TCRB sticks with organic growth to double
Focus remains the unbanked masses
Thai Credit Retail Bank (TCRB) wants to continue growing organically, aiming to almost double net profit in the next few years and more than double its asset size.
The bank is not ruling out mergers and acquisitions, but this is not a focus of its growth strategy, said chief executive Winyou Chaiyawan in an interview with the Bangkok Post.
Organic growth remains the bank’s key strategy to sustain growth of its microfinance and nanofinance business in the long run.
TCRB, a banking arm of Thai Life Insurance Group, the country’s leading life insurer, was incorporated in 2007 but struggled with net losses for the first five years. The bank’s business restructuring in 2012 shifted focus to unbanked lowincome earners, offering microfinance and nanofinance services, which has paid off as TCRB’s revenue has turned around.
Although TCRB is a small bank, it has expanded in terms of both asset size and earnings.
“Based on growth momentum over the past five years, we will see net profit reach 1 billion baht in the next few years, but our asset size will hit 100 billion further down the road, given small-ticket loans,” he said.
As of August, the bank’s total assets were 48.9 billion baht, and it aims for 700 million in net profit this year from 531 million last year. Over the past five years, the bank’s loan growth averaged 16% per year, with customer growth of 12%, and income growth of 158%.
TCRB started operating nanofinance in 2015.
The small bank has focused on two lower-income customer segments, the micro- and nanofinance client base. Microfinance credit lines average 2-3 million baht per borrower, while nanofinance is 50,00060,000 baht per borrower.
“These people are the country’s backbone but they’re unbanked because bank won’t offer them loans. There are a lot of people who are unqualified [for commercial bank loans],” said Mr Winyou.
“Around 60% of our new loan applicants are also loan shark borrowers, and some of them borrow to refinance underground loans. We don’t have exact data, but we hope that segment can leave the loan sharks.”
The majority of the bank’s customers spend money on necessities rather than items they want, he said.
Nanofinance can contribute to stronger economic fundamentals for the country and improve the quality of life for lowerincome earners.
“The improving economy and expected GDP growth of 4.4% this year has not trickled down to lower-income earners. We’re working closely with them and we do not feel the economic recovery,” said Mr Winyou.
“GDP growth isn’t the issue. The concern is income distribution, in which [the country] has not improved for some time. The gap between the rich and the poor is becoming wider.”
He said nanofinance has been slower to develop in Thailand than other Southeast Asian countries.
The ceiling interest rate for nanofinance is set at 36% per year in Thailand, lower than other loans at around 40%.
The bank’s managing director Roy Agustinus Gunara said risk management and know-your-customer are key to success in nanofinance. Given that they are unsecured loans, TCRB needs to care for its customers closely and know them thoroughly.
The bank’s lending branches are located near where customers work. Relation managers (RMs) visit and talk to clients daily to build up strong relations, and collect debt payments from customers on a weekly basis.
With this business model, operating costs are quite high, at around 50% of the bank’s total expenses. TCRB has developed a digital platform to cut down on operating costs, improve business efficiency, and control risks.
“We offer financial services on a digital platform and we will further improve our digital banking,” said Mr Gunara.
TCRB plans to increase RM numbers and lending branches in preparation for business expansion in the future. The bank’s total employees numbered 1,000 in 2014 and have risen to 2,300, of which 1,500 are RMs.
In 2019, the bank plans to raise employee numbers to more than 3,000 and increase branches to 500, up from 316.
Around 60% of the bank’s new loan applicants are also loan shark borrowers. WINYOU CHAIYAWAN Chief executive, Thai Credit Retail Bank