Sluggish consumption will continue to dampen demand for SME loans, banks say
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BANKS HAVE mixed views on the SME stimulus measures launched by the Cabinet yesterday, noting that while they might help small and medium-sized enterprises get access to finance, the problem is a lack of demand for lending because of the low levels of con
Kasikornbank, the major SME lender, says it is one of several banks that have no problem granting loans to SMEs whether the Cabinet authorises stimulus measures or not. But the problem is that the current sluggish consumption levels do not support the need to borrow, said Patchara Samalapa, executive vice president.
He said the government and the Bank of Thailand should set clear conditions for commercial banks on the percentage of loan-loss reserves required when lending to SMEs through the government’s measures.
Trirong Butragaht, chief SME banking officer at TMB Bank, said the new criteria for the Thai Credit Guarantee Corporation were more attractive than the previous scheme, and TMB was ready to join the TCG programme and grant soft loans despite their narrow margin.
TMB considers SMEs an important segment, but it will be cautious when selecting clients, he added.
Chansak Fuangfu, senior executive vice president of Bangkok Bank, said that when the Transport Ministry kicks off its construction projects next year, the demand for loans, including project finance, from corporate customers would be stimulated. The government is speeding up its investment projects, including three or four |of the 17 projects the Transport Ministry has on its agenda that will open for bidding by the end of this year.
Loan demand so far this year has been for working capital, he said, adding that the bank’s contractor clients would benefit from the government projects.
Chansak said BBL’s corporate lending so far this year had been lower than target because repayments had outstripped new loans.
He said new investments including those in renewable energy and the upcoming auction for fourth-generation telecom licences would be opportunities for the banking sector. However, external factors, especially the Chinese economy, should be monitored because they could have impacts on Thai corporates.
The new government economic team’s stimulus package could boost 2015 economic growth by 0.3 percentage point, TMB Bank’s research house forecasts.
It points to the Village Fund injections and short-term job-creation projects, which would entail funding of Bt136 billion. The forecast did not take into account the latest measures to help SMEs that were approved by the Cabinet yesterday.
