SCB foresees lower NPL ratio for SMEs

Siam Commercial Bank (SCB) expects its bad-loan ratio for small and medium-sized enterprises (SMEs) to marginally exceed this year’s target amid numerous uncertainties.

The non-performing loan (NPL) ratio for SMEs with annual sales of 75-100 million baht is estimated at 8.6%, a bit higher than the bank’s target of 8.3-8.5% this year, said senior executive vice-president Pikun Srimahunt.

The bank’s financial assistance launched for SMEs ravaged by the coronavirus outbreak and the sluggish economy will prevent NPLs from dramatically increasing their performance, she said.

“Without financial assistance measures, SME NPLs could spike,” Mrs Pikun said.

SCB, the country’s fourth-largest lender by total assets, yesterday introduced measures to help hoteliers and tourism-related businesses directly hit by the coronavirus outbreak.

The bank earlier implemented both financial and non-finance measures to ease the financial burden of SMEs affected by the economic doldrums.

SCB is offering a six-month grace period for principal loan payment to SMEs and will extend the grace period to 12 months if the situation is prolonged.

SMEs are also provided non-financial assistance through SCB’s travel events and business matching.

The latest measures to help the tourism industry are rolling out in three phases, the first focusing on hotels. SCB lends to about 300 hotels with annual sales of 75-100 million baht, with a total loan portfolio of 13 billion baht. All of them are feeling the pinch from the outbreak.

“We’ve provided a six-month grace period for loan principal repayment to 70% of our total hotel clients,” Mrs Pikun said. “Their combined credit line amounts to 10 billion baht. The bank is ready to extend the grace period to 12 months if needed. This proactive measure will contain the bad debt of the business segment this year.”

In the second phase, the measures will expand to tourism-related operators like restaurants, souvenir shops, tours and the transport business, she said, adding that the third phase will cover other industries.

Mrs Pikun said most of these customers want financial assistance to ease their financial burden, rather than an additional credit line.

SCB has extended new SME loans worth 6-7 billion baht since the start of 2020.

The bank’s new SME loan growth is targeted at 50 billion baht this year, down from 58 billion baht in 2019. SCB also expects the total SME loan portfolio to fall by 1-2% this year from 260 billion baht at the end of 2019.

SCB shares closed yesterday on the Stock Exchange of Thailand at 93.75 baht, up 50 satang, in trade worth 1.32 billion baht.

‘‘ This proactive measure will contain the bad debt of the business segment this year.

PIKUN SRIMAHUNT Senior executive vice-president, SCB