The state-owned Small and Medium Enterprise Development Bank of Thailand (SME Bank) yesterday got the nod from the State Enterprises Policy Commission (superboard) to exit its rehabilitation plan, thanks to its improving operating performance and significantly lower non-performing loans.
It took SME Bank three years to tackle its ailing financial state before succeeding in cutting its non-performing loans to 16 billion baht or 16.8% of total lending in 2017 from 32 billion or 40% in 2014.
SME Bank last year provided 98 billion baht worth of new loans, 93.4 billion of which was extended to SMEs for not more than 15 million each.
Ekniti Nitithanprapas, director-general of the State Enterprise Policy Office, said SME Bank has fared better than the requirements set by superboard, with the proportion of its NPLs to new loans in 2017 standing at only 0.21% against the required level of 0.25%.
According to the requirements of the superboard, the bank can be removed from the list of ailing state enterprises if it manages to lower its NPLs to below 18 billion baht and if less than 5% of its new loans turn sour.
SME Bank is among seven state enterprises under rehabilitation. The others are Thai Airways International, the State Railway of Thailand, the Bangkok Mass Transit Authority, TOT Plc, CAT Telecom and the Islamic Bank of Thailand (IBank).
SME Bank suffered a massive net loss of 4.03 billion baht in 2012 before rallying back to a net profit of 396 million baht in 2013, 176 million in 2014, 1.24 billion in 2015 and 1.60 billion in 2016.
Mr Ekniti said IBank has also done quite well in its rehabilitation efforts, saying the bank is making a lot of progress in separating its bad loans.
IBank was yesterday ordered by the superboard to find new partners by March after the law governing the bank is successfully amended to permit the Finance Ministry to hold a higher stake than the current limit of 49%.
The amendment is scheduled to be read by the National Legislative Assembly next month.
The loss-making IBank has long sought a new partner, though that plan has hit a snag as interested investors have requested that the state-owned bank finish recapitalising beforehand to raise its capital adequacy ratio (CAR) to be in line with the Bank of Thailand's minimum requirement of 8.5%.
To reach that requirement, IBank needs to raise its capital by 20 billion baht. But the superboard has only approved injecting 18 billion baht into the bank.