News Column

BAY keeps SME loan growth goal

August 8, 2014

By Somruedi Banchongduang, Bangkok Post, Thailand

Aug. 08--Bank of Ayudhya (BAY), Thailand's fifth-largest lender by assets, is maintaining its 2014 growth target for SME loans at 13% despite the first-half figure falling far short of the target.

The economic recovery, which seems to be gaining traction in the second half, will be the main driver to achieving the full-year target, said Sayam Prasitsirigul, head of SME banking.

BAY targets expanding its SME loan portfolio by 13% to 207 billion baht this year.

Similar to its industry peers, BAY's SME loan portfolio grew by a mere 4.64% to 192 billion baht as of the end of June, as lenders were reluctant to issue new loans to SMEs, seen as the most vulnerable to the political uncertainty.

But Mr Sayam said SME loan demand had improved significantly, with loan applications now up 33% and loan extensions by 54% year-to-date.

BAY's SME customers are seeking loans to add to their working capital, as they need fresh funds to build up their inventories to cope with potential rising demand.

It has cut this year's GDP growth forecast to 2% but is maintaining its 13% SME loan growth target on hopes that the economy will turn around now that the military takeover has ended political tensions.

The 13% goal for SME loans was originally set based on an assumption that economic growth would come in at 3-4% this year.

"The Thai economy is expected to recover fully next year, led by government spending, but sentiment has already started to improve significantly," Mr Sayam said.

"The positive sentiment is restoring SME customers' confidence. They're more willing to honour their debts, which in turn leads to a decline in non-performing SME loans."

BAY shares closed yesterday on the Stock Exchange of Thailand at 48.75 baht, up 75 satang, in trade worth 8.57 million baht.

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Source: Bangkok Post (Thailand)

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