TMB sticks to 10% loan-growth goal

TMB Bank is maintaining its loan-growth target at more than 10 per cent this year, based on an expected 4-percent expansion of Thailand's gross domestic product. However, the lending outlook during the second half cannot be predicted because of concern over a possible economic downturn in Europe.

TMB chief executive officer Boontuck Wungcharoen yesterday said the outlook for lending during the remainder of the year had to take into account many factors, not least the debt crisis in Greece and Portugal, which could have an impact on the global economy. On the plus side, continued political peace after the July 3 general election can boost investor confidence, and also benefit the Thai economy.

He said TMB had left its business plan unchanged despite the European economic instability. The bank's loangrowth target therefore remains at more than 10 per cent. Non-performing loans are expected to finish the year at 56 per cent, against 7.7 per cent at the end of last year.

Boontuck said inflation remained a matter of concern for Thailand, and the central bank's Monetary Policy Committee might have to hike the repurchase rate further to rein it in. He expects the policy rate to be increased by 25 basis points to 3.25 per cent at today's meeting of the committee.

TMB is also aiming to capture more importexport trade-finance business aggressively to cash in on higher transaction levels and boost feebased income.

Chief wholesale banking officer Piti Tantakasem said the bank had focused on trade finance over the past three years, with the volume of imports and exports increasing every year. The value of TMB's trade-finance business has risen seven-fold over the period, with the monthly amount now standing at between Bt70 billion and Bt80 billion, against Bt10 billion three years ago, he said.

"The figures show that trade volumes are continuing to rise, which benefits the trade-finance services of financial houses as well," he added.

The food sector has showed impressive growth, while garments exporters have competed well overseas, especially with China. Higher inflation in China presents an opportunity for Thai exporters, as Chinese labour costs are not as low as before, Piti said.

"Even though the incoming Thai government plans to increase the daily wage to Bt300, this can still undercut wages in China. So this also represents a golden chance for the tradefinance services of TMB," he said.

However, if the Thai minimum daily wage is increased, at least four key industries, namely construction, garments, electronic parts and auto parts, could be adversely affected, as they are more reliant on manpower than other sectors, he warned.

TMB's target for wholesale loans this year has been maintained at Bt25 billion, as the bank is less aggressive in this segment than it is in securing trade-finance service deals, he added.

Early in the year, TMB secured a large lending deal for Big C Supercentre's acquisition of Carrefour's business in Thailand, providing a Bt15billion loan to Big C as part of a Bt38.5billion bridging facility coarranged with Krung Thai Bank.

Meanwhile, TMB yesterday signed a contract for the provision of a chequepayment service to AIA Thailand's policyholders in upcountry areas.

AIA currently issues about 5,000 cheques per day outside Greater Bangkok. Its policyholders with TMB accounts will now receive faster and more convenient services, as the bank can shorten the clearing cycles for cheques issued by the insurer, TMB said.