Syndicated loans recommended
Banks should provide more syndicated loans to larger companies in place of bilateral loans to prevent the concentration of risk, said Boontuck Wungcharoen, chief executive officer of TMB Bank.
The uncertainty in the global economy could add risk to private firms, and syndicated loans could help financial houses reduce their exposure, he said.
"All banks ... should be strict on giving out large loans to guard against concentrated risk," he said.
Boontuck said there were a few blue-chip companies in Thailand that needed large amounts of funding. Financial houses should start to think about how they can manage the risk from financing such enterprises. Risk management is the foundation of the banking sector, he added.
Risk management and the prospects of the local economy were the key drivers of TMB's loan growth in the first eight months of this year. The bank now believes its loan growth will exceed the previous full-year forecast of 10 per cent.
Boontuck said the bank recorded 10 per cent loan growth during the first eight months thanks to the outstanding growth of capital loans.
He added that the bank had been more cautious on non-performing loans as well, with NPLs from net loan growth in the first eight months less than 0.1-0.2 per cent, reflecting careful management and the outlook of the Thai economy.
At present, TMB has NPLs worth Bt27 billion or 6 per cent of total outstanding loans, an improvement from Bt70 billion two years ago.
