Lease IT to ramp up loans to SMEsegment
LISTED company Lease IT (LIT) is aggressively chasing private businesses, particularly small and medium-sized enterprises, now that commercial banks are more cautious about providing loans to this segment.
Sompon Ekteerajit, managing director of the leasing firm, said that even though the economy looked like improving over last year, banks were still not easing up on lending to SMEs, providing an opportunity for LIT to expand its factoring portfolio.
Because SMEs represent relatively high risk to lenders, this segment generates high yield. LIT says it is confident of managing the risk, as proved by its non-performing-loan rate of less than 2 per cent.
"Clients have told us that the commercial banks are cautious with their lending as they don’t have much confidence in the economy. We expect this will be an opportunity to tap the SME segment and help boost our loan portfolio this year to above Bt1 billion. Revenue and profit this year are expected to expand by 30 per cent as well," Sompon said.
New SME clients
He said the company previously granted factoring (accounts-receivable financing) to new SME customers at the rate of Bt60 million to Bt70 million per month, but last year, that rose to Bt100 million per month. In January of this year, factoring to new SME clients climbed to Bt200 million. The increase showed that SMEs had more demand for this type of financing.
"The company will be able to offer additional project and trade finance to our customers as well," he said.
Before the firm listed on the Market for Alternative Investment in 2013, leasing and instalment loans accounted for 50 per cent of its portfolio, project finance and trade finance for 28 per cent and factoring for the rest. Last year, the company adjusted its portfolio by increasing its focus on project finance, trade finance and factoring. The proportion of instalment loans and leasing dropped to 39 per cent, project finance and trade finance went to 31 per cent and the proportion of factoring increased to 30 per cent.
The company plans to issue new debentures to raise working capital for lending in the future. Recently, LIT issued bills of exchange worth Bt600 million.
