KBank assistance to boost SME liquidity in 3 cash-strapped sectors
June 04, 2014 00:00 By Sucheera Pinijparakarn
Bt25 bn funding for tourism, building contractors, farm products/service
Kasikornbank (KBank) hopes to help improve the cash flow of its SME clients by around Bt25 billion within three months as a result of newly introduced assistance measures, which offer a 3-percentage-point overdraft lending-rate reduction and a six-month grace period for principal repayment.
Executive vice president Patchara Samalapa said yesterday that the measures would be offered to 15,000 small and medium-sized enterprises in three sectors – tourism, building contractors and agricultural products and services – that had been severely impacted by the political unrest over the past six months.
The assistance package runs from from June 1 to August 31.
The roughly 15,000 SME clients have a combined credit line of Bt43 billion with KBank. They are not NPL (non-performing loan) customers, but their overdrafts are fully utilised and they are suffering a cash-flow shortage.
The bank hopes, therefore, that the lending-rate cut and grace period will increase their liquidity by about 55 per cent or Bt25 billion due to a reduced debt burden, with the funds that are freed up being used as much-needed working capital.
The 15,000 SME clients in the three targeted sectors have an average overdraft of Bt2.7 million.
The 3-percentage-point lending-rate reduction and six-month grace period for principal repayment together will cost KBank Bt100 million. The bank’s SME clients, in general, are experiencing a revenue contraction of at least 40 per cent, and many of them are at risk of a liquidity shortage due to a lack of working capital. Until now, KBank has offered these clients advisory services and specific financial assistance measures on a case-by-case basis.
Patchara said that apart from the latest assistance to SMEs, the bank would help stimulate the economy within three months by extending new loans to SMEs to the tune of Bt75 billion – from the Bt60-billion level in the past three months – in light of an expected increase in lending demand.
The bank’s 25-per-cent increase in new-loan extension will be directed at SME clients that are showing good prospects in terms of ordering inventory to prepare for the coming high business season.
In the first five months of the year, KBank’s loan growth expanded by 2 per cent to outstanding lending of Bt529 billion.
The bank is maintaining its full-year loan-growth target for SMEs at 6-8 per cent, said the executive.
Meanwhile, Krungthai Bank, which had been planning to launch assistance measures to help its SME clients, might suspend the plan and maintain its aid on a case-by-case after seeing improved prospects for the economy, including public-investment plans, said executive vice president Udomsak Rojviboonchai.
Revitalisation of public-investment programmes will benefit SME clients in building and construction, which account for some 20 per cent of the bank’s SME loan portfolio of Bt350 billion, he said.