CIMBT sees demand for sustainability-linked loans
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CIMBT sees demand for sustainability-linked loans

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CIMBT's booth at Money Expo 2024 held in May at Impact Muang Thong Thani. The bank plans to raise the proportion of sustainable finance in its corporate loan portfolio to 20% by 2030. (Photo: Varuth Hirunyatheb)
CIMBT's booth at Money Expo 2024 held in May at Impact Muang Thong Thani. The bank plans to raise the proportion of sustainable finance in its corporate loan portfolio to 20% by 2030. (Photo: Varuth Hirunyatheb)

CIMB Thai Bank (CIMBT) plans to tap into demand for sustainability-linked loans estimated to be worth 200 billion baht among large local corporate clients over the next two years, focusing on the oil, gas and energy sectors.

Jason Lee, CIMBT's head of sustainability, said demand is expected to be generated by around 300 large Thai corporations seeking transition financing during the two-year period.

CIMBT has not set a specific target for sustainable finance as it is awaiting its parent company, Malaysia's CIMB Group, to finalise its medium-term business plan for 2025-2030, said Mr Lee.

From 2021 to 2024, CIMB Group provided 100 billion ringgit (around 770 billion baht) in sustainable finance.

From 2022-2023, CIMBT provided a total of 30 billion baht in sustainable financing to large local corporations, accounting for 4-5% of its overall corporate loan portfolio.

CIMB Group said it wants to steadily increase the proportion its sustainable financing contributes to the total loan portfolio annually, in line with guidance from Malaysia's central bank, which is encouraging the sector to grow sustainable finance to account for 50% of total loan portfolios over the longer term.

According to Mr Lee, CIMB Group is expected to set ambitious sustainable finance targets in its upcoming five-year business plan.

CIMBT plans to increase the proportion its sustainable finance portfolio contributes to its total corporate loans to 20% by 2030.

In the first phase of transition financing in Thailand, CIMBT is focusing on the oil, gas and energy sectors, helping businesses transition from brown to less brown organisations.

He said while the Bank of Thailand's taxonomy encourages commercial banks to support local businesses in gradually transitioning from high (red and brown) to lower carbon emissions (less brown), the central bank has not set specific targets for the proportion sustainable finance should comprise in commercial banks' loan portfolios.

Sustainable finance accounts for around 5% of total corporate loan portfolios across the commercial banking sector.

However, one state-owned bank has increased its sustainable finance portfolio to 20% of its total corporate loan portfolio, said Mr Lee.

In addition to sustainability-linked loans, CIMBT now offers a range of sustainable finance products to corporate customers, including transition loans, transition bonds and sustainable derivatives.

The bank also established an ESG Advisory unit to assist Thai companies in transitioning to lower carbon operations, aligning with international net-zero emission standards.

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