CIMB Thai aims to fatten interest
CIMB Thai Bank must aggressively chase high-yield products and raise the proportion of current and savings accounts next year to maintain its interest margin at more than 3 per cent, Subhak Siwaraksa, president and chief executive officer, said yesterday.
The bank this year failed to show expected loan growth because of the plunge in wholesale loans and the suspension of retail loans, he said.
"We suspended unsecured loans because we had to improve the information-technology system. Even with the system, the acquiring of new loans cannot keep up with repayments. Outstanding unsecured loans this year are between Bt6 billion and Bt7 billion, down from Bt12 billion over the past three years," he said.
"Wholesale loans, especially those involved with overseas [investments], have been affected by the global volatility," he said.
Loan growth was forecast at 20-30 per cent this year, but actual growth should end up at 15-20 per cent.
This has caused its net interest margin (NIM) to shrivel to 3.12 per cent, the narrowest the bank has ever seen.
The 2013 growth goal is 20-30 per cent, driven by the retail sector. It will resume unsecured lending after |validating the IT and credit-scoring system.
The unsecured loan is a high-yield product, which can help improve net interest margin.
"We aim to extend unsecured loans of Bt3 billion to Bt4 billion to bring outstanding loans back to stay at Bt9 billion," he said.
NIM
The bank wants to expand its NIM in 2013 to 3.3-3.6 per cent.
The NIM in 2013 should be fatter than this year because the bank will focus on deposit products for retail customers, which should raise the proportion of current and savings accounts to 35 per cent from 25 |per cent.
The loan portfolio in 2013 will be slightly rearranged, Subhak said. Retail loans will jump to 45 per cent from 35-45 per cent, wholesale loans will drop to 30-35 per cent from 40 per cent and loans to small and medium-sized enterprises are to remain unchanged at 25 per cent.
CIMB Thai’s credit-card launch has been pushed back to the fourth quarter of next year from the first quarter to ensure the efficiency of the credit-card system.
Retail banking contributes better margins and fee income, while investment banking and trade finance from corporate customers generates fee income despite thin loan margins.
Non-interest income in 2013 should be up by 40-60 per cent, he said.
Chief financial officer Narongchai Wongthanavimok said the bank wanted to increase the ratio of non-interest income to interest income to 40:60 from 35:65.
