Thailand
Thailand: SME Bank borrowers in repayment streak
No new loans extended by the Small and Medium Enterprise Development Bank of Thailand (SME Bank) have turned sour year-to-date, and the state-owned bank’s bad loan ratio is expected to continue to fall to 17% at year-end.
None of the bank’s new loan borrowers have failed to repay their debt since the beginning of the year, president Mongkol Leelatham said, adding that 0.15% of the bank’s new loans had deteriorated to be non-performing loans (NPLs) last year, falling from 2.3% in the previous year.
The bank defines new loans as lending extended within one year. SME Bank’s NPLs amount to 17.4 billion baht, representing 18% of loans outstanding at 97 billion.
He predicted the bank’s bad loan ratio will decline to 16.6 billion baht or around 17% of total loans at the end of this year.
SME Bank was once beleaguered with high NPLs, hitting around 40% in 2014, second only to the Islamic Bank of Thailand (IBank). The State Enterprise Policy Office (Sepo) expects SME Bank to exit rehabilitation by June, thanks to improving operating performance and lower NPLs.
SME Bank and IBank are among seven state enterprises under Sepo rehabilitation. The others are Thai Airways International, the State Railway of Thailand, the Bangkok Mass Transit Authority, TOT Plc and CAT Telecom.
Mr Mongkol said a higher number of family-owned and owner-operated SMEs have been given better access to financial sources after registering as juristic persons, and this has enhanced their competitive edge and debt-servicing ability.
Family-owned and owner-operated SME operators accounted for 70% of the bank’s loan applicants in 2015, but juristic persons dominated with 70% of the bank’s loan applicants last year.
Separately, he said potential borrowers have applied for 9 billion baht in loans from a 15-billion-baht SME transformation loan scheme and the entire amount is expected to be taken out by September.
SME Bank already approved 3 billion baht for the SME transformation loan scheme, which was designed to upgrade competitiveness and bolster SME startup exports.
The scheme offers a seven-year loan at 3% interest for the first three years and the minimum lending rate afterwards. It does not require collateral.
Meanwhile, the bank has reached an agreement to provide loans to those who rent stalls in the AEC Trade Center in Ayutthaya province.
The bank expects to lend 1 billion baht loan in total to more than 500 operators at the AEC Trade Center.
Source: http://www.bangkokpost.com/business/finance/1265243/sme-bank-borrowers-in-repayment-streak