CIMB Thai Bank seeks overseas investments to boost revenue

The bank aims to close US$2-3 billion in deals in the next six months, boosting its foreign loans to hundreds of billions. The bank projects significant growth in its major foreign investments while keeping debt below 2%.

Wut Thanittiraporn, CIMB Thai’s senior executive vice president of business and corporate financial transactions, says the trend of major clients investing abroad is expected to continue in the second half of this year. Thai companies with clear strategies are looking to expand their businesses in various sectors internationally, including energy, petrochemicals, retail, automotive, food and beverages, and agro-processing.

The bank's approach to expanding into foreign markets takes various forms, such as business expansion through construction of facilities, investment partnerships, and mergers and acquisitions (M&A). While political factors in each country, including Thailand, pose some risks, they do not deter large Thai businesses from foreign investments, as they typically plan ahead and have been increasing foreign investments at a higher rate than during the Covid-19 period, Wut said.

The bank is expecting to see opportunities for significant M&A deals in the second half of this year, averaging more than US$500 million per deal, or about 1.7 billion baht. The bank could potentially close around 2-3 M&A deals by the end of the year, contributing to foreign investment reaching nearly 100 billion baht, Wut added.

In the first half of 2023, the bank was entrusted with enabling major clients to expand their businesses in various international markets.

Foreign investment loans have grown by over 70% compared to the previous year, resulting in a total outstanding loan balance of 66 billion baht, up from 38 billion baht in 2022, according to Wut.

The bank’s consistent efforts in bridging its clients to international markets over the years have shown that challenges hindering companies from entering or expanding in foreign markets include regulatory requirements, political risks, country-specific policies, market competition, local culture, exchange rate volatility, and financial transactions, Wut added.

For companies that overcome these limitations and enter foreign markets, their growth is accelerated, enabling them to establish new markets, expand their customer base, secure new partnerships, and potentially increase their revenues by 20% or, in some cases, by more than 100% in the long run. Indonesia, Malaysia, Cambodia, and Vietnam are among the fast-growing markets due to their large populations and preference for Thai products. China and Singapore serve as trade hubs, and beyond Asean, the bank is ready to lead its clients to further markets, according to Wut.

As for large domestic clients, the bank is aiming for an 11% growth target this year, with an outstanding loan target of 81 billion baht. This goal is achievable, following the trend of growth from the previous year, which saw an outstanding loan balance of 73 billion baht, Wut said.

While the non-performing loan (NPL) ratio for large clients stands at around 2%, the bank remains cautious in handling these loans due to their high value. Potential issues could significantly impact the bank's NPL, Wut added.