD 5.3 billion).
"National Bank is proud of ABA Bank's success. This financial institution is well established in its market, and plays a key role in the country's social and economic development," said Louis Vachon, President and Chief Executive Officer of National Bank. "ABA Bank is growing rapidly and contributes to making banking services even more accessible. Its business model, focused mainly on banking services for individuals and small businesses, has promising future prospects."
National Bank became a shareholder of ABA Bank in 2014 with an initial 10% interest. It made additional investments to bring its stake up to 42% in 2015 and to 90% in 2016. National Bank's investment in ABA Bank now totals USD 320 million (CAD 424 million).
Since National Bank's initial investment, ABA Bank has grown substantially and its market share has more than doubled. The number of employees jumped from 600 to more than 5,000; the number of branches from 12 to 70 and the number of clients from 60,000 to 600,000.
During the first nine months of fiscal 2019, the additional 10% stake acquired in ABA Bank would have increased National Bank’s diluted earnings per share by $0.03. In the fourth quarter of fiscal 2019, the transaction will have a negligible impact on common equity Tier 1 capital ratio according to Basel III.
Since 2014, the profitability on National Bank's investment in ABA Bank has increased more than tenfold and return on equity is approximately 30%.
At this point in time, National Bank is very pleased with its investments in Cambodia and is not seeking expansion in other countries. It therefore is keeping its moratorium in effect on any additional significant investments in emerging markets.
Caution Regarding Forward-Looking Statements
This press release includes certain forward-looking statements. These statements are inherently subject to significant risks, uncertainties and changes in circumstances, many of which are beyond the control of the Bank, including obtaining the necessary regulatory approvals, the risks associated with changes in general economic conditions, and changes made to guidelines on risk-weighted capital and their interpretation. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf. The forward-looking information contained in this press release is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes.
About National Bank of Canada
With $276 billion in assets as at July 31, 2019, National Bank of Canada , together with its subsidiaries, forms one of Canada's leading integrated financial groups. It has nearly 25,000 employees in knowledge-intensive positions and has been recognized numerous times as a top employer and for its commitment to diversity. Its securities are listed on the Toronto Stock Exchange (TSX: NA). Follow the Bank's activities at nbc.ca or via social media such as Facebook , LinkedIn and Twitter .