Smaller banks aim for firm loan growth

Small and mid-sized banks have set ambitious targets for growth of small- and medium-sized enterprise (SME) loans this year, in light of the economic recovery and decreasing bad loans in the business segment.

TMB Bank, the country’s seventh-largest lender by assets, aims for 10% growth in SME loans this year, in line with the bank’s total loan expansion of 8-10%.

The 10% target for SME loans is equal to 2016’s growth rate. TMB saw a flat rate in the segment last year.

The more broad-based economic recovery and stable non-performing loans (NPLs) encouraged TMB to set a more aggressive target for SME loan growth this year, said chief SME banking officer Tientip Narach, whose oversight includes businesses with yearly sales of up to 100 million baht.

TMB’s small SME loans amounted to 87.64 billion baht, representing 14% of the bank’s loans outstanding of 626 billion baht at the end of 2017.

Policymakers optimistically predict that the country’s GDP will grow at a faster pace than last year’s 3.9%.

The Finance Ministry’s Fiscal Policy Office forecasts the economy to grow by 4.2% this year, while the central bank is set to revise its current growth projection of 3.9% at the rate-setting committee’s next meeting on March 28.

SME supply chain is a key focus of TMB. But the bank will pay more attention to term loans this year to help customers lock in low long-term financial costs amid the upward trend in interest rates, Ms Tientip said.

CIMB Thai Bank (CIMBT) aims for highsingle-digit growth in its SME loan portfolio and double-digit growth in new loans this year, said Wareemon Niyomthai, head of the commercial banking group.

The bank will focus on small SMEs with annual sales of up to 400 million baht this year, Ms Wareemon said, as there is positive loan demand in the segment and the stronger economy will improve debt-servicing ability.

The aggressive loan growth target was set after the bank revamped its internal operations last year.

CIMBT revamped its SME loan analysis to strengthen risk management. Apart from financial data, the bank will consider customer behaviour using data analytics for loan approval.

“We would consider customers’ discipline related to business operations, such as on-time tax payment and other nonfinancial behaviours, under data analytics,” Ms Wareemon said. “The bank plans to launch an innovative loan analysis instrument using so-called psychometrics.”

CIMBT has measures to provide assistance to customers immediately in the event that they face business problems, she said.

TMB shares closed Friday on the Stock Exchange of Thailand at 2.76 baht, down two satang, in trade worth 499 million baht.

CIMBT shares closed Friday at 1.09 baht, up one satang, in trade worth 1.77 million baht.