SME Bank confident of cutting NPLs

Salinee Wangtal, chairwoman of the board of SME Bank, said it would not require an additional Bt2 billion as the bank’s previous administration had requested from the Finance Ministry, as the bank is confident that its recovery plan will be able to increase the BIS ratio of bank reserves to asset risk to a double-digit percentage by next year.

Its current Bank for International Settlements (BIS) ratio is 7 per cent, lower than the Bank of Thailand’s minimum requirement of 8.5 per cent. SME Bank’s BIS ratio was 6.38 per cent last year and 3.28 per cent in 2012.

Salinee said in an interview yesterday that the bank would not require the additional funding injection, but that comment was very different from what she said last month.

“SME Bank employees have worked together to increase the BIS ratio to 7 per cent, mostly Tier 1, and if the bank can fix the current NPL problem, I am confident that the BIS ratio will be able to reach a double-digit percentage by next year,” she said yesterday.

 

NPLs at 38%

SME Bank currently carries Bt35 billion in NPLs, 38 per cent of its total outstanding loans of around Bt88 billion. Debtors whose businesses closed down are responsible for around Bt20 billion of the bad loans, while the rest are for businesses that are still operating.

Salinee said the bank would begin to sell the collateral of the businesses that have shut down. As for the clients that are still operational, the bank will help them restructure their debt plans to make sure they can return to a normal loan status.

About 20,000 of the bank’s clients whose loans are non-performing are in the micro-debt category, worth around Bt10,000-Bt100,000 each. Salinee said the bank’s board was considering using the services of a private institution with expertise in collecting micro-debts to handle these, as the cost of hiring such an institution would be lower than that of hiring additional employees. This is a practice widely used by commercial banks.

As for other recovery plans for SME Bank, Salinee said the Finance Ministry had approved a plan for loan growth next year of 12 per cent, to Bt30 billion. Of that total, Bt18 billion will be provided to its existing customers for business expansion, and the rest for new clients.

The bank yesterday announced nine loan schemes that are expected to cater to between 10,000 and 20,000 SMEs nationwide. They will kick off after New Year’s.