Tisco Bank, a subsidiary of Tisco Financial Group Plc, expects lower impairment charges this year as its coverage ratio exceeds the industry's average level.
The bank's non-performing loan (NPL) ratio this year will either be similar to or marginally lower than the 2.54% at year-end 2016, said group chief executive Suthas Ruangmanamongkol.
Last year the small bank set aside more than 4 billion baht as a loan-loss provision to use as a buffer against the NPL uptick.
After the country's largest maker of hot-rolled steel, Sahaviriaya Steel Industries Plc (SSI), won the Central Bankruptcy Court's approval to rehabilitate its business, the once-defaulted loans have become performing loans and have boosted the bank's coverage ratio to 140%, above the industry's average of 130%.
Tisco Bank is one among three major lenders to SSI, the other two being Krungthai Bank (KTB) and Siam Commercial Bank (SCB). SSI and its loss-making subsidiary, SSI UK, which operates a steel plant in Teesside, England, borrowed a combined 48.4 billion baht from the three lenders -- 22 billion each from KTB and SCB and 4.4 billion from Tisco Bank.
They defaulted in September in 2015.
In the meantime, the bank will keep its focus on middle-class depositors who deposit 1-10 million baht.
Tisco Financial Group recently announced it acquired the retail banking business of Standard Chartered Bank Thai (SCBT) for 5.5 billion baht, which covers credit cards, personal loans, business loans, wealth management, mortgage loans, bancassurance and retail deposits.
Tisco Bank's target depositors are also the major depositors of SCBT, said Tisco Bank president Sakchai Peechapat.
Tisco Bank and its sister firm All-Ways Company's acquisition of SCBT's retail banking business is aimed at strengthening and creating economies of scale for Tisco Bank's retail business and diversifying its products and services. Tisco Bank and its group do not offer credit card business.
The middle-class depositors largely park their money in time-deposits and this will help the bank control both operational and financial costs amid the rising interest rates, Mr Sakchai said, adding that it will better manage liquidity by matching fixed-deposits and auto loans.
The bank does not need more branches for deposit mobilisation.
Under the acquisition, six branches of SCBT will be transferred to Tisco Bank, adding to Tisco Bank's current 57 branches.
"Tisco will keep the existing business strategies, brand, conditions, and benefits offered by SCBT," Mr Sakchai said. "It will reconsider business strategy upon the completion of asset transfer completion, in around one year."
The bank aims for loan growth to be flat in terms for both total and auto loans this year, assuming the flat growth of new car sales at around 800,000 units.
Tisco Bank delivered a 17.8% increase in its net profit to 5 billion baht last year, thanks to a 7.8% rise in net interest income and a 1.6% increase in non-net interest income.
Its loans outstanding fell 5.6% from end-2015 to 224.9 billion baht at the end of 2016.