No major sale of assets to boost profits this year, CEO says
Thanachart Bank has set its sights on making profits from normal operations rather than extra gains as before, and is attempting to grow from corporate lending, particularly to mid-sized businesses.
Last year, the bank gained extra profit of Bt12 billion from selling a life-insurance company, causing net profit to surge to Bt9.23 billion.
This year, net profit will not be higher as there is no such extra gain. However, TBank president and chief executive officer Somjate Moosirilert said that in the first half, normal operations were well in place.
He noted that the bank still had non-life-insurance, fund-management and securities subsidiaries, and had no plans to divest those firms to gain extra profits.
“We will try to grow from our normal operations. We are training our human resources to be dynamic and comply with the proactive strategy and the new mindset in acquiring new lending,” he said.
The bank is building its operational growth on corporate loans, particularly to mid-sized enterprises, which it defines as those with annual sales revenue of Bt3 billion to Bt5 billion.
“We have to get closer to this segment and show seriously that it is meaningful for the bank. We will encourage those firms to support their partners in order that they too one day will become the bank’s clients,” he said.
The bank will place importance on existing corporate clients that have repaid previous debts and ask for additional credit for expansion.
He noted that Thanachart Bank had paid attention to the property sector as it is a real sector and the bank has expertise in this category. Not only is the sector growing, it has many supporting segments such as construction and building materials.
Year to date, the bank has signed on to financing deals to support property projects including the luxury shopping complex IconSiam, which is being developed by Siam Piwat and Charoen Pokphand Group.
Although business loans – including those to small and medium-sized enterprises, as well as larger corporates – will be the key driver of its lending growth in the second half, total loan growth this year is expected to be flat because of the slowdown in car loans. TBank is the biggest lender in this category.
Thanachart Bank is among the hire-purchase lenders that have been unable to avoid rising non-performing loans, particularly in the used-car segment. Fully half of the 4-per-cent NPL rate is due to auto loans, and most of those bad loans were in Siam City Bank’s portfolio before TBank acquired it.
“NPLs are normal in the banking industry, and we can reduce them by sending teams to negotiate with clients and offer debt restructuring in some cases. Even though the political unrest has been resolved and the National Council for Peace and Order has imposed measures to boost the economy, the results are expected to take four to six months to materialise. We should give time to our clients,” Somjate said.
However, the bank will consider selling off bad debt from unsecured loans that it cannot collect within 18 months, he said.
NPLs are expected to have peaked in the previous quarter, and now that the situation has improved, borrowers who were unable to pay their debts are expected to recover. No one wants to default on his debt obligations but the uncertainty in the previous months affected the ability of some to make their payments.