August 08, 2014 01:00
By Sucheera Pinijparakarn
Japan firms figure large in 3-year plan
Bank of Ayudhya is drawing up a three-year plan on lending more to small and medium-sized enterprises to comply with the policy of major shareholder Bank of Tokyo-Mitsubishi UFJ.
Krungsri’s head of SME banking, Sayam Prasitsirigul, said an initial plan to be in the top three SME lenders by 2016 might need to be reviewed. However, BTMU wants to help build a strong supply chain between SMEs and Japanese corporates in Thailand, which will be one of the missions of the three-year plan.
“It wants SME loans to grow more than they are currently, and the supply chain is among the key segments driving loan growth,” he said.
Krungsri is sticking to its 2014 target of 13-per-cent SME loan growth even though it fell behind in the first half. Loan applications began to pick up last month, and bad debts dropped in June.
In the first six months, Krungsri’s SME loans grew by only 4.4 per cent from end-2013 to Bt191.4 billion.
Sayam said SME loan applications in July increased by 33 per cent compared with January and the amount of credit sought by those applications increased by 54 per cent.
He said this was an indicator that SMEs had more confidence in the economy. Furthermore, SME clients are willing to repay their debt, reflected in the improvement in the rate of non-performing loans in June. NPLs in the SME segment peaked at 3 per cent in May before improving to 2.7 per cent in June.
He said the bank had seen a demand for working capital since June, while during the first five months, applications were for term loans. Demand for working capital shows that SMEs want sufficient cash flow to buy inventories to serve the recovery of consumer spending anticipated in the current second half.
As the economy rebounds, consumer spending will follow suit, spurring private investment. Further demand for term loan is expected next year.
Sayam predicts, based on the target of 13-per-cent growth, that outstanding SME loans will reach Bt207 billion by the end of this year, compared with Bt183 billion last year.
Meanwhile, Siam Commercial Bank yesterday held its fourth “SME Success Seminar”, where Kannikar Chalitaporn, president of the bank, noted that SCB was ready to support SMEs as this sector contributes 98 per cent of gross domestic product. SCB will not only finance SMEs but will also provide financial planning.
Yesterday’s seminar was aimed at suggesing new opportunities and ideas to SMEs after political tension has eased up and consumers’ confidence is rising.
She said lending had normalised, so SCB would maintain its loan growth target of 5 per cent this year.