CIMB Thai Bank (CIMBT) expects to grow offshore loans this year thanks to regional business expansion of large local corporations, in line with Asean's economic growth.
For the first half of 2023, offshore loans outstanding grew to 66 billion baht, up 70% from the end of last year. The bank expects continued growth in the second half, attributed to the high potential of the regional economy, said senior executive vice-president Wut Thanittiraporn.
Large local corporations have expanded operations in regional markets through several entry modes including outbound direct investment, exports, joint ventures, partnerships as well as mergers and acquisitions (M&A).
The regional business expansion is led by the energy, petrochemical, food and beverage, agriculture, and retail sectors, he said.
Mr Wut said the bank has some big M&A deals in the pipeline by large local corporate customers who want to invest in the regional market.
The deals are expected to be completed within this year which would support the bank's offshore loans. As a result, CIMBT is targeting to expand the loan portfolio to 100 billion baht by the end of the year from the existing 66 billion baht.
There are greater opportunities for business expansion and investment across the region in accordance with the high growth potential of the the post-pandemic Asean economy.
In addition, the US-China trade dispute has prompted manufacturers to relocate from China to the region. Meanwhile, each Asean economy will benefit from such relocation differently based on economic context and the strategies of investors.
CIMBT has a significant role in the parent group's Asean strategy, given that Thailand is one of the largest economies in the region and is a key market for the group.
"We believe CIMBT's cooperation with the regional franchise in Malaysia, Singapore, Indonesia and Cambodia creates meaningful synergies, and this will continue to reinforce the bank's strategic position within the group over the medium term," he said.
The delayed formation of the new government has not affected the investment plans of large local and regional corporations. Thailand still attracts foreign direct investment, particularly in the electric vehicle (EV) and EV battery sector.
Normally, politics is a key con- sideration for clients and they would adjust their strategies in line with the situation, Mr Wut said.
"Internal politics is a known factor which corporate customers have priced into their business plan. Thailand and Cambodia have completed their general elections, while Singapore and Indonesia are scheduled to hold general elections next year," he said.
Business operators mainly focus on the economic policies of the new government, especially the daily minimum wage and taxes, which directly affect the cost structure of the private sector. Moreover, corporate customers also face higher financial costs in line with rising interest rates.
Given the good asset quality of corporate loans, CIMBT's non-performing loan ratio stands at 2% and may decline in line with the loan portfolio expansion this year, he said.