TBank focuses on small-business, high-margin lending

Chief executive officer Somjate Moosirilert said the bank would focus more on loans to small and medium-sized enterprises, especially small companies that require credit lines below Bt10 million.
TBank’s SME portfolio is Bt79 billion, of which 19 per cent is loans to small enterprises.
The bank projects ROE this year at 12 per cent, up from 10 per cent in 2011, and net interest margin close to last year’s, at 2.8 per cent.
SME loans this year should grow by 12-15 per cent, while overall loan growth is targeted at 12 per cent from outstanding loans of Bt640 billion at end of last year.
Somjate said the bank would set up three groups to work with SMEs nationwide and would set up 15 SME business centres this year.
It will also speed up loan approvals. SME customers in Bangkok will know within 15 days whether their credit has been approved, while for those in the provinces the approval period will be no more than 20 days, he said.
Somjate acknowledged that the integration process after last year’s merger of TBank and Siam City Bank might take some time, so his bank needed to pay attention to product development and delivery of the best solutions to customers. “We estimate the integration process might take six to 24 months before it is 100 per cent complete.”
SME and corporate lending accounts for 35 per cent of total outstanding loans, with the rest retail lending, include auto instalment loans.
However, this year’s estimate for loan growth is still mostly for auto loans, as the bank wants to maintain its market leadership. Outstanding auto loans stand at Bt240 billion, and the bank projects loan growth of 12 per cent this year.
Somjate said the bank would increase the proportion of used-car and cash-for-car loans to 35 per cent this year from 30 per cent because of their high margin.
TBank’s strength in the auto-loan market lies in its relationship with car dealers, for whom it also offers working-capital loans if they require liquidity for ordering new vehicles from auto-|makers.
“This relationship influences auto loans as these [dealers] may refer customers to the bank, and we also refer our customers who want to buy cars to our dealers,” Somjate said.
The rate of non-performing loans this year is expected to improve to 4 per cent from 6 per cent, he said.
Meanwhile, the imposition by the Bank of Thailand of deposit fees of 0.47 per cent for both commercial and state-run banks would help ease aggressive fund mobilisation and help the bank expand its products with special campaigns to customers who have deposits below Bt10 million.
The bank plans to issue a debenture to raise funds and prepare for business expansion.