Large corporates feel the pain of trade war, baht rise
The trade war between the United States and China and the appreciation of the baht against other currencies have started to impact large corporates, say bankers.
Although large corporates are resilient to any impact and their ability to repay debt remained sound compared with small and medium-sized enterprises, the prolonged trade war had started to impact revenue and sales of large corporates, said Wasin Saiyawan, senior executive vice president and chief of wholesale banking at Siam Commercial Bank.
Also, the depreciation of the Chinese yuan against the baht had reduced exports to China for some corporates. This had led to a year-on-year decline in income for these corporates, he said. So the bank has to take care of clients to ensure their ability to repay debts would not be affected.
He did not expect growth in lending to large clients. Currently outstanding loans to large corporates stand at Bt900 billion, according to Wasin. Bad debts or non-performing loans (NPLs) account for 1 per cent of total loans and the bank would try to prevent it rising over 2 per cent, he added.
Senathip Sripaipan, chief wholesale banking officer at TMB Bank, said that some large corporates have delayed investments, especially in overseas projects, because of the impact of the slow growth of the global economy and the ongoing trade war.
The bank is worried about large agri-business firms. The bank has not yet seen signs of debt default or rising bad debt. “But we have to closely monitor them,” he added.
Payong Srivanich, president and CEO of Krungthai Bank, said that some big businesses have started to cut their capacity utilisation from full utilisation to about 70 per cent. Some property developers have also delayed their investments in new projects, he added.
Pornchai Padmindra, co-head for wholesale banking and head of corporate banking and investment banking at CIMB Thailand, said that the trade war and the global slowdown had some impact on large firms.
Some of them have started to relocate their production base to avoid the impact of tariff hikes. “Big corporates could export their products to new markets,” he added.