SME bank aiming to make a profit next year by restructuring bad laons

“Our financial results at the end of this year have continued to show a net loss of about Bt1.35 billion. But we believe that when we rehabilitate our business following the plan, our results will recover next year,” Pongsak Chajiamjan, a senior executive vice president and the acting president of the SME Bank, said last week.
He said the bank’s debt rehabilitation board led by Pichai Chunawachira had finalised the rehabilitation plan by focusing on restructuring non-performing loans worth Bt19 billion or 19.7 per cent of its Bt98-billion loan portfolio. The board would also develop new products to serve customer demand.
According to the plan, the bank will negotiate with its customers to restructure debts worth Bt9 billion out of total NPLs worth Bt19 billion by year-end.
The remaining Bt10 billion will be negotiated and restructured next year. This would help the bank generate income from NPLs.
The new products would be aimed at SMEs needing less than Bt200 million in credit.
Operating costs and the investment budget would be cut. In particular, electricity costs would be reduced by about Bt1 million a month.
The bank’s policy is to retain all staff but they will be reshuffled to do work that matches their experience.
As of July, new loans had reached Bt14 billion, short of target by about 40 per cent.
The Finance Ministry has been asked to increase the bank’s capital base. Its capital adequacy ratio is 6.26 per cent, lower than the 8.5-per-cent minimum required by the Bank of Thailand.
The bank also has tried to look for sources of funds costing less than 3.36 per cent, which is what the bank is now paying on its loans.
Its cost of funds is higher than other banks because it cannot accept deposits from the public. This forces the bank to find long-term capital and low-cost loans to support its business rehabilitation plan.
“All of this is the way to rehabilitate our business in the long run,” he said.