Lending to SMEs to slow in Q4: KBank
The flooding will slow growth in commercial lending to small and medium-sized enterprises (SMEs) in the current quarter, but many such businesses will require overdrafts (O/D) to stay afloat, according to Kasikorn Research Centre (KResearch).
SMEs need O/D loans to provide emergency liquidity for payroll and other purposes, the research house said.
The flooding is expected to see growth in lending to SMEs for the full year fall to 7 per cent, compared to 13.5 per cent in the first half.
However, demand for SME loans will be high after the flood waters subside as business operators seek funds to restore their operations. KResearch foresees affected SMEs requiring larger working-capital loans than normal because most lack business-interruption insurance.
Therefore, SMEs will require more capital than larger companies, with the former requiring estimated working capital of between Bt65 billion and Bt104 billion, the research unit said.
SMEs’ demand for new working capital from commercial banks in 2012 will account for not less than 1.7 per cent of expected of SME loans this year.About 1.56 million SMEs, or 54 per cent of the country’s total, have been affected by the floods, with the worst-hit sectors being wholesale/retail and auto maintenance, accounting for 49.4 per cent, followed by manufacturers at 17.9 per cent and property businesses at 8.8 per cent, KResearch said.
Pakorn Partanapat, executive vice-president of Kasikornbank (KBank), the largest loan provider to SMEs, said last week that 330 SME customers had sought financial assistance totalling Bt3 billion, most of them in the wholesale/retail, agriculture and construction-materials businesses.
The bank had previously estimated that about 14,000 flood-affected customers would seek loans, which KBank initially estimated would total Bt37 billion, Pakorn said.
The bank had been able to help many customers refinance, and so was not worried about an increase in non-performing loans, which should not exceed 3.7 per cent of total loans, he said.
While the bank had achieved its lending-growth target for the first nine months of 9 per cent, growth in loans to SMEs would suffer in the fourth quarter, he said. Outstanding loans at the end of this year are projected at Bt440 billion, up from Bt390 billion at the end of last year.
The bank is also considering new loans to help restore SMEs’ businesses after the floods have subsided. The amount of new loans will be finalised at the end of this month.
