THE BANK of Thailand has suggested that commercial banks should help support the liquidity of SME customers amid the risks they currently face by reducing interest rates or extending payment-due dates.
The central bank yesterday invited representatives of banks for a round-up of the sector’s performance last year.
Salinee Wangtal, assistant governor of the BOT, said before the meeting that the central bank was worried that the difficult situation faced by small and medium-sized enterprises could damage the segment in terms of revenue and cash flow.
Banks should, therefore, take whatever steps they can to help SMEs carry on their business, she said.
They should consider reducing rates or extending due dates for repayment to ease the cash flow of this category of customer, she suggested.
The BOT was happy that banks last year had diversified their portfolios from mainly corporate loans to SME lending, she said, adding that SME loans in the banking sector during the year had grown by 14.8 per cent – above the overall 11-per-cent loan growth in the industry.
Salinee said the financial status of commercial banks was strong enough to deal with the current uncertainty, supported by their performance last year when they reported a combined net profit of Bt220 billion.
Non-performing loans, meanwhile, are low at 2 per cent. Even though the prevailing uncertainty might drive NPLs up, the central bank believes the banks can manage their NPLs well thanks to their strong financial status, she added.
According to a report by commercial banks, the sector targets loan growth of 8-10 per cent this year.
Last year, competition in the banking industry was intense, resulting in the system easing lending conditions. However, the loan criteria are acceptable in the BOT’s view, said the assistant governor.
At present, the country’s banks have an average loan-loss provision of 3.8 times total lending.
Kittiya Todhanakasem, first senior executive vice president of Krungthai Bank, said that despite the fierce competition in the banking industry last year, her bank had not relaxed its lending conditions.
Asked about the BOT’s concern about the plight of SMEs and its wanting the banks to offer help to the segment, she said KTB this year was giving importance to retail (individual) and SME customers and that if any risks negatively affected such clients, it would be ready to assist them.
The overall repayment situation of KTB’s customers is “not bad”, she said, adding that the bank’s NPLs are stable at 2.5 per cent.