KBank targets Bt60 bn SME loans

Under the soft-loan programme, the Government Savings Bank will lend Bt100 billion to commercial banks, which will re-lend the money to small and medium-sized enterprises at an interest rate of 4 per cent per annum for seven years.

Patchara Samalapa, executive vice president for SME business, said KBank hoped to lend around Bt30 billion through the government scheme.

Soft loans

It will also offer its own soft loans totalling Bt2 billion, with interest rates ranging from 4 to 7 per cent in the first six months depending on risk.

Based on the Bt60-billion target for the fourth quarter, KBank hopes to book new loans of Bt200 billion this year, the same as last year.

In the first seven months, new lending by KBank’s SME business division dropped by 7 per cent year on year to Bt138.59 billion because of lower demand, he said.

The SME stimulus package will work better if the parallel stimulus aimed at low-income people results in higher spending. That would result in higher demand, encouraging SMEs build up their inventories, he said.

The bank expects its outstanding loans to SMEs to climb to Bt580 billion by the end of the year, from Bt561.66 billion at present.

KBank has observed that its SME clients have been struggling with tight cash flows, particularly in trading and agricultural businesses, Patchara said.

The bank has also noted buyers of agricultural produce purchasing from neighbouring countries because of the recent drought in Thailand, which hurt local supplies.

He said that since the beginning of 2014, KBank had offered assistance to SMEs including new loans and debt restructuring, and 94 per cent of these clients had recovered.

As a result of these measures, the rate of non-performing SME loans at KBank is below 3 per cent.