Siam Commercial Bank (SCB) remains focused on fee-based income from wholesale banking business rather than loan growth in its effort to achieve 15% growth in fee-based income this year.
Thailand's third-biggest lender by assets has enjoyed roughly 20% annual growth in fee-based income over the past several years and the more modest 2014 target stems from a larger base, said senior executive vice-president Arthid Nanthawithaya.
The bank's fee-based income at the moment forms half of total revenue generated from wholesale banking, up from 35% in the past, and plans call for maintaining the existing level to balance SCB's income structure.
"We have set a goal that our fee-based income will stand at 25-30% of the corporate loan portfolio in the long run," said Mr Arthid, who heads SCB's wholesale banking group.
"We are committed to the target, though the ratio is still far from the goal. To achieve the target, we need to raise fee-based income aggressively while keeping corporate loan growth at a slow pace," he added.
Corporate loans typically contribute lower margins due to lower risk.
SCB's corporate loans at the end of March were up 1.9% from the end of 2013. Corporate loans outstanding at the end of the first quarter reached 641.32 billion baht, accounting for 36% of the bank's total lending.
SCB aims to deliver corporate loan growth of 2% this year.
Mr Arthid said the bank will concentrate on offering financial services that generate fee-based income, rather than extending loans to corporate clients. If corporate customers seek to borrow a hefty amount, the bank will offer them a syndicated loan option.
Fee-based income from corporate banking normally comes from three main services: investment banking, capital markets and financial markets.
The three services normally contribute evenly to the bank's income. But financial market service, which covers foreign exchange and trade finance, has provided less than the others this year in line with weak exports.
Mr Arthid said investment banking is showing a positive trend amid improving economic sentiment after several deals were delayed during the tumultuous first half.
SCB has several merger and acquisition deals in the pipeline, involving both mid-sized and large firms.
But state enterprise deals have been delayed as the bank awaits clearer policies and the direction of the 17-member superboard overseeing state enterprises.