TMB's wholesale banking to focus on clients' 'mega-trends'
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After focusing on rebalancing its portfolio and improving margins in the first six months of the year, TMB Bank will start offering loans to smaller and mid-sized corporates that are cashing in on four mega-trends.
Piti Tantakasem, chief wholesale banking officer, said yesterday that this sector witnessed flat growth in the first six months because the bank had concentrated on the cost of funds and rebalancing its portfolio from large corporates and state borrowers to medium-sized companies and supply chains.
Wholesale banking accounts for nearly 50 per cent of TMB’s overall portfolio, or around Bt200 billion. The margin improvement of wholesale banking has also improved the spread in the first six months by 30 basis points from 2.68 per cent.
Lending in the first six months in the wholesale segment was for working capital rather than term loans, making for flat loan growth but income growth of 20 per cent. Fee income rose by 20 per cent and interest income by 27 per cent.
Piti said the margin improvement resulted from the bank’s preference to giving loans to several mid-sized and smaller corporates.
“We provided loans of Bt100 million instead of Bt1 billion as part of loan balancing,” he said.
Fund mobilisation is not easy for commercial banks and when the government’s infrastructure projects get started, the competition for deposits will tighten, so loan growth is not as critical as how to manage the cost of funds and meeting high margins through portfolio rebalancing, Piti said.
However, he said the bank would work during the latter half of the year on increasing term loans, gradually improving their proportion from 30 per cent.
In general, working capital generates higher interest income but does not add significantly to the loan portfolio.
The bank still focuses on trade finance but it will increase its focus on new segments, what the bank calls mega-trends: infrastructure projects, urbanisation, digital television and cross-border trade.
“These mega-trends will create opportunities for mid-sized corporates and their supply chains, which is our expertise,” he said.
The expansion into smaller corporates might lower the proportion of wholesale banking loans to less than 50 per cent in the near future, he said.
Piti said the bank could not provide an overall loan-growth estimate for the second half because it would depend on the market situation. However, he said wholesale banking would maintain growth of overall income of 20 per cent, fee income of 20 per cent and interest income of 27 per cent, as in the first half.
