CIMB Thai Bank has started to target lending to small businesses, after completely adjusting the structure of its commercial banking group (CBG).
It aims to build up the loan portfolio from this category of customer to Bt10 billion in the next three years.
Jiratchyuth Amyongka, senior executive vice president and CBG head, said yesterday that under the new structure, the bank had revamped its channels, staff and zoning with a view to capturing small business customers.
The loan portfolio at the bank’s CBG has until now largely been built up of mid- to large-sized enterprises.
As end of May 30, it had outstanding loans of Bt45 billion, up slightly from Bt43 billion at the end of last year.
For medium- and large-sized enterprises, CIMB Thai offers credit lines of Bt20 million-Bt60 million, while its small business customers – which account for 5 per cent of its overall 3,000 SME (small and medium-sized enterprise) clients – will be offered lower credit lines.
“We will use our branches nationwide to chase small-sized enterprises, while business intelligence centres will be the channel for tapping mid-sized businesses and relationship managers will be the channel to service larger businesses,” he said.
The bank aims to build its small-business loan portfolio to Bt10 billion, which would be 15 per cent of overall enterprise lending, within three years, he added.
Small enterprises contribute the highest yield for the bank at 8-10 per cent, and customers in the category require quick loan approval. CIMB Thai has therefore developed two new products, which will be formally launched during the current quarter, said the executive.
As small-business lending is a new category, the bank has limited the overall amount of credit for this segment to Bt2 billion this year, as it wants to be sure that extending credit to these smaller clients does not bring a risk to the bank.
“We have developed a scorecard system for small business clients to help analyse the lending to this category of customer. We see potential growth in this segment and the risk is low because these customers have residential property as collateral, so they won’t want to see their homes repossessed,” said Jiratchyuth.
As a smaller bank, CIMB Thai’s loan growth must be higher than the average for the banking sector and it is, therefore, targeting SME loan growth of 22 per cent this year.
This means the commercial banking group has to attract new loans totalling Bt11 billion in order to reach its outstanding-loan target of Bt55 billion by year-end, he explained.
Even though its performance in the first five months of the year was below target, the bank believes it can achieve loan growth of 22 per cent based on pipeline value of Bt8 billion in the second half.
“This is a good time to grow our SME lending, as they require capital to resume business now that the political uncertainty has been resolved. Apart from small-sized business, we will be active in the manufacturing sector, as well,” he added.
However, the bank remains more cautious on some sectors, such as condominium projects, said the CBG head.