March 21, 2014 00:00 By Sucheera Pinijparakarn
Strategic shift in line with BTMU partnership
Bank of Ayudhya will chase small and medium-sized enterprises in the automobile and the electrical/electronics industries as part of its synergy with new strategic partner Bank of Tokyo-Mitsubishi UJF.
“We have to select what kind of businesses will still be an opportunity for us, and SMEs in the auto and electrical and electronics fields are the key focus because they are suppliers and dealers of Japanese firms, which are the customer base of BTMU,” Sayam Prasitsirigul, Krungsi’s head of SME banking, said yesterday.
The economic uncertainty is causing the bank to shift its sights away from retail businesses even though they generate high yields.
Non-performing retail loans at more than 1 per cent are the highest in the SME portfolio, whose NPL ratio is lower than 1 per cent.
The bank targets loan growth from medium-sized enterprises at 14 per cent and small businesses at 16 per cent, but at only 8 per cent for retail businesses.
Krungsri had planned to jump into the top three in the SME loan market from fifth currently in three years, but the goal has been pushed out to five years because the bank moved the Bt37-billion portfolio of SMEs with credit lines of more than Bt1 billion to corporate banking in line with the strategy of BTMU.
Last year, SME Banking had outstanding loans of Bt220 billion, but after the partial transfer to corporate banking, it was left with Bt183 billion.
Under the new definition of SMEs, “retail” means a credit line of up to Bt12 million, “small” a credit line of Bt12 million to Bt30 million and “medium” a credit line of Bt30 million to Bt1 billion.
Auto and electrical/electronics customers make up less than 10 per cent of the bank’s SME portfolio.
According to the Board of Investment, Japan is the biggest foreign investor in Thailand. In 2012, 761 Japanese companies invested Bt348 billion in this country, with 479 projects in the automobile and electrical and electronics industries.
In the beginning, BTMU will refer to Krungsri the names of companies in the supply chains of Japanese corporations in Thailand.
Krungsri aims to extend Bt6.5 billion in loans to SMEs in the automobile industry and Bt1 billion to those in the electrical and electronics industries this year.
“The wallets of SMEs in both industries in Thailand have around Bt300 billion. The synergy with BTMU and the special financial programme to both industries will help boost loans to Bt15 billion next year,” Sayam said.
The special financial programme will be launched soon.
The bank has maintained its forecast for SME loan growth at 12.4 per cent this year even though it halved its growth forecast for gross domestic product to 2 per cent.
“We’re still optimistic that the government can be formed in the first half. The quick formation will help stimulate the economy in the second half,” he said.
“Our shareholders also believe in the country’s fundamentals including the auto industry. Even though it will not be bright this year, it will resume because
“Thailand is well placed for production of Japanese autos.”