TMB Bank hopes to see corporate term loans make up half of outstanding loans over the next five years, bolstered by the government's 2-trillion-baht borrowing plan for infrastructure investment, said a bank executive.
Chief wholesale banking officer Piti Tantakasem said TMB has planned to increase its term-loan portfolio as it provides a strong margin in the long run compared to other types of loans.
Corporate term loans now make up 20% of its corporate loans while the rest are loans for working capital.
Normally, long-term loans carry a higher margin than short-term loans but they are also more risky.
Many companies are eyeing a piece of the megaprojects, particularly those in the building and construction-material sector, and have expanded their capacity utilisation to support them.
Last week, Prime Minister Yingluck Shinawatra reassured local bankers that projects under the 2-trillion-baht borrowing will definitely begin next year. The borrowing bill has been debated by the parliament since last week.
Recently, TMB took part in Tisco Bank's syndicated loan worth 4 billion baht for the country's third-largest cement maker TPI Polene for capacity expansion. TMB also provided another syndicated loan worth 15 billion baht with other three banks to support investment in the mass-transit Purple Line.
"Initially, the 2-trillion-baht megaproject investment would benefit building and construction-material companies. The sector has started to show positive signs with new investment and this will facilitate term loan growth," Dr Piti said.
Liquidity would not be a problem for the bank in financing the megaprojects because the government's infrastructure investments span over seven years.
Apart from deposits, the bank has another 30-40 billion baht in government bond investment. As of June, its deposit portfolio was at 478.14 billion baht while the loan-to-deposit ratio stood at 97.1%.
He said the bank's corporate loan expansion has slowed down in the second half of the year compared with the first half, especially working capital loans, in accordance with the country's sluggish economy and sinking exports. However, the economic situation is expected to pick up in the third or fourth quarter of the year supported by seasonal factors.
TMB, the country's seventh largest bank by total assets, booked marginal growth for wholesale loans at 2% for the first six months of the year. Corporate loan portfolio represents the biggest portion of 47% of total loans outstanding, followed by 35% of small and medium-sized enterprise business, and 18% of retail banking business.