"Quoted from Annual Report 2024"

Mr. Sok Voeun

Chief Executive Officer

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The microfinance sector demonstrated resilience and moderate growth in 2024. Despite global economic challenges, the sector expanded by 3.9%, driven by increased demand for financial inclusion, robust regulatory support, and advancements in digital finance.
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By the end of 2024, the gross loan portfolio of the microfinance sector was USD 5.3 billion, with 1.6 million loan accounts. Loans from microfinance institutions have been provided to key economic sectors including households (32.8%); agriculture (20.8%); trade and commerce (20.1%); service (11.8%); construction (6.7%); transportation (2.7%); manufacturing (2.7%); and others (2.4%). Meanwhile, microfinance institutions collected customers’ deposits, for a balance of USD 2.5 billion across roughly 2 million accounts. Overall, most microfinance institutions remain robust and resilient, continuing to strictly adhere to the laws and regulations, guidelines and measures issued by the central bank, according to the 2024 National Bank of Cambodia annual report.

LOLC Cambodia experienced resilience and progress in 2024. The company conducted its business operations with caution and used strong internal controls to maintain its loan portfolio quality.

Despite global economic uncertainties, LOLC achieved remarkable growth across our key performance areas.

LOLC’S MAIN ACHIEVEMENT IN 2024

LOAN PERFORMANCE
LOLC used a cautious approach to ensure its product quality and sustainability. In 2024, the gross loan portfolio increased to more than USD 1.3 billion, a growth of 6% compared to the end of 2023. LOLC serves more than 330,000 borrowers. The borrowers are made up of groups (37%) and individuals (63%). Around 64% of loans were provided to micro entrepreneurs (loan size ≤ USD 3,000), of which 80% were not required to provide real estate collateral. The micro loans accounted for just 20% of LOLC’s total gross loan portfolio with an average loan size of USD 1,000. The other 80% were provided to the small, medium and large sectors. More than 30% of LOLC’s loan portfolio was provided in local currency.

Loan Portfolio Quality
Maintaining the quality of our loan portfolio remained a top priority in 2024. While adapting to macroeconomic challenges, LOLC Cambodia has made itself ready for adverse situations and continued to expand its loan portfolio. The Board of Directors and the management team have collaborated closely to monitor credit risk management and internal controls by implementing the following measures:
 Loan assessment and evaluation conducted following cash flow base analysis;
 Different levels of authorities for loan review and loan approval;
 Policies, procedures and manuals and their implementation are frequently reviewed;
 System support for detecting and restricting the implementation of policies and procedures.
 Continuously strengthened post-disbursement credit monitoring through a variety of approaches;
 An integrate risk management culture throughout LOLC;
 A continuously strengthened credit quality assurance team that ensures the implementation of internal controls;
 An internal Audit Department that plays a crucial role in ensuring the application of robust internal controls;
 A credit quality-based incentive structure for financial sale advisors and other field personnel;
 A requirement that the Credit Bureau of Cambodia checks 100% of borrowers and co-borrowers before disbursement to supplement rigorous in-person loan evaluations (cash flow base assessment);
 Continuous training and retention efforts to strengthen staff capacity, enhance knowledge, and ensure proper implementation;
 Client Protection Principles implemented as a fundamental risk management practice;
 Continuous compliance with ABC/CMA lending guidelines regarding multiple loans and refinancing.

DEPOSIT PERFORMANCE
‌Our unwavering commitment to innovation, customer-centric solutions, and operational excellence has enabled us to expand our deposit balance to over USD 1.0 billion by the end of 2024, a growth of 11% compared to the end of 2023. The number of depositors increased to more than 530,000. The growth in deposit balances and accounts highlights LOLC’s reputation as a trusted microfinance institution. This success reflects its commitment to delivering exceptional customer service, ensuring client protection, and offering competitive, innovative deposit and loan products.
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‌ ‌DIGITAL BANKING
To support business development and cater to the transformative power of technology, LOLC keeps investing in digital banking services and has made significant strides in digital innovation. The upgrade of our core banking system and ongoing enhancements to our digital banking services have streamlined access to financial solutions, making them more convenient and inclusive for our clients. Furthermore, investments in data analytics and cybersecurity have reinforced our operational resilience and strengthened customer trust. These digital advancements position LOLC Cambodia well to thrive in an increasingly digital economy.

BANCASSURANCE
Through our bancassurance partnership with Serendib Microinsurance Plc., LOLC is committed to enhancing financial inclusion by expanding access to insurance services for clients and operational networks. This collaboration strengthens consumer protection by offering term life insurance designed to alleviate the financial burden on families in the unfortunate event of an accident and/or health issues leading to the death or permanent disability of a borrower and/or co-borrower. As of 2024, around 60% of LOLC’s clients have been protected with a term life insurance.

REGULATORY COMPLIANCE AND OPERATIONAL RESILIENCE
LOLC Cambodia remains fully compliant with all regulations and prudential ratios set by the National Bank of Cambodia. Our management and employees have demonstrated resilience and adaptability in navigating macroeconomic changes while maintaining strict adherence to all applicable laws and regulations.

SUSTAINABILITY MANAGEMENT
Sustainability lies at the core of our operations. In 2024, LOLC Cambodia took significant steps toward embedding environmental, social, and governance (ESG) principles into our strategy.

As of December 2024, about 79% of our loan clients lived in rural areas; around 70% of borrowers were female; 49% of borrowers were involved in agricultural work with no significant environmental risk exposure; around 2,400 clients had access to clean energy; 11,300 clients were using home improvement loans and housing loans; 5,900 clients were using WASH loans for better sanitation and clean water; and more than 530,000 clients had access to savings.

LOLC Cambodia strictly upholds the principles of responsible lending. It has been certified by the SMART campaign since 2015 and in February 2022 was awarded the Gold Level of Client Protection Certificate by Cerise and SPTF. In 2024, LOLC passed the Client Protection Certification review by Microfinanza, maintaining its gold level certification and certifying its adherence to high standards of client protection. LOLC was also awarded the sBB+ social rating, which indicates adequate social performance management, client protection systems and alignment to social missions. It was also awarded ᾳ Medium of institutional rating, which indicates a strong outlook for financial sustainability as well as strong and stable fundamentals. LOLC also participated in the United Nationals Global Compact (UNGC), which reflects LOLC’s commitment to sustainability by advancing sustainable development goals and responsible business practices. Also, LOLC Cambodia has aligned its strategies with the UNGC’s universal principles on human rights, labor, environment, and anti-corruption.

LOLC Cambodia supports Sustainable Development Goals (SDGs) and contributes to environmental and social protection solutions through key initiatives:
 LOLC Cambodia has put its efforts by embedding in the loan process the key points to address concerns on environmental, social, and governance, which the loan origination process involves ESG in decision-making.
 LOLC Cambodia has an exclusion list which prohibits the financing of activities with a negative impact on the environment and community. LOLC has robust measures in place to prevent loans from being granted for any excluded activities. All loans are assessed against the exclusion list and on environmental and social assessments by field staff before being reviewed and approved by supervisors/branch managers/credit committee members.
 LOLC Cambodia conducts environmental and social assessments for all loans.

• — For loans which are lower than USD 30,000, environmental and social risks are discussed with clients to improve awareness and offer guidance.
• — For Small and Medium Enterprise loans (SME) which are bigger than or equal to USD 30,000, a comprehensive assessment tool is fully integrated into the lending process. The detailed assessment is conducted to evaluate whether risks are low, medium or high, and to provide awareness and guidance to the client.
• — As an ongoing implementation, the progress of environmental and social assessment is monitored.

LOLC is committed to promoting financial education awareness among staff, clients, communities, youth, and public:
 In 2024, a total of 10,692 individuals participated in financial education awareness training, with 76% of participants (8,115) being female.
 LOLC has developed key financial education messages that can be found on its website and Facebook Page to enhance the financial literacy of its clients and the public.

Additionally, LOLC has allocated funds to support its Corporate Social Responsibility (CSR) initiatives through various community events, including the following:
 The company installed benches, planted trees, organized school activities, painted school fences, donated library books, and provided bins and solar lights to communities, schools, pagodas, and other public places.
 LOLC consistently supports its suppliers and other stakeholders who participate in social activities and promote environmental protection. LOLC is pleased to have received a letter of appreciation from supplier MG Pacific for our support of the “It Starts with You” project. This project primarily aims to reduce waste, contributing to better environmental preservation. This reflects LOLC’s commitment to promoting environmental protection by reducing plastic waste, mitigating climate change, and maintaining a good environment.
 LOLC actively contributes to the advancement of the education sector and supports community development. In 2024, the company provided educational materials, including notebooks and bags, to more than 3,500 students in 21 primary schools. In 2025, LOLC will continue providing educational materials to more students, with a focus on poor and remote areas.
 LOLC awarded computers to 48 students who achieved A grades in the 2024 high school diploma examination. These students are children of LOLC’s customers who actively engage with the company’s products and services. The program was created to celebrate the students’ hard work and commitment to their education. It also serves as a sincere gesture of appreciation to our valued customers for their ongoing trust and support of LOLC’s products and services.
 LOLC donated rice, fish sauce, soy sauce, and floor mats to the Battambang Orphanage Center to support the needs of the children there.
 The company contributed to social work by delivering anti-drug campaign leaflets and other promotional materials to the general secretariat of National Authority for Combating Drugs (NACD) to disseminate drug-related awareness to the publics.
 LOLC signed an agreement with Ecobatt-Energy Cambodia to collaborate in collecting electrical and electronic equipment waste to diminish adverse effects to the environment and human health.

STRATEGIC PRIORITIES FOR 2025

As we look to the future, our strategic priorities for 2025 focus on sustaining growth, enhancing innovation, and deepening our impact.

Advancing Financial Inclusion: We aim to expand our reach to underserved communities through innovative financial products, ensuring that everyone has access to essential financial services.

Digital Innovation: By leveraging cutting-edge technologies such as artificial intelligence and data analytics, we will enhance customer experiences and improve operational efficiencies.

Sustainability Leadership: Continuing our focus on green financing and ESG initiatives, we will prioritize projects that promote environmental conservation and sustainable economic activities.

Employee Empowerment: Investing in our people remains a top priority. We will continue providing training programs and initiatives to nurture a highly skilled, motivated, and diverse workforce.

Customer-Centric Growth: Through continuous engagement and tailored solutions, we will deepen relationships with our clients, addressing their evolving needs effectively.

Finally, I would like to express my sincere thanks to our shareholders, Board of Directors, and committee members for their leadership, support, and guidance throughout the year. I would also like to express my sincere gratitude to all LOLC staff who have worked hard and diligently, and have remained committed to working with integrity, ethics, professionalism and responsibility. Additionally, I would like to express my sincere thanks to all LOLC clients, investors and business partners for supporting LOLC and its achievements. To the Royal Government and the National Bank of Cambodia, I offer my sincerest gratitude — both for your support in 2024 and in anticipation of happy and prosperous years ahead.