We'll have enough for loan-loss: TMB

TMB has yet to complete its loan-loss provisioning to comply with International Accounting Standard 39, the new accounting standard that all banks are required to meet by the end of the year. The new standard is being imposed by Bank of Thailand regulations.

Currently, the capital-adequacy ratio of the country's fifth-largest bank is more than 10 per cent, still higher than the minimum requirement of 8.5 per cent.

However, TMB's recapitalisation plan remains incomplete despite the bank having proposed the plan to the Finance Ministry earlier this year. Finance Minister Chalongphob Sussangkarn says he needs to study the bank's plan in depth.

TMB Bank is expected to raise about Bt35 billion in fresh funds by issuing new shares to existing shareholders. Board chairman Somchainuk Engtrakul on Monday said the capital-increase plan would be completed next month.

"Although the recapitalisation plan will be delayed a month, the delay will have no affect on the bank," Subhak said yesterday. "As long as it's possible to receive the proceeds of the capital increase before the end of the year, it will be in time for the loan-loss provision."

He said the bank's total lending this year was expected to drop 5-10 per cent from last year's figure. The bank plans to concentrate on reducing bad debts rather than providing new loans, because of the uncertain economic environment.

The fall in loans will result mainly from fewer wholesale and small and medium-sized enterprise (SME) loans, which will both fall short of the bank's targets of Bt16 billion and Bt10 billion, respectively.

However, TMB Bank's consumer-loan growth is still in positive territory. The bank granted mortgages worth between Bt7 billion and Bt8 billion in the first half of the year, while its full-year target is Bt16 billion. It expects to reach its housing-loan target, because there are signs of economic recovery in the second half of the year.

However, Subhak said the stronger baht would affect the bank's wholesale customers and particularly SME operators in the export sector.

"The baht is quite a lot stronger than the country's economic fundamentals, which will hurt exporters. The bank is advising its customers to save on costs and adjust themselves in line with the changing situation," he said.

Somruedi  Banchongduang

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