SCB's Cambodia unit told to lend more
THE GROWING economy in Cambodia and consequent rise in the number of middle-income people have encouraged Thailand's third-largest bank, Siam Commercial Bank (SCB), to give the green light to its subsidiary Cambodian Commercial Bank to expand its lending
Suriyah Termlertmanauswong, director and general manager of CCB, said yesterday that this would be the first year the Cambodian operation would do aggressive business, encouraged by the approach of the Asean Economic Community (AEC).
He added that SCB last year injected US$15 million (Bt490 million) of capital into CCB to support lending expansion. CCB’s registered capital at present is $40 million.
SCB established CCB in 1991 with a branch in each of four major cities – Phnom Penh (head office), Battambang, Siem Reap and Sihanoukville. However, Suriyah noted that lending in the past had not grown much, as the bank preferred a conservative style.
The loan portfolio grew slowly as the bank emphasised risk management, making sure loans did not go bad. Moreover, most lending was long-term.
Now, however, as the bank gets more aggressive, most lending will be for working capital and trade finance in line with the increased business activities of Thai clients.
He said CCB was strongly tapping Thai corporates and their supply-chain businesses that are expanding in Cambodia because its economy is showing healthy growth. Furthermore, the growing number of middle-income people is driving up overall purchasing power.
A middle-income person in Cambodia is defined as one who has a monthly income of $2,000, and this segment accounts for about 20 per cent of the total population.
Thai corporate customers are expected to account for 30 per cent of CCB’s client base by the end of this year, up from 20 per cent currently. Outstanding loans this year are targeted at between $80 million and $90 million, compared with $50 million now.
Cambodia has attracted foreign investment thanks to its low labour costs and tariff privileges under the Generalised System of Preferences provided by rich countries.
According to the Economic Intelligence Centre, the research unit of SCB, Thai investment in Cambodia recorded average growth of 40 per cent annually in the past five years, with accumulative net investment of $720 million in 2014. That figure is low compared with Thai investment in Laos, Myanmar and Vietnam.
Logistics and trading have been two business focuses for CCB. Suriyah said this would be the first year for CCB to focus on Thai small and medium-sized enterprises by cooperating with the “SCB First” programme in Thailand.
He added that CCB had not focused much on retail banking, but the growing middle class was interesting enough for the bank in cash on the sector.
“We don’t have a hire-purchase business in Cambodia but we have financed loans to hire-purchase companies instead. Thai hire-purchase companies have expanded into Cambodia, which is an opportunity for us to expand lending as well,” he said.
Rungruang Sukkirdkijpiboon, first executive vice president of SCB and head of its customer segment division, said around 70 per cent of SCB First customers – defined as those with assets under management of Bt10 million with the bank – were SMEs.
The role of the bank has changed as it acknowledges that it should not simply wait for customers to make deposits but should help its clients make their businesses successful.
The bank yesterday launched an annual seminar called “Cambodia 360 Degrees – Starting a Business Is Possible” for SCB First customers with the objective of helping them achieve tangible results.
