FIDF debt plan sees TBank switch gears for this year
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Cost-cutting steps to take priority
Thanachart Bank will adjust its 2012 business plan, now that the banking industry faces the new issue of contributing to the payment of the Financial Institutions Development Fund’s debt.
Somjate Moosirilert, president and CEO of TBank, said last week that the government’s FIDF debt-transfer policy had prompted the bank to review its business plan.
The policy will widely affect the profitability of banks, including TBank.
The bank will have to concentrate on ways to cut costs and improve efficiency in order to overcome the challenges. The bank will disclose its 2012 business plan next month.
TBank has not reported its financial figures for 2011 yet, however, its profit and net loans are
not expected to show significant growth because it was working on the merger of Thanachart Bank and Siam City Bank, which started in April 2010.
The merger was completed on October 1 of last year; just as it was gearing up for business in the last quarter of 2011, the floods arrived.
“Unfortunately, we, the banking industry and other business were affected by the floods. We have huge expenses from the merger, so financial results in 2011 have to be lower than 2010,” he said.
Loan growth at TBank should be in the range of 4-5 per cent, he said.
TBank is a commercial bank that relies heavily on bills of exchange (B/E). If B/Es are taxed to help pay the FIDF’s debt, B/Es may not be able to attract investors, so the bank will shift to mobilising funds through other products.
The bank at present has no problems with capital, and even if its loan portfolio is mostly auto loans, which are charged a fixed interest rate, the bank can handle the cost, Somjate said.
Retail loans represent 55-60 per cent of TBank’s credit portfolio, while 40 per cent is corporate and SME loans. Retail consists of auto loans, mortgages, and credit card and personal loans.
Asia Plus Securities said in a research note that TBank will return to growth in 2012 and that its loans could be increased by 10 per cent against the single-digit increase in 2011.
TBank is expected to improve its net profit this year because it will have lower loan-loss provisions.
