CIMB flags concerns over health of SME segment
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CIMB THAI Bank might revise down lending growth to small and medium-sized enterprises to single digits amid concerns about the sector.
Despite that, the bank still projects total loan growth of up 20 per cent this year after posting growth of only 4.3 per cent last year.
Subhak Siwaraksa, president and chief executive officer, said the bank would review its SME commercial banking business plan in mid-year.
Subhak said the economic volatility had affected the sector.
He said given the situation with the sector, the bank would mainly rely on the retail and wholesale banking sectors for loan growth this year.
Subhak predicted there would be more mergers and acquisitions (M&As) this year, which would lead to high demand for loans, especially for bridge loans.
He cited the example of the TCC Group, which recently announced it was acquiring a controlling stake in BigC Supercenter from France’s Casino Group.
He said the TCC Group would have to use a bridge loan to pay transactions to Casino before a financial restructuring.
CIMBT aims to join the bridge loan to TCC.
Subhak said lending growth to the wholesale banking sector this year should touch 20 per cent based on M&A activities and Thai companies’ business expansion in Asean.
He said although household debt in Thailand was at a high level, retail loans this year were projected to grow 11 per cent from outstanding loans of Bt75 billion.
The segment was responsible for 60 per cent of the bank’s income.
The bank had room to grow in retail banking if it went in the right direction but it would tighten loan conditions to tackle bad debt, he added.
Subhak said people with a monthly income of less than Bt25,000 tended to have a high debt-service ratio, and the bank would try to avoid this segment or increase credit conditions to reduce the impact.
He said retail loans last year witnessed flat growth because the economic uncertainty affected people’s purchasing power and debt-servicing ability.
CIMBT aims to woo 285,000 new clients this year – 200,000 of them new deposit clients and the rest credit clients.
At present, it has some 600,000 retail clients.
Meanwhile, Amonthep Chawla, executive vice president of CIMBT and head of its research office, said the bank would revise down Thailand’s gross domestic product target this year from the 3.3 per cent predicted in November.
Amonthep said this was based on the economic data in the first two months of the year, showing the economy had not recovered yet.
“We will wait for the economic data in March before adjusting the GDP target for this year, and it is possible that GDP growth might be below 3 per cent,” he said.
He said Thailand’s key economy driver was private investment, and as such there could be a brighter GDP picture in the second half of the year if the government stuck to its investment plan.
