SCB works to increase market share in SME trade financing

Siam Commercial Bank (SCB) is attempting to increase its market share in trade-finance activities for small and medium-sized enterprises to 12 per cent within three years from less than 10 per cent now as it sees this as crucial for when the Asean Economic Community (AEC) is fully realised.

Senior executive vice president Sirichai Sombutsiri said yesterday that trade finance for SMEs year to date had grown only 1-2 per cent because of below-target export. The bank will develop campaigns to enhance trade-finance transactions as it wants to see its market share in this area on par with the average market share of its other portfolios, 12 per cent.

SCB holds 17 per cent of the banking industry’s SME loans.

SCB projects outstanding SME loans at Bt360 billion to Bt370 billion by the end of this year, an increase of 20 per cent from the end of 2012. 

Sirichai said that when the AEC achieved full realisation in 2015, trade finance would have a greater role in Asean, so SCB had to speed up the growth of this activity.

“We expect to see 12-per-cent market share in SME trade-finance activities within two or three years, but this year the share is unable to surpass 10 per cent because of the volatility of the baht,” he said.

The trade-finance portfolio is currently Bt40 billion, which SCB aims to raise to Bt50 billion by year-end.

SCB in March launched its “Forward Contract Product Programme” without collateral requirement for SME importers and exporters to help operators that have been affected by exchange-rate fluctuations. After introducing the programme, the bank provided credit lines of Bt3 billion, higher than the normal amount, said Wareemon Niyomthai, SCB executive vice president.

Before introducing the programme, the bank found that SME customers were not making forward contracts as they could not conveniently find securities as collateral.

Apart from the volatility of the baht, the bank is closely monitoring gold-price volatility as this could affect gold-related businesses. Wareemon noted that the gold price was more volatile than the baht. Some of SCB’s SME clients are in gold-related businesses, and the bank advises them on cash-flow and inventory management.

She said lending to SMEs in the first quarter grew by more than 10 per cent quarter on quarter as the bank has expanded the segment to lower-medium businesses with annual turnover of Bt75 million to Bt200 million. This segment is a new customer base, and more than half of them will be refinance customers. The bank targets loan breakdown from lower-medium businesses at 10-20 per cent by the end of this year. 

Year to date, SCB has lent Bt4 billion to Bt5 billion to lower-medium businesses.

Yesterday, SCB and the Federation of Thai Industries held the seventh “SCB-FTI Factory Outlet Fair” as a distribution channel to help SMEs. The bank targets sales of more than Bt15 million through the five days of the event. The fair will run until Friday at SCB headquarters in Bangkok.