TMB Bank has made a grim forecast that its net lending this year will be about Bt10 billion, far below its target of Bt40 billion to Bt50 billion.

One consequence of the lower-than-expected loan growth is a new estimate that the bank's net profit for 2006 will be lower than last year's, chief executive Subhak Siwaraksa said yesterday.

Thailand's fifth-largest bank posted a net profit last year of Bt7.8 billion. Its net profit for the first nine months of this year was Bt4.26 billion.

If the estimate is accurate, TMB Bank's lending growth in 2006 will be a mere 2 per cent to 3 per cent, compared to the target of 8 per cent set at the end of last year.

"Several corporate customers prematurely repaid loans with a combined value of about Bt15 billion. This significantly affected our wholesale loans, although SME [small- and medium-sized enterprise] loans and retail loans are still in good shape," Subhak said.

TMB Bank is not the only bank feeling the pinch of premature loan repayments. Several others have suffered the same problem as debtors moved to avoid interest-rate hikes while struggling with higher oil prices and political turmoil. However, the other banks have kept their loan-growth targets unchanged.

Bangkok Bank is aiming for 3 per cent, Krung Thai Bank for 7 per cent, Siam Commercial Bank for 10 per cent and Kasikornbank for 6 per cent to 9 per cent. Bank of Ayudhya, earlier aiming for loan growth of 6 per cent to 8 per cent, recently opted for a lower target of 4 per cent to 5 per cent.

Subhak said TMB Bank was quite confident of achieving this year's target growth of 8 per cent to 12 per cent for SME loans and consumer loans.

He said the bank's fee income - another major source of revenue - was maintaining its potential for growth with an impressive year-on-year expansion of between 20 per cent and 30 per cent in the third quarter.

The bank is planning to focus on its SME and retail loans next year. The proportion of the bank's overall loan portfolio held by SME loans is targeted to increase from 48 per cent to 50 per cent next year and consumer loans from 16 per cent to 18 per cent, while corporate loans will decrease from 42 per cent to 32 per cent.

"We will pay more attention to SME and retail loans because their spread is higher than corporate loans and wholesale loan competition is very high. The bank believes its loan growth will return to normal levels next year," Subhak said, adding that large premature repayments are unlikely to occur again in 2007.

Somruedi Banchongduang

The Nation