TMB Bank, the country's seventh-largest lender by assets, plans to halve its bad-loan ratio for small and medium-sized enterprise (SME) business to 4% by the end of next year.
The bank's SME non-performing loans (NPLs) stand at 8% of loans outstanding, with most of the soured loans originating in 2012 and 2013, said chief SME banking officer Chompoonoot Pathomporn.
The bank is resorting to all instruments to improve asset quality, she said, adding that these include tightened scrutiny of new SME loans, distressed debt restructuring and bad-asset disposal.
TMB has slowed new SME lending since 2016 and focused on internal restructuring to control asset quality.
Although the country's economic momentum is gathering steam, commercial banks' NPLs and special mention loans for SMEs had climbed at the end of September.
NPLs for SMEs edged up to 4.65% of loans outstanding at the end of September from 4.45% at the end of June, and special mention loans potentially at risk of becoming NPLs increased to 2.63% from 2.61% in the same period, according to Bank of Thailand data.
The bank forecasts its SME loan growth to fall short of the 8% target this year after delivering 2% growth so far, Ms Chompoonoot said.
TMB's SME loan growth could be flat or marginal in 2018, she said.
At present, TMB's SME loans outstanding amount to 90 billion baht. The bank expects them to reach 91-92 billion by year-end.
The bank's new SME lending averages 1-1.2 billion baht a month.
TMB aims for SME loans to grow in a range of 6-7%, raising its portfolio to 97 billion baht.
The bank's financial products and services for SMEs, including TMB SME One Bank deposit accounts and the TMB Business Touch mobile banking app, will present opportunities to expand both new SME loans and the customer base.
Both services offer free banking transactions through the digital channel and let the bank get to know clients better via the cash flow database.
Ms Chompoonoot said about 700,000 TMB SME One Bank deposit accounts have been opened, of which 170,000 are active. By monitoring customers' financial behaviour, the bank can improve SME loan analysis and control asset quality.
The government's single financial account scheme for SMEs will help standardise the business segment, she said.
TMB shares closed yesterday on the Stock Exchange of Thailand at 2.32 baht, unchanged, in trade worth 149 million baht.