Bank of Ayudhya (Krungsri) is upbeat about achieving small and medium-sized enterprise (SME) loan growth of 2-3% this year, following an uptick in the first quarter as the Thai economy gradually recovers.
According to Duangkamol Limpuangthip, head of the SME banking group, Krungsri expanded its SME loans by more than 2% as of the end of March this year and the bank intends to sustain this momentum, keeping pace with the country's economic expansion.
Krungsri, the country's fifth-largest lender by total assets, booked aggressive SME loan growth of 11% in 2023, with outstanding SME loans tallying 340 billion baht.
The more conservative target of 2-3% growth this year remains a challenge because of sluggish economic conditions, she said.
The bank anticipates Thai GDP growth of 2.7% in 2024.
According to Ms Duangkamol, the bank adjusted its SME loan criteria to suit the post-pandemic economic landscape, ensuring normalisation.
Despite the stagnant economic growth, the bank is maintaining its SME loan standards without tightening conditions, she said.
However, the bank will selectively offer loan products to maintain asset quality, said Ms Duangkamol.
"SMEs need to adapt their business operations, focusing on financial restructuring," she said.
"Enhancing their financial structure will bolster liquidity and cash flow, fortifying their capacity for debt repayment."
Financial restructuring can also help SMEs alleviate their financial burdens and better manage funding costs, especially with elevated interest rates.
Inefficient financial structures are a partial factor for non-performing loans (NPLs) among SMEs, said Ms Duangkamol.
She said Krungsri stands prepared to assist vulnerable clients through both financial and debt restructuring initiatives.
This year the bank aims to keep SME NPLs at a ceiling of 2.5% of SME outstanding loans, which are projected to reach 350 billion baht by year-end, said Ms Duangkamol.
She also highlighted the bank's focus on environmental, social and governance (ESG) loans for this year.
Krungsri expects to issue about 4.5 billion baht worth of new ESG loans to SME customers this year, up from 4 billion the previous year.
These ESG loan products encompass solar energy, electric vehicle charging stations, transformation loans, and initiatives promoting gender equality.
The bank also wants to concentrate on digital banking services to facilitate business expansion this year.
The digital banking platform for SMEs, known as Krungsri Biz Online, encourages digital transactions.
With 40% growth in digital transactions for SMEs last year, the bank anticipates sustained positive growth in digital transactions this year.