Soft-loan money pours into economy

SCB wastes no time with B6bn in stimulus

Siam Commercial Bank (SCB) has already extended 6 billion baht in soft loans to small and medium-sized enterprises (SMEs), suggesting that money from the government’s latest stimulus measure is rapidly entering the economic system.

The loan extensions have begun only a few weeks after the state-owned Government Savings Bank (GSB) started letting commercial banks draw down its sponsored 100-billion-baht fund for soft loans to re-lend to SMEs.

SCB’s 6 billion baht has gone to about 300 SMEs that will use the money for shortterm working capital and long-term investment, first executive vice-president Vipon Vorasowharid said.

The government’s soft-loan scheme is aimed at helping SMEs that have been battered by the economic slowdown and weak purchasing power by affording them better access to borrowing sources.

The loans are expected to boost domestic consumption and economic growth.

Other measures are a 100-billion-baht credit guarantee by the Thai Credit Guarantee Corporation (TCG), a two-year tax cut to 10%, a five-year tax exemption for SME start-ups and a 6-billion-baht venture capital fund.

Under the scheme, the GSB extends soft loans to commercial and other state-run banks at 0.1% interest, then they re-lend the money to SME operators at a 4% rate.

The state-backed bank recently forecast the entire 100 billion baht in loans would be taken out by year-end.

Mr Vipon said SCB planned to receive a total of 15 billion baht to extend in soft loans to its SME customers this year.

Investment in new factories, buying and improving machinery and easing tight liquidity are the main objectives of the soft loans, he said.

“The soft-loan scheme will help to boost SMEs’ confidence and encourage them to resume investment thanks partly to the attractive rate,” Mr Vipon said.

“They’ve been holding off from making any kind of investment decision, preferring to await a clearer economic picture.”

SCB extends the soft loans to clients with clear plans and readiness for expansion, he said.

The country’s third-largest commercial lender by assets has bumped up this year’s target for new SME lending by 20% to 120 billion baht after making 50 billion in new SME loans in the first half.

However, it has lowered next year’s new SME loan target from double-digit percentage growth to only 6-7%, Mr Vipon said without saying why.

SCB hopes to maintain SME non-performing loans (NPLs) at the current level of 4.8% for the rest of the year.

In the meantime, the small Land and Houses Bank (LH Bank) has revised down this year’s loan growth target to 15-18% from 20-25%.

Without the soft loan scheme, the bank’s loan growth would not even reach 15%, said Sutharntip Phisitbuntoon, senior executive vice-president for credit.

She said LH Bank expected to draw down 3 billion baht from the soft-loan fund.

Separately, the state-owned TCG said it had already granted credit guarantees for 2.03 billion baht worth of loans to 343 SMEs as of last Wednesday, chairman Yarnsak Manomaiphiboon said.

Applications for these loans opened on Sept 16, and the lenders are SCB, Kasikornbank, Thanachart Bank, TMB Bank, CIMB Thai Bank, Standard Chartered Bank (Thai) and the Thai Credit Retail Bank.

SCB shares closed Friday on the Stock Exchange of Thailand at 134 baht, up 50 satang, in trade worth 622 million baht.

LHBANK shares closed at 1.56 baht, unchanged, in trade worth 3.86 million baht.