BBL to concentrate more on small business clients
Bangkok Bank (BBL) will focus more on small businesses to reinforce its SME banking after ensuring that its medium-sized business and corporate loan portfolios can navigate the rough economic seas ahead.
Small businesses account for 11 per cent of its Bt1.6-trillion overall portfolio, less than retail banking’s 12 per cent. BBL is strong in corporate and medium-sized business banking, as it has concentrated on these segments for many years
Executive chairman Kosit Panpiemras said yesterday that the bank now considered these portfolios strong enough to pay more attention to small businesses, particularly start-ups. Small companies requiring credit lines from Bt100,000 to Bt10 million are the main target.
The “progressive agriculture project”, in which the bank takes an active role in providing advice on value farming, will be the model for small-business lending. BBL’s customer base in the agricultural-product industry numbers about 4,000 firms.
“In serving small businesses, the bank will not use lending as the way to accelerate their growth. We will offer loans under the framework of GDP growth.
“Before deciding to offer loans, we will have to study each business and the ability of each customer to ensure that the lending will not be too risky for the bank and the customers,” he said.
The move into small-business banking does not mean BBL is changing its conservative style. What the bank will do for this segment is to offer education and a long-term relationship, Kosit said.
“Building small businesses to be as strong as medium-sized businesses and corporations might require more time because the bank has to spend a lot of time understanding the businesses.
“We will not aggressively grow but prefer steadily growing together with the business of our customers,” he said.
The size of the corporate segment will increase slowly as big companies are adjusting their labour incentives to enhance their base of high-skilled workers, but not all of them can cope with this change.
Corporations that want to grow fast should go outside, either through mergers and acquisitions or reallocation of their production bases to neighbouring countries that can support their labour incentives.
Major banks have a firm base in retail and SME (small and medium-sized enterprise) banking, which both generate high yields that help sustain profitability. BBL, which has a strong base in the corporate market with a lower yield, is facing profitability challenges.
Even though it is the country’s largest bank, its net income lags behind Siam Commercial Bank and Kasikornbank, the third- and the fourth-largest.
