SCB keeps focus on SMEs in rural areas
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Siam Commercial Bank is expanding its customer base of small and medium-sized enterprises upcountry as the sector has been growing for three years, especially in the border provinces.
SCB began focusing more on upcountry markets three years ago as it found that the growth rate of SMEs in the provinces was higher than in Bangkok. As a result, the proportion of lending upcountry currently is 55 per cent, up from 49 per cent.
Executive vice president Wareemon Niyomthai said yesterday that the bank would keep building its customer base upcountry, particularly the border provinces, which are benefiting from the approach of the Asean Economic Community.
The Bt2-trillion state infrastructure mega-project is also a key driver of the growth of SMEs, especially construction contractors and the construction-material sector, which account for 10 per cent of the bank’s SME portfolio.
Most customers in the provinces are in the agriculture-trading businesses.
In the first five months, SCB had outstanding loans of Bt350 billion, up from Bt303 billion at the end of last year.
The bank this year targets new loans of Bt570 billion to SMEs, of which 60 per cent are refinancing. Projected outstanding loans by the end of this year are Bt360 billion to Bt370 billion.
In the second half, SCB expects exchange-rate fluctuation to be the main risk for SMEs involved in import or export.
Therefore, the bank is emphasising assistance to SMEs affected by currency risk.
Although the SME portfolio is smaller than that of corporate customers, SMEs remain an important segment for Thailand’s economic growth.
Currently, trade finance accounts for 10 per cent of total SME loans. Since the introduction of SCB’s SME forward-contract service at the beginning of this year, it has provided Bt3 billion to help customers manage currency risks.
Furthermore, the bank has prepared a financial solution called “SCB SME Trade” to help growing export-import businesses cope with economic changes in the future.
Wareemon said the bank would try cap its rate of non-performing loans at 1.4 per cent.
The NPL rate at present is lower than 1 per cent.
