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Published on January 25, 2008

Thanachart Bank (TBank) says it has adjusted its business position from a niche bank to an international one, targeting more corporate loans following its partnership with Canada's Scotiabank.

The medium-sized bank has been concentrating on auto loans for more than 20 years, and auto hire-purchase loans make up 78.41 per cent of its overalll loan portfolio.

Last year, Scotiabank became TBank's strategic partner by acquiring 24.99 per cent of Thanachart Capital, which owns 74.92 per cent of the bank.

TBank now plans to "go international" with support from its new shareholder, Scotiabank, which will give it an advantage over others in the foreign banking business.

With this strategy, TBank will generate better returns, said Thanachart Capital president and CEO Suphadej Poonpipat.

TBank plans to increase its return on equity from 11.6 per cent at the end of last month to 15 per cent by the year 2010.

Being an international bank will reshape TBank's loan structure. It will expand corporate and small and medium-sized enterprise (SME) loans.

This will lower the proportion of vehicle loans in its portfolio, Suphadej said.

However, TBank will maintain auto hire-purchase loans as its core banking business.

Consumer finance still has high potential for growth, and the bank expects continuing good returns from these loan products, Suphadej said.

TBank expects to increase corporate and SME loans to 20 per cent and 5 per cent of total loans, respectively, within the next three years. At present, they represent 11.3 per cent and 1.5 per cent of total loans, respectively.

"Local exporters will be the bank's key target customers, particularly those who export to those new markets that are covered by Scotiabank's network.

"Companies that export to Middle East countries like Turkey and Egypt will be the bank's main target group, because Scotiabank has many branches in the region," Suphadej said.

Other local banking institutions generally do not focus on specific customer groups, because they have inadequate

networks.

This will be TBank's advantage.

Moreover, the bank plans to expand into other foreign banking businesses, including trade financing, foreign exchange and the treasury business, he said.

TBank will pay greater attention to SME loans by using its existing customer base in the auto industry, particularly car dealers.

In addition, TBank plans to increase its total assets from Bt321.25 billion now to Bt500 billion by the end of 2010, Suphadej said.

At the same time, the institution's market share in terms of deposit base is expected to rise from 4 per cent to 6 per cent.

Somruedi Banchongduang

The Nation