Amid risks, Tisco Bank to focus on loan asset quality
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Tisco Bank will place importance on loan asset quality to maintain its interest spread as it deals with risks both from the flood aftermath and renewed global economic crisis this year.
Suthas Ruangmanamongkol, president of Tisco Bank, said it would be more cautious with lending to guard against non-performing loans, adding that internal and external factors were forcing the banking sector to focus on risk management.
Tisco Bank has the lowest gross rate of NPLs in the nation at 1.3 per cent.
In terms of assets, Suthas pointed out that widening the spread was important to enable small banks to compete with larger ones.
Tisco’s net spread is 1 per cent, while the overall banking industry is below that figure. The bank plans to improve its spread to above 1 per cent this year.
Suthas said a drive for deposits would be seen throughout the year because of the demand for loans to recover businesses that were hit by the floods in the fourth quarter of 2011.
Tisco Bank will participate in syndicated loans for corporates.
Its retail loan portfolio is 75 per cent, with the rest corporate loans. The bank prefers to focus on retail customers because of higher return and lower risk.
It considers that risk from the corporate sector could grow after reinsurers limited coverage of all-risk insurance in Thailand because they sustained huge losses from the flood disaster, he said. The bank, therefore, has to be more cautious on new lending to companies in flood-prone areas.
Suthas said the damage to flood-affected industrial estates would lead to higher NPL rates among business clients, adding that all banks were keeping an eye on how the flood aftermath is affecting loan asset quality.
Tisco Bank projects its lending this year to grow no less than 10 per cent.
Business loans will see the highest growth because the bank has a small portfolio in this segment.
Auto loans will also continue to grow despite a low supply of cars in the first half, as production will be fully resumed by the second half. Moreover, the government’s first-car-buyer tax-break scheme will help accelerate auto loans.
Tisco plans to increase the proportion of used-car loans to 20 per cent this year from 15 per cent and focus on its auto-cash product to offset low demand for new-car loans during the first half.
Suthas said the trend of lower interest rates would reduce the attractiveness of deposits and bills of exchange. The latter are still more attractive than deposits, but the bank will not promote such products as aggressively as before because regulators are concerned about a rapid increase in the number of B/Es issued by several banks to retail investors
Tisco is a major player in the B/E market, and its bills of exchange are issued to serve large investors.
