Krungthai Bank to target lending strategy at medium-sized businesses
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KRUNGTHAI Bank will next year strongly go after medium-sized enterprises - those with annual turnover of up to Bt500 million - along with smaller businesses upcountry through the bank's new "loan factory" credit-analysis system.
With smaller businesses upcountry through the bank’s new “loan factory” credit-analysis system.
Udomsak Rojviboonchai, senior executive vice president, said the key strategies for pursuing SME business next year would be speedy approvals and new products.
With the loan factory, the bank has adjusted the credit scoring process by using qualitative credit assessment (QCA), reducing the processing time of a loan application from 30-50 days to nine or 10.
The bank tested QCA from June to October. It provided Bt30 billion worth of new loans to medium-sized enterprises, only one of which turned bad because the customer committed accounting fraud.
Relationship managers screen customers before the loan factory screens them again, making the process quick and low-risk. Udomsak said the rejection rate had improved from 30 per cent to just 10 per cent.
The proportion of KTB’s lending to SMEs next year is expected to increase to 50 per cent, and to 60 per cent in 2016, he said.
A medium-sized enterprise is defined as one with annual turnover of up to Bt500 million and a credit line of no more than Bt100 million. The bank plans to extend the credit line to Bt200 million next year in line as required by this segment.
“After the roll-out of the loan factory for medium-sized enterprises, we are confident that the system is ready to tackle the risk. Therefore, we will go ahead with increasing the credit line,” he said.
Udomsak said that when the bank becomes more active in the medium-sized-enterprise segment, loan products would have to be more diverse, so it plans to launch new loan programmes every month throughout next year.
The bank will also concentrate on SMEs upcountry, especially in provinces that its business centres are not covering yet. He pointed to Loei and Nan as two provinces where KTB might not have been very active in the past.
The bank plans to set up 10 more business centres to the existing 63 to cater to SMEs in the provinces.
Udomsak said that although next year’s lending targets had not been finalised yet, the bright prospects of the economy and the bank’s strategies of speeding up approvals and adding more products should mean that loan growth in the SME sector will be higher than this year.
This year, outstanding SME loans are expected to reach Bt360 billion, up by more than 10 per cent from 2013.
