KTB eager to stay No.3 for SME loans

Firms with credit of B10-20m the focus

Krungthai Bank (KTB) is aggressively pursuing small and medium-sized enterprise (SME) loans in a bid to keep its third rank amid fierce competition.

Weidt Nuchjalearn, an executive vice-president, said KTB, the country's second-biggest lender by assets, expects 18-20% growth in SME loans this year to maintain the third spot.

Its SME loans amount to 325 billion baht, behind Kasikornbank (420 billion baht) and Bangkok Bank (385 billion baht).

Siam Commercial Bank (SCB) and Bank of Ayudhya (BAY) hold the fourth and fifth spots, respectively.

Competition in the SME loan market is intensifying as local commercial banks are drawn to attractive margins and potential growth.

At the same time, big firms have alternatives for raising funds beyond the financial institutions.

Bank of Thailand data show SME loans grew by 14.1% last year, exceeding overall lending growth of 13.7%.

"We have to stay away from the followers, as the No.4 bank is coming closer," said Mr Weidt.

KTB plans to focus on small firms with credit lines of 10-20 million baht, with their higher growth and yields.

The bank plans to increase its small-business loan portion to 30% of all outstanding SME loans by year-end from 18% now.

Sayam Prasitsirigul, BAY's head of SME banking, said his bank plans to expand its SME loan portfolio from 181 billion baht now to 320 billion in 2016 as part of an attempt to surpass KTB.

"The bank has set an ambitious SME loan growth goal of 15% a year over the next three years," he said.

"We will dedicate all our resources to achieving the goal."

Mr Sayam said BAY has enough staff but must improve productivity among the existing 700 SME managers to achieve the target.

The bank's network of 601 branches nationwide is a strength, he said.

BAY's strategic customer segments are small firms with credit lines of 12-30 million baht and retail business with credit lines of up to 12 million baht.

It projects loan growth of 21% for the small-business segment and 24% for retail business compared with 15% growth for medium-sized business loans.

In 2011, SCB announced a goal of cracking the top three in SME loans by raising its loan portfolio to 300 billion baht by this year under the Magic3 strategy.

Its outstanding SME loans stand at 299 billion baht, just shy of the target, at the end of 2012.

About the author

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Writer: Somruedi Banchongduang
Position: Business Reporter