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Published on December 17, 2007

Siam City Bank expects its outstanding corporate loans to remain at the current level of about Bt90 billion.

"In the bank's corporate business plan over the next three years we will mainly look for higher-quality customers to replace high-risk borrowers.

So our net corporate-loan growth will be flat over the period," first senior executive vice president Lersuk Chulasesa said last week.

Expanding the corporate-loan business has made life tough on the bank, he said.

It has had to set aside additional reserves for wholesale financing to comply with the new International Accounting Standard 39.

Large borrowers always provide less loan collateral.

When corporate borrowers refinance their loans from other sources, the bank's earnings take a hit. Several companies have turned to other funding sources, particularly the bond and stock markets, and have paid off their debts early.

The middle-sized bank plans to reduce large corporate lending to 42 per cent of its total

loan portfolio, from 49 per

cent currently, while SME

and retail loans will be in-creased.

Kasikornbank and TMB

Bank also aim to whip up their SME and retail lending business at the expense of corporate credits.

KBank has set an ambitious goal of expanding SME loans by 20 per cent next year compared with just 8 per cent for corporate loans. Its outstanding SME loans are expected to catch up with wholesale loans by the end of this month and pass them in volume next year.

Executive vice president Boontuck Wangcharoen has said the bank will still pump up its wholesale loan book but at a lower pace than SME loans, which will cause the share of corporate loans to drop.

Bangkok Bank is retaining growth targets for all loan categories, even though wholesale lending is projected to slow in line with the market environment, senior vice president Paya Sosothikul said.

Corporate, SME and individual loans of the banking system are expected to rise by 2-3 per cent, 6-7 per cent and 15 per cent respectively next year. The bank hopes to do better than the industry average in all categories. This strategy is supported by the bank's long relationships with corporate customers, market opportunities in SME and consumer loans, and the bank's strong capital base, he said.

"By the lending projec-

tions of the banking industry next year, Bangkok Bank will expand loans along with this trend. Once corporate loans grow slower than SME and consumer loans, their proportion will automatically shrink," he said.

Despite greater competition for SME business, the country's largest bank is confident of maintaining its 30-per-cent market share, ranking it as the No 1 player. It also sees good potential for SME business, particularly with automobile, logistics, electronics and hotel companies.

Somruedi Banchongduang

The Nation