TMB targets more lending to small business in Q4 as economy picks up
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TMB Bank expects lending to small enterprises to recover in the final quarter, shoring up its full-year loan growth after posting 5.3-per-cent expansion for the first nine months.
Chief executive officer Boontuck Wungcharoen said lending to small enterprises with annual revenue of less than Bt50 million in the third quarter dropped from the second quarter and from December 2013 in line with economic circumstances. The bank also tightened loan-underwriting criteria for this segment.
He said that if the government’s stimulus measures are implemented with speed and effectiveness, Thailand’s economic growth was likely to accelerate, which will boost the borrowing of small enterprises.
TMB targets total loan growth for this year at 8-10 per cent. In the first nine months, TMB’s lending grew by 5.3 per cent, mainly to medium-sized enterprises, defined as those with annual sales between Bt50 million and Bt500 million.
In the third quarter alone, TMB’s lending expanded by 3.2 per cent, causing net interest income to rise by 6 per cent from the previous quarter and overall NIM to improve by 15 basis points to 2.98 per cent.
TMB reported third-quarter net profit of Bt2.38 billion, growth of 27.6 per cent year on year but down by 7.3 per cent from the previous quarter because of a provision reversal in the second quarter from debt restructuring and sell-off of bad loans.
Non-performing loans at the end of the third quarter were up by 1.2 per cent from the previous quarter. However, total NPLs stood at 3.43 per cent, against 3.87 per cent at the end of last year.
Boontuck said TMB aimed to continue to enhance profitability and efficiency by reducing its cost-to-income ratio further. In the third quarter, this ratio dropped to 50.1 per cent, compared with 53.1 per cent a year earlier and with 51.8 per cent in the second quarter of 2014.
Meanwhile, Maybank Kim Eng Securities (Thailand) yesterday said in a research note that it had lowered its earnings forecast for Tisco Financial Group for this year and next on slower lending growth.
In the first nine months, Tisco reported lending was down 2 per cent on fewer instalment loans and car-inventory financing in line with low domestic car sales.
The brokerage house cut Tisco’s net-profit forecast by 2-3 per cent for this year to Bt3.99 billion and Bt4.64 billion for next year. It also now predicts Tisco’s lending this year will decline by 6 per cent, compared with a previous forecast of a 1-per-cent dip.
Tisco on Monday reported net profit for the third quarter of Bt1.1 billion, down by 4 per cent year on year but up 10 per cent quarter on quarter.
Maybank raised its forecast for Tisco’s net interest margin after seeing that it can sustain high NIM despite less lending.
