TMB looks to further growth in net profit
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TMB BANK will continue the upward momentum from last year to push net profit over Bt10 billion this year from Bt9.3 billion and return on equity to 15 per cent from 14.7 per cent by whipping up income while keeping a lid on expenses.
“We expect to spend three years in improving cost to income in line with the industry,” Boontuck Wungcharoen, chief executive officer, said yesterday.
TMB’s cost-to-income ratio was 52 per |cent versus 40 per cent for the banking industry.
Boontuck achieved his goal in lifting ROE to 14 per cent by 2014. ROE in 2013 was 9.6 per cent.
ROE should reach 15 per cent if the bank |can expand its loan portfolio by 8-10 per |cent and deposit base by 8-10 per cent while holding non-performing loans below 2.8 per cent.
TMB used to have highest NPL ratio but under its rolling five-year plan, it has concentrated on NPL restructuring. Its NPL ratio has steadily improved, falling to 2.85 per cent at the end of last year from 3.87 per cent the year before.
The next job for TMB is to increase total income especially fee income, but this is a challenge as it has to also control costs.
The seventh largest bank by assets has moved to expand its retail customer base by bringing out innovative products especially for deposits such as the No Fixed account and Do It Yourself – ME by TMB, as transaction accounts give stable deposits to the bank.
Retail customers account for 65 per cent of its deposit base. No Fixed and Me by TMB helped accelerate the growth of TMB’s deposits last year, which rose 21 per cent. Excluding No Fixed and Me by TMB, retail deposits went up 2 per cent.
TMB’s total deposits increased by 8 per cent, double the rate in the banking industry. Most of the deposit growth was in transactional banking.
TMB’s income grew slightly by 4 per cent to Bt29.95 billion last year, of which fee income lagged, rising by only 3 per cent to Bt5.7 billion, so TMB will have to work harder to maximise fee income from three main banking segments – retail, SME and wholesale.
For retail banking, it will increase its share of customers’ wallets by cross-selling and up-selling products that match with their requirements.
The bank plans to expand active No Fee Savings deposit accounts to more than 1 million this year.
Wholesale banking contributes only 20 per cent of the bank’s fee income, which it regards as too little. It wants to increase the ratio to 25 per cent this year.
“We will focus on recurring income from trade financing. Even though the outlook for import and export remains gloomy, TMB still gives importance to trade finance with selective industries,” said Piti Tantakasem, chief wholesale banking officer.
The bank will offer Internet and mobile banking services to corporate customers and upgrade trade finance services. It will use customer relationship management to strengthen bonds with corporate customers. After sales service is important for this segment.
TMB’s wholesale banking loans grew by 7 per cent last year. It did not want to be too aggressive in lending as SMEs have been clobbered by internal and external factors, unlike corporations, which can withstand the headwinds.
However, in the long term, wholesale loans should beone-third from 45 per cent.One of the five megatrends that will be an opportunity for wholesale banking is the greying of society. The healthcare business is the focus for TMB.
Trirong Butragaht, chief SME banking officer, said the bank will strive to grow its SME fee income from 20 per cent now to 25 per cent of total income this year.
The bank has assigned special relationship managers to help SME customers with cashflow problems.
It will launch features to help reduce costs for SMEs and will tailor trade finance products to SMEs’ needs.
