Cash-strapped SMEs drive up lending growth
Local small and medium-sized enterprises are in need of more working capital to ease tight liquidity, as the recent fuel-price hike and the planned increase in the daily minimum wage to Bt300 have boosted their costs, bankers said.
Pisuthi Amyongka, head of SME banking at Thanachart Bank, said existing customers had borrowed additional working capital to enhance liquidity in the face of the higher costs.
While overall lending growth at TBank in the first quarter is not expected to be high, what growth there is will likely be fuelled by the higher demand for working capital, Pisuthi said.
Sayam Prasitsirikul, head of corporate and SME products at Bank of Ayudhya (BAY), agreed that SMEs need more working-capital loans, not only for liquidity purposes but also to expand their operations.
The bank is particularly concerned about small and medium-sized exporters, given the current global economic volatility. SMEs serving the domestic market are benefiting from higher domestic consumption, which is being supported through government schemes.
Apart from the working-capital loans, the Bank of Thailand’s Bt300-billion soft-loan programme to help flood-affected SMEs is a key driver of banking loan growth.
The central bank lent Bt210 billion to local banks at 0.01-per-cent interest, while the banks put Bt90 billion of their own money into the scheme.
Flood-affected SMEs and individual customers will have a 3-per-cent fixed rate for five years.
Sayam of BAY said the bank proposed a loan amount of Bt24.5 billion to the central bank; SMEs have started taking out loans of about Bt47 million per day.
BAY this year aims to boost its SME loan portfolio to Bt180 billion from Bt155 billion at the end of last year. The soft-loan scheme could help the bank achieve the target.
Pisuthi of TBank said the bank would focus more on soft loans to flood-hit SMEs in the first quarter to help their operations get back to |normal.
TBank has been allotted Bt3 billion of soft loans in the first quarter, he said, adding that the bank would gradually ask for additional soft loans when the first lot is used up.
The soft-loan scheme might not boost loan growth much but it could help SMEs resume their businesses and avoid non-performing loans, he said.
TBank this year projects loan growth of 18 per cent to Bt78 billion, with smaller customers as the key driver of growth.
“We will aggressively target small customers, as they are not so worried about price but require faster loan approval. The proportion of loans to small businesses this year will increase by 2-3 per cent to 28 per cent of our total SMEs loan portfolio,” he said.
Meanwhile, the BOT reported that as of the end of January, 41 financial institutions had provided Bt626.25 billion in assistance to flood-hit debtors, accounting for 7.23 per cent of the total outstanding credit (excluding interbank loans) in Thailand’s financial system.
Of the debtors, 20,256 were corporations and 903,889 were retail debtors.
Most of the assistance loans were to businesses, amounting to Bt461.20 billion, or 7.47 per cent of total loans to the business sector. The remaining Bt165.05 billion were consumer loans, 80 per cent of which were for residential projects and hire purchases. Of total flood-affected consumer loans, Bt13.84 billion were credit-card loans, or 0.56 per cent of total consumer loans.
Between October 1 and February 29, 199 flood-hit financial consumers made complaints through the BOT’s Financial Consumer Protection Centre. Solutions were found in 167 cases. Almost all asked the central bank to coordinate with financial institutions on extension of debt-payment periods, and reduction of interest rates and fees.
