Small banks eye mid-sized corporates
TWO SMALL banks have shifted their focus from small businesses to mid-sized corporate customers, despite the fact that the former can generate higher yields.
Surachai Chitratsenee, senior executive vice president for SME banking at CIMB Thai Bank, said last week that the bank sees its network of branches in Asean as an advantage in facilitating lending to Thai companies operating in the region, especially mid-sized corporates and larger SMEs (small and medium-sized enterprises).
He added that compared to larger banks, CIMB Thai has fewer local branches, limiting its access to small businesses. Small businesses are the focus of several local banks due to their high yields.
The bank found that mid-corporates are interested in investing in the Asean market, especially enterprises with annual sales revenue of Bt1 billion to Bt2 billion and large SMEs with annual sales revenue of Bt400 million-Bt500 million.
“Mid-sized corporations and large SMEs in the food, hotel, tourism and service sectors are seeking business opportunities in Asean. Cross-border loans from those companies comprise 10 per cent of the [bank’s] outstanding loans of Bt40 billion,” he said.
He raised Ichitan Group as an example of a mid-sized corporate that is aggressively moving toward the Asean market and has decided to use CIMB Thai Bank because of its expertise in the region.
Mid-sized corporations currently account for one third of CIMB Thai Bank’s loan portfolio, Surachai said, adding that this ratio could expand to 50 per cent next year on the strength of business in Asean.
Surachai said the bank also helps facilitate financial and business opportunities for mid-sized corporates in Malaysia and Singapore that are expanding in Thailand ahead of the 2015 launch of the Asean Economic Community.
Singaporean and Malaysian investors are interested in property, hotels and services in Thailand, he said. Recently, CIMB Thai supported a credit line for ISCM Industries (Thailand) and Integrated SCM, two subsidiaries of D’Nonce Technology, a listed company in Malaysia.
“We have two or three additional customers who intend to use cross-border loans and we plan to lead a group of Thai mid-sized corporates and SMEs to study opportunities in Myanmar. The first stage for the SMEs is to get to know the market before deciding to invest,” he said.
CIMB Thai booked loan growth from SME banking at 10 per cent for the first six months, against a target of 30 per cent. The bank will have to accelerate lending growth in the second half to achieve the target, he said.
Tisco Bank, most of whose lending comes from hire purchases, is trying to increase lending to mid-sized corporates rather than large firms.
Suthas Ruangmanamongkol, president of Tisco Bank, said large corporates can raise funds themselves through the capital markets, unlike mid-sized corporates or SMEs, which still seek financing from banks.
The bank will focus on SET100 firms with annual sales revenue of Bt2 billion-Bt3 billion, Suthas said.
“Targeted mid-sized corporate customers are involved in the auto sector, as we have good relationships with auto dealers. We will tap mid-corporates that run logistics and commercial-vehicle businesses such as fleet vehicles, which are expanding in line with the bright outlook for tourism,” he said.
