CIMB Thai aims for more fee income
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CIMB Thai Bank has adjusted its commercial-banking strategies for this year, focusing more on fee income to offset a decline in interest income as lending has slumped.
CIMBT’s commercial-banking sector focuses on small and medium-sized enterprises. This sector in 2014 saw a decline in new loans and net loan growth due to the political chaos in the first half.
New loans by the commercial banking group amounted to just under Bt20 billion against the target of Bt22 billion, while net loans were Bt9.3 billion, lower than the targeted Bt10 billion. Outstanding loans grew by 20 per cent to Bt52.5 billion.
The economic circumstances in the first half of this year are expected to see a further lending slowdown, obliging the bank to adjust its strategies to maintain healthy profit growth, said Jiratchyuth Amyongka, senior executive vice president and head of the commercial banking group.The group targets net loans of Bt8.3 billion, lower than last year. Based on that figure, outstanding loans will reach Bt62 billion by the end of this year.
“We have to target segmentation that helps generate fee income. We will focus on transactional [banking] in cross-border trade, and treasury and commodity hedging. The fee-income proportion this year will have to rise to 15 per cent from 11 per cent in 2014,” he said. CIMBT has set an ambitious target of commercial banking group’s fee income at 30-40 per cent of the total within five years.
Profit before tax and provisions in 2015 is expected to grow by 40 per cent from Bt1.31 billion in 2014.
In its lending policy, the bank will give priority to small businesses that require credit lines of no more than Bt20 million, because this level generates the highest yield at 9 per cent, compared with 4-6 per cent from medium-sized businesses.
The bank targets new loans of Bt3 million to Bt5 million from small businesses this year, and branches will be the main channel for pursuing these clients, Jiratchyuth said.
CIMBT has 150 branches nationwide, fewer than major banks, but it will seek small-business clients through its branches in border provinces.
Apart from small businesses, the bank will place emphasis on medium-sized ones that require credit lines between Bt20 million and Bt60 million. It will be cautious when dealing with businesses requiring more than Bt60 million as the economy remains shaky.
