Scheduled to list on the Stock Exchange of Thailand next Friday, Thai Credit Bank Plc (CREDIT) is set to become the first banking initial public offering (IPO) stock in a decade and the 12th bank listed on the bourse.
Founded by the Chaiyawan family, Thai Credit operated with a retail bank licence for more than 17 years under the name Thai Credit Retail Bank.
The bank received a full commercial bank licence from the Finance Ministry on Aug 17 last year.
FAMILY AFFAIR
Thai Credit is the second business owned by the Chaiyawan family to list on the Stock Exchange of Thailand (SET) after Thai Life Insurance Plc (TLI) floated shares on July 25, 2022, which was the largest IPO of that year.
Mr Winyou said the outstanding character of Thai Credit is its business model is similar to a non-finance business, but it is highly regulated as a commercial bank under the supervision of the Bank of Thailand.
The commercial bank focuses on nano- and microfinance, micro small and medium-sized enterprises (SMEs), home loans, and groups that do not have full access to financial services, said chief executive Winyou Chaiyawan.
Mr Winyou said Thai Credit started its business with the same model as other commercial banks, following this scheme for about five years.
During that period, banking was highly competitive and new players such as Thai Credit found it difficult to compete in every segment, he said.
"We reviewed our business model and started to focus on loans for SMEs, where competition was weaker because big banks didn't pay much attention to this field," said Mr Winyou.
"Yet loan demand from customers in this group was high."
Micro-SMEs, which are classified as recording annual revenue of no more than 1.8 million baht and employing up to five people, are estimated to total 3.2 million nationwide and there is ample room for loan growth in the segment, he said.
"Our customer base is large and they play a vital role in driving the economy," said Mr Winyou.
SMALL LENDING FOCUS
He said since Thai Credit turned its focus to small business loans, the bank has grown on average by 30% per year the past three years and expects to expand 20-30% over the next 3-5 years.
The bank provides deposit, foreign trade loans and other services related to banking, with a goal to expand to other areas, said Mr Winyou.
Mr Winyou said the outstanding character of Thai Credit is its business model is similar to a non-finance business, but it is highly regulated as a commercial bank under the supervision of the Bank of Thailand.
For nanofinance lending, where competition is not high, Thai Credit has the highest net interest margin, the lowest cost-to-income ratio and the highest loan growth rate in the industry, he said.
As of September last year, the bank tallied total retail loans worth 140 billion baht.
"Many banks view small business loans as risky because they can potentially lead to higher non-performing loans [NPLs]. That prompted large banks to shy away from SME and nanofinance loans," said Mr Winyou.
For Thai Credit, NPLs in the first nine months of 2023 totalled 4% of its loan portfolio.
"That is not much, partly because most of the bank's customers have received loan guarantees from the Thai Credit Guarantee Corporation," he said.
"The key factor driving us to become a leader in SME lending and nanofinance is our staff, who are fully dedicated in terms of getting to know our customers, making it possible to curb bad debts.
"We now focus on small merchants who sell goods in fresh markets across the country. Our staff work very hard to get to know the customers, granting loans to those who have the ability to service payments. This is an area where we see room for growth."
DON'T STOP EVOLVING
Mr Winyou said the outstanding character of Thai Credit is its business model is similar to a non-finance business, but it is highly regulated as a commercial bank under the supervision of the Bank of Thailand.
"Although the business has grown rapidly over the past 5-8 years, Thai Credit has not stopped evolving," he said.
The bank offers digital banking services, including a micro-pay e-wallet application where customers can receive, pay and borrow money, enabling bank staff to look after the customers.
As of September last year, there were more than 400,000 downloads of the app with more than 13 billion baht worth of transactions.
In addition, the "Alpha by Thai Credit" mobile app was developed to offer customers cash deposits and withdrawals without visiting a branch.
The app also reduces the bank's operating cost.
During 2020-22 and the first nine months of 2023, Thai Credit earned net interest income of 6.37, 8.49, 11.1 and 9.78 billion baht respectively, with net profits of 1.37, 1.94, 2.35 and 2.82 billion baht.
The return on equity for these four periods was 18.0%, 20.7%, 18.9% and 21.8% respectively.
The bank's loan portfolio totalled 68.6, 97.7, 121 and 138 billion baht during these four periods, for a compound annual growth rate of 33%.
With an IPO price of 29 baht apiece, CREDIT is offering 347,029,122 shares to the public through 10 securities companies and leading banks.
Most of the funds raised from the IPO will be used to strengthen the bank's capital, expand its loan portfolio, and develop its IT system via a digital transformation strategy by improving IT security and infrastructure, said Mr Winyou.
The remainder of funds will be reserved as working capital and for business expansion, he said.
"For executives, listing on the SET opens a new chapter for the bank, enabling it to grow substantially as in the past several years," said Mr Winyou.
