SCB to slow lending during remainder of year
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SIAM COMMERCIAL BANK, the country's third-largest bank by assets, will slow down its lending over the rest of the year, out of caution over global market prospects and low domestic consumption.
SCB president Kannikar Chalitaporn yesterday said the bank’s loan growth in the first six months had exceeded the market average of 12 per cent.
She said that although the bank was not revising its full-year loan-growth target of 13 per cent, it would slow down business growth over the remainder of the year.
The bank is constantly watchful for any uncertainty in the global and domestic markets, and is always ready to tone down activity in areas that are high risk, she added.
She raised the example of commodity exports to China, an area in which SCB will be less active in regard to lending to corporates and small and medium-sized enterprises (SMEs) that sell agricultural and rubber products to that market.
However, the economic slowdown in China is only short term and SCB is maintaining its plan to establish a footprint in that country, she insisted.
“We are prepared, but problems have not arisen as yet. Our experience is that low-income people will be at the highest risk in the event of high household debt and low consumption [in Thailand]; therefore, we have not focused on this segment and the ongoing high level of household debt does not affect the bank,” she said.
Loan growth at SCB this year will mainly derive from SME and retail lending, as the bank is familiar with both sectors, said Kannikar.
Greater focus on fee-based income
Arthid Nanthawithaya, SCB senior executive vice president, said the bank’s ratio of fee-based income had risen to 50 per cent, while lending in the first half was flat due to its less-aggressive loan expansion.
The bank will attempt to increase the ratio of fee-based income from corporate customers to 60 per cent in the next two to three years, from 50 per cent currently, he added.
Interest-rate income, meanwhile, grew by less than 5 per cent in the first half, compared with the double-digit growth of fee income. About 70 per cent of new income from corporate banking in the period came from fees, he said.
Arthid said overall corporate lending in the second half would be better than in the first period, because of the completion of CP All’s acquisition of cash-and-carry retailer Siam Makro. SCB lent CP All between Bt24 billion and Bt25 billion to finance the deal.
Outstanding corporate lending stood at more than Bt500 billion at end-June.
He added that the bank would offer solutions that generate fee income rather than interest income. However, for deals that still require loans, SCB will focus on those of a similar nature to CP All’s acquisition of Siam Makro.
Siam Makro has cash flow and tangible revenue, which is a value deal for both buyers and lenders, unlike lending to greenfield projects, which take time to see a return, he said.
SCB has four fund-raising deals in the pipeline, amounting to Bt100 billion and concerning a real-estate investment trust, property funds and an infrastructure fund, as well as merger and acquisition deals worth tens of billions of baht, he said.
All of the deals are expected to be completed by year-end.
