GSB eyes 15% return from SME, startup investments 

Chatchai said that this year the bank has invested in 10 SMEs and startup firms for a combined Bt279 million under the joint-venture programme. About 20 other firms are under consideration for investment support valued at up to Bt900 million, he told a press conference, adding that decisions regarding the second batch of firms would be made this year.
Most of the first batch of companies are engaged in innovative technologies that have scope to boost the development of the bank’s business platform to better equip it for the digital economy era.
 The lender cited as examples its investments as diverse as robotics for smart farming, a cloud accounting platform, a monitoring and data analytics company, social media management, a loyalty card programme, digital marketing, online books and magazines, and visual effects and production houses. 
Chatchai said the other 20 startups are also pursuing innovation and the development of business platforms. With the bank’s support, they would help GSB to increase its non-interest income from an average of 5 per cent last year to 10 per cent over the next three years, he said.
“We invest in startups and SMEs when we see an opportunity to collaborate with them to develop the business platform for the bank’s service to our customers,” Chatchai said.
“This will be our tool to boost our non-interest income when, as nowadays, we are collecting less fee income from our services to customers.
“This means we have to find a new business model to increase our fee income from new business. The investment to develop new business platforms with startups will be the way to create innovative technology that will drive the bank’s income growth for the long term.”
He said that if the demand for investments in startup and SMEs exceeded the Bt2 billion allocation, the bank would aim to top up this budget in any future round of investments.
Chatchai said that investments in startups and SMEs usually take about four years to lay the foundations for business growth. In the following four years, the promising enterprises would start to generate profits and pay dividends to their investors. In the two years beyond that, the bank would consider whether to sell its stakes in these ventures.
“We expect return an investment average of 15 per cent a year,” Chatchai said. “And we may get even better returns if sell our stakes when the businesses are much stronger in, say, 10 years from now. This depends on the business financial results in the future.”
Normally, the bank would hold only a 49 per cent stake in a joint venture firm. “All of them are Thai companies, so this is the bank’s way of supporting the government’s policy to promote a digital economy under Thailand 4.0,” Chatchai said.
He said that this year the bank’s strategy was to strive to be “the best and biggest local bank in Thailand” by focusing on loans to the lower-income market. This was in keeping, Chatchai said, with the government’s policy to improve people’s quality of living and create careers for low-income earners and boost SMEs and start-ups.
“This will support the government’s policy to improve the prospects for lower-income people to have a job and create their own income over long term. This is a way to improve the quality of living for lower-income people,” he said.
To support its business strategy, the bank plans to open business centres to serve SMEs and startup nationwide, with up to 82 such centres planned this year from 37 at the end of March.
 This strategy is expected to drive new loans growth to 6 per cent this year compared with last year, Chatchai said.
At the end of 2017, the bank reported net profit of Bt31.2 billion, up 20.27 per cent from Bt25.94 billion for 2016. 
 Meanwhile, in the first quarter of this year, GSB announced 100 per cent growth in net profit year on year. The net profit of Bt13.479 billion for the quarter was boosted by gains from the sale of the bank’s stake in IRPC Plc to PTT Plc early this year.
The bank also saw growth in approval of new loans worth Bt149.3 billion in the first quarter of this year, driving outstanding loans as of March 31 to Bt2.05 trillion, up 2.24 per cent from the end of 2017. The new loans were extended to SMEs, state enterprises, and also in the form of micro-finance for micro-businesses. The bank’s deposits reached Bt2.17 trillion on March 31, while total assets were Bt2.62 trillion, dropping 1.61 per cent from the end of 2017.