Bank of Ayudhya frets over slowing trade loan demand
Bank of Ayudhya (BAY) is uncertain whether it can maintain double-digit growth for small- and medium-sized enterprise (SME) trade finance this year, as global trade spats are dampening loan demand.
Trade loan demand, particularly from exporters, is diminishing primarily because of the trade dispute between the US and China, said head of the SME banking group Sayam Prasitsirigul.
While the bank delivered 11% year-on-year growth in SME trade finance during the first nine months of the year, it should have expanded faster, Mr Sayam said.
"The trade war will be a key challenge that pressures trade finance business from now on amid the growing uncertainties," he said. "We cannot confirm if loans are able to expand at a double-digit rate for this quarter and the full year."
The bank hopes to keep the current growth rate through year-end, Mr Sayam said.
BAY, the country's fifth-largest lender by assets, defines small-sized enterprises as those with annual sales of 20-150 million baht, while medium-sized enterprises are those with annual sales of more than 150 million to 1 billion baht.
The bank recorded 31% growth in trade finance last year, buoyed by SME business restructuring. A low comparative base also contributed to the robust growth.
BAY plans to diversify its trade finance customer base into supply chain, which showed 18% year-on-year growth for the first nine months of 2018.
The positive growth in supply chain business was attributed to Japan-based clients, thanks to a collaboration with major shareholder Mitsubishi UFJ Financial Group (MUFG).
Mr Sayam said acquiring new clients and becoming their main lender are key strategies for SME loan growth. As of September, the bank's total SME loan portfolio had reached 194 billion baht, up 13% from the end of last year, while 50% of total loans outstanding were from new clients.
"SME loans outstanding of 194 billion baht as of September already exceeded the full-year target of 185 billion," Mr Sayam said.
BAY shares closed yesterday on the Stock Exchange of Thailand at 40.50 baht, unchanged, in trade worth 1.6 million baht.