CIMB Thai Bank looks beyond loans for growth amid sluggish economy
Thailand’s economy is underperforming regional peers as consumers and small firms pay off debts accrued under a populist government toppled by the military in 2014. Growth is forecast at just over 3 per cent for 2016, up from 2.8 per cent in 2015.
“The economy will continue to be quite sluggish,” CIMB Thai Chief Executive Subhak Siwaraksa told Reuters in an interview yesterday. “We have adjusted our business strategy. You have to recognise that as a bank now we do more than loans.”
CIMB Thai Bank, a unit of Malaysia’s CIMB Group Holding Bhd , is Thailand’s ninth-biggest lender by assets.
Revenue generated from the non-interest side of the business accounted for about 40 per cent of the firm’s total, Subhak said. The firm is one of Thailand’s top-two bond underwriters and has about 50 per cent of the market in structured products, he said.
Advising Thai corporates expanding in South-east Asia and providing financing for the expansion was another area of growth for the bank, he said, and played to CIMB’s presence across the region.
The bank is currently advising Thai firms seeking to expand in Indonesia and Malaysia, especially in power, retail, manufacturing and property, he added.
CIMB Thai still expected to grow its retail loan portfolio 10 per cent this year, and corporate loans by 10-15 per cent, he said, even with relatively slow economic growth.
The bank’s bad loan portfolio should peak in 2017 at around 4 per cent of total loans, Subhak said, up from below 3 per cent now.
Bad debt would continue to increase as consumers defaulted on loans that were granted before the 2014 coup, he said.
“It will creep up, it’s unavoidable,” he said. “We are in the midst of working out the effects of a populist hangover. These are loans of what you might call 2014 vintage.”
The bank, which has assets of US$8.52 billion (RM34.9 billion), is increasing its online presence through a tie-up with mobile operator Advanced Info Service (AIS), which allows AIS subscribers to open bank accounts without visiting a branch.
As it boosts online banking, the firm has shut down branches and now has around 100 branches, down from 160 when it started the reduction two years ago, he said, adding the cut in the number of branches has had no impact on deposits. — Reuters
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