UOB (Thai) to boost SME lending by branching out upcountry

"Lending from the provinces is 40 per cent but we aim to drive loans from upcountry to 50 per cent in the near future," said Sayumrat Maranate, head of business banking at UOB (Thai).

As the pilot unit in the group, UOB (Thai) also got the green light from headquarters to adopt the streamlined end-to-end credit process to expedite approvals for SME customers, she said yesterday.

The system will also help tackle the possibility of delinquent borrowers.

Credit approvals have been speeded up to five to 10 days from one month.

SMEs are customers with annual turnover of up to Bt400 million and a credit line of up to Bt40 million.

Geographically speaking, Thailand is an interesting market for the group, Sayumrat said. By expanding its SME base and loan portfolio to the provinces through its business centres, it hopes to avail of opportunities opening up with the dual-track railroad, which is expected to be completed by 2020.

"We have been operating business banking centres in Udon Thani, Khon Kaen and Nakhon Sawan provinces since 2013 and we plan to open more," she said.

In Chiang Mai, the company set up its second business centre on Taphae Road to serve growing border trade and to capture opportunities opening up with the dual-track railroad.

By the time the railroad is complete in 2020, UOB will have business banking centres in all the provinces in which dual-track railways are located.

The second Chiang Mai business banking centre had its soft launch in March but has already broken even with new bookings reaching Bt1 billion.

The bank will target its SME loan growth at more than two to three times gross domestic product growth. Relationship managers at the business banking centres are the key contact point with SMEs in the provinces.

They have to have proactive solutions for both lending to and helping customers before any problems emerge.

Year to date, the bank’s SME base has increased to 40,000 accounts. Business banking loans now account for 15 per cent of UOB (Thai)’s loan portfolio.

According to UOB (Thai)’s report for October to the Bank of Thailand, its loan portfolio was at Bt275.11 billion.

While Sayumrat did not disclose the non-performing loan ratio, she said it was low. The bank saw red flags for the economy last year and assigned its relationship managers to talk with customers in supply chains that might have trouble in the future in order to find solutions to lessen the upcoming problems.

For the Bt100 billion soft loan component of the government’s stimulus packages, UOB (Thai) has participated in lending Bt2 billion.

Most SMEs require soft loans for investment because of the low financing cost for seven years.

About half of its business banking customers take out term loans because the bank has a clear strategy in supporting investment to SMEs.

"A term loan can help support their business to grow until sales pass Bt400 million.

"We will then send them to |the commercial banking unit, which takes care of companies with annual sales of Bt400 million to Bt2.5 billion.

"About 20 per cent of our SMEs can upgrade their scale to become medium-sized businesses," she added.