SCB focuses on SME export clients

      
 
Sirichai Sombutsiri, an SCB senior executive vice president, yesterday said China was the key intermediate export market for indirect sales to the euro zone, although the exact scale of the knock-on effect is hard to predict as far as Thai small and medium-sized enterprises are concerned.
The Chinese market has undoubtedly been affected by the euro-zone crisis, which affects Thai exporters, and especially SMEs, he said. The bank has warned customers to be alert to the consequences and to seek new markets to offset the export slowdown.
SME customers who indirectly export to the euro zone account for 20 per cent of the bank’s SME loan portfolio of Bt240 billion, while direct exporters to the area make up only 2-3 per cent of the portfolio.
However, direct exports to euro-zone markets have dropped 20 per cent in terms of both volume and value.
Some clients that directly export to the euro zone have asked the bank to extend debt repayment by at least one month, as their European customers have also delayed payment.
“We are monitoring customers on a case-by-case basis to assist them in terms of lending and debt solutions, along with trying to persuade them to shift to exporting to emerging markets to diversify risk,” Sirichai said.
Many customers have already diversified to emerging markets such as South Africa and the Middle East, which has helped keep the risk of default under control at least for the moment, he added.
Kasikornbank earlier said many of its SME customers had requested a cut in the interest rate they have pay as a ways of easing the financial burden.
However, KBank customers have been more affected by the increase in the minimum daily wage than by the euro-zone crisis, as its SME exporters to the area account for only 1-2 per cent of the overall SME lending portfolio.
Despite the unstable export outlook, SCB still attaches importance to the SME export sector as a long-term income generator for the bank. However, it has to rely on comprehensive analysis to ensure the good quality of debt, Sirichai said.
The bank next year will have to design total solutions to deal with euro-zone and other uncertainties to achieve the 2013 target of outstanding SME lending of Bt300 billion, he said. If it can achieve the target, SCB should rise one place to third in the bank lending market.
SCB estimates its outstanding SME loans will reach Bt255 billion this year, for an increase of 23 per cent from last year’s level.
Over the first six months, SME lending grew by 14 per cent or Bt30 billion from the end of last year, bringing its outstanding loans to the sector to Bt240 billion.
Total SCB income in the period grew by 35 per cent to Bt5.4 billion, while net interest income was Bt3.7 billion, up 34 per cent year on year, and non-net interest income rose 38 per cent to Bt1.7 billion.
Non-performing loans at the end of June stood at 1.5 per cent.