Chairman & CEO Statement


Operating in Challenging Times

The last financial year has been a challenging one, with many regional economies experiencing slower growth, against a backdrop of heightened global geopolitical tensions in North Asia, South China Sea; and in the complex relationships among the four major countries – USA, China, Russia and Japan.

Markets were volatile, with central banks moving away from record low interest rate levels, and the world being rocked by momentous events such as Brexit and the divisive US Presidential election.

On the economic front, inward looking policies, such as populism, nationalism and trade protectionism are threatening the world economy and the established order of globalisation and free trade. Low oil prices have suppressed economic growth in many resource rich countries, whilst the war on terrorism and the related refugee problems added to economic uncertainties. In China, the new policy reforms are only expected to yield benefits over the longer term. There are also political and economic uncertainties ahead, with potential Party Congress changes in China and elections due in Germany; and closer to home, in Malaysia, Cambodia and Thailand too.

Going forward, the complexity of the situation makes potential economic outcomes that much harder to predict and plan for. Such events and macroeconomic outlook directly affect the financial services sector since governmental and regulatory rules and policies could change, impacting products and business segments in the countries we operate in. Meanwhile new growth trends such as the sharing economy, big data, analytics, digitalisation, machine learning, and artificial intelligence continue to disrupt business models in many sectors. Notwithstanding this, Fullerton Financial Holdings (“FFH”) is equipping itself to surmount the challenges.

Capitalising on Our Core Competencies

FFH has weathered these headwinds by harnessing our key competencies and knowledge which are embedded in our core businesses. We have continued to build robust corporate governance frameworks through strong independent boards and management teams within our operating companies.

At the core of our mission is the provision of financial and related services for the Mass Market and SME customer segments. We have developed unique business models that target these segments, as seen in our most recent greenfield operations in Cambodia and Myanmar, and the award winning SME business in Alliance Bank in Malaysia. Rather than resting on our laurels, we actively drive our operating companies to challenge themselves, and improve our products and services to our customers. We play an active role in the operations of our companies, allowing us to remain attuned to the market and business cycles, and continually adapting our business plans to strike an appropriate balance between risk and reward.

The business restructuring of Bank Danamon is a prime example, where the implementation of a new strategy to transform lending mix, drive cross-sells and manage funding costs has added enterprise value - demonstrated by improved operating and financial performance and higher share prices. At Fullerton India, the rapid adaptation to the banknote de-monetisation event in November through alternative payment channel has allowed us to ride through the transition.

A customer-centric approach, adapted to the markets we operate in applied across our branch networks and alternative channels, remains a key focus of our strategy. This is supported by robust operating processes and systems, risk management policies and procedures. As we grow our companies through the business cycles, we are constantly looking for innovative solutions to improve channel effectiveness and operational efficiency. At the same time, we will source for new investment opportunities to bolster our existing portfolio. In this respect, we will seek partners who are leaders in products and services, or technology and innovation, in the countries that they operate in.

Creating Impact through Transformative Technology

We believe the ideal way to achieve this while countering the current economic headwinds is through transformative technology. There has been a global rise in popularity of non-traditional payment and lending models that are conveniently enabled via smartphones, but there are still many rural regions in many countries, that do not have access to these services. We have been able to increase our customer reach by expanding our range of digital services and providing access in such rural and developing regions.

Our business in China, Fullerton Credit is amongst the first in the country to adopt and apply the social media and wallet platform WeChat, enabling our customers and staff to better engage with the company. Operating in such an intimate and connected ecosystem created great convenience for customers to apply for loans, enquire about their credit facilities, and repay their loans. Additionally, our use of big data analytics, merging customer and available third party data sources allowed us to understand our customers better, and hence better manage our risk exposure through the customer life cycle with world class capabilities. Today, Fullerton Credit is both a brick and mortar, as well as a digital lender, reflecting the changing lending landscape filled with new opportunities and revenue pools from new customer segments, not accessible in the past.

Fullerton India upgraded to the latest version of the rural loan management system ( to manage its expanding portfolio. This system provides end-to-end digitalisation of the rural business processes, including the issuance of eReceipts for collections through the “emcollec” app. To shorten response time for urban loan applications, a ‘smart’ lending model through the e-loans Portal and Instaloan application now enables automated forms and instant online credit approval.

Digitalisation has also been extended to frontier markets such as Myanmar, where Fullerton Myanmar pioneered the use of tablets and biometric devices with thumbprint recognition, and cloud computing. This enables the capturing of customer information quickly, without the need for form-filling. In the UAE, to enable customers to conduct financial transactions 24/7 anywhere, dunia launched QwikCash smartphone app for seamless funds transfer, bill payment and remittances.

In addition to leveraging technology at our portfolio entities, we are also investing resources into building a financial technology franchise within FFH. Through strategic partnerships, direct investments or joint ventures, we seek to develop FFH’s knowledge and capabilities in the core financial technology areas of digital lending, analytics, e-wallets, payments and remittances. We believe that this focus on transformative technology will add value to FFH and our portfolio entities.

Increasing our Footprint

FFH continued to steadily expand our footprint and reach in emerging and new frontier markets to provide greater financial access to the underbanked and underserved customer segments.

In China, Bank of China Fullerton is now the largest community banking group with close to 100 community banks and 80 sub-branches across 12 provinces. Reaching over one million customers, it continues to extend its reach in rural China through both organic growth and inorganic acquisitions. In India, Fullerton India continued its expansion of branches in urban and rural areas, and set up a new Housing Finance subsidiary to support the country’s objective of providing affordable housing to the masses.

In terms of frontier markets, Fullerton Myanmar has grown to become the country’s fifth largest microfinance institution. Since its launch in 2014, Fullerton Myanmar has gained a foothold in 12 townships, reaching over 60,000 customers in the rural communities – with plans to expand into 80 new townships within the next five years.

Similarly, Cambodia Post Bank has rapidly climbed the ranks to become the fifth largest banking network in Cambodia, and was recently awarded ‘The Outstanding Bank Growth Award’ by the International Data Group ASEAN. In just four years since launch, Cambodia Post Bank has managed to expand to 18 out of 25 provinces and enabled 60,000 businesses within the country. Recently, it is further broadening its customer base for micro-lending through the acquisition of Funan Microfinance.

Our ability to achieve accelerated growth has also been boosted through strategic partnerships with local banks and businesses, enabling us to provide faster, flexible, relevant and innovative solutions. FFH’s capability and experience, coupled with our partners’ local knowledge and network, have proven to be a successful formula in expanding and strengthening our franchise.

Embracing Sustainable Development

As we grow and transform, we are committed to ensuring that all our businesses are developed to ensure their long-term sustainability, keeping in view the Sustainable Development Goals adopted by the United Nations in 2015.

In particular, to address the goal of no poverty, we continue to focus on addressing the credit needs of the underserved customer segments, and greater financial inclusion, often the first step on the ladder out of poverty. For instance, in India, the primary services of Fullerton India include loans for rural livelihood advancement, rural home finance and financing of various rural micro enterprises. Not only does Fullerton India serve customers who are underbanked, over the years, it has created over 16,000 jobs in rural India. This has, in turn, had a remarkable impact on improving family income and enhanced living standards of over an estimated 48,000 family members. In Myanmar, a country transitioning from decades of military rule to civilian democracy, Fullerton Myanmar imparts credit and financial education to its customers.

Group loan borrowers undergo training to learn the basics of loans, the meaning of social guarantee, and the importance of timely repayments. The credit education program underpins Fullerton Myanmar’s ability to grow its business sustainably, as demonstrated by its healthy loan repayment rate of 99.98% since inception.

Our Competitive Advantage: Human Capital

In FFH, we believe that our people are the most essential asset to our business. We ensure that our team is diverse, comprising seasoned professionals who have in-depth expertise encompassing all functional areas of banking, business transformation, risk management, finance and operations.

To ensure that our people remain experts in their own field, we proactively provide continuous learning opportunities for our core teams through Experience, Exposure and Education. This year, we deployed our employees to Fullerton Myanmar on short-term assignments, to work with the local team as they faced the challenges of a rapidly changing environment, to conceptualise and implement new innovative products, as well as train and impart know-how to them. Career development opportunities are made available to employees through inter-entity “cross-pollination” assignments; for example, an employee from India has been posted as Chief Risk Officer in Cambodia.

Our HR team has played a proactive role in partnering our portfolio companies, to drive and implement strategic change management. For instance, they recently collaborated with Fullerton Credit’s leadership team, to review their manpower planning which resulted in the realignment and redeployment of their resources to support the growth of current and new lines of businesses. Together with the business process re-engineering, this allowed Fullerton Credit to deliver higher productivity.

Our strategic interventions for our portfolio companies can at times be the turning point for an entity at the crossroads. It is thus crucial that our employees make judgments and decisions that exhibit our core values: Ownership, Integrity, Passion, Collaboration and Innovative. We aim to build a culture of people who have these values ingrained as their shared DNA. This is paramount for the building of our franchise to ensure it is a sustainable business that has enduring success in impacting the lives of our customers in the region.

Looking Ahead

We are cautiously optimistic about the outlook for the medium and long term. Over the last 12 years, we have planted and secured a niche in the SME and mass markets segments in the emerging economies of Asia. We will capitalise on our combined competencies and learnings from such markets to evaluate investment opportunities for long term growth.

In order to build our franchise further, we remain focused on network expansion, product offerings and operational excellence to grow our businesses. Concurrently, we will forge new strategic partnerships to achieve scale or access transformative technologies, products and markets. These would include investment in, and collaboration with, digital innovators for cutting-edge technologies to create new marketing channels and improve operational efficiencies.

To this end, we are grateful to have the immense support of our board, shareholder, partners and regulators, and would like to acknowledge them all for their encouragement and dedication. We would also like to thank the management, staff and all our entities for their dedication and hard work, as well as our customers for their loyalty, trust and support of our businesses.

Ernest Wong

Gan Chee Yen