SME Bank looks to increase public service account share

SME Bank looks to increase public service account share

Mongkol: Supporting local small business
Mongkol: Supporting local small business

The state-owned Small and Medium Enterprise Development Bank of Thailand (SME Bank) aims to raise its lending ratio for public service accounts (PSAs) to 52% of its loan portfolio and cut its bad loans to 10% this year, says its chief.

The bank is still pursuing its mission to offer low-rate loans to support local SMEs in compliance with the government's policy, said president Mongkol Leelatham. SME Bank raised its loans under PSAs to 35% of its portfolio last year, up from 27% in 2016.

The emphasis on PSAs cost the bank 547 million baht in forgone income last year, Mr Mongkol said.

SME Bank achieved its target in extending loans under PSAs, lending 8 billion baht under the 10-billion-baht SME development loan scheme to 1,923 operators. A further 294 million baht of the 8-billion-baht micro-SME loan scheme went to 329 operators as of May 28.

The bank posted an operating profit of 2.02 billion baht with a net profit of 457 million last year after setting aside loan-loss provisions.

Earlier this year, SME Bank received approval from the State Enterprises Policy Commission to exit its rehabilitation plan after improving operating performance and cutting non-performing loans (NPLs) over the past three years.

The bank was 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.

SME Bank suffered a 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 Mongkol said SME Bank's NPLs fell to 16.9 billion baht, representing 17% of loans outstanding at the end of 2017, from 18 billion or 19% at the end of 2016.

The bank's bad loans peaked at 35 billion baht or 40% of total lending several years ago.

Mr Mongkol said 3.28 billion baht or 3.32% of the bank's new loans extended during 2015-17 turned sour. But the bad loan rate fell to 891 million or 1.32% of new loans during 2016-17, due to debt restructuring efforts and better-quality loans.

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