TMB BANK slams brakes on loans as economy takes toll

"The bank may revise the loan target to 5 per cent, from 8 per cent before, but we need to talk first in June or July. In the first five months, we still made a profit as targeted but were not aggressive in looking for new customers, because of the high risk of lending to them," president and CEO Subhak Siwaraksa said yesterday.

Loan applications have dropped in half from two years ago, when economic conditions were more normal, he said.

TMB will no longer bank on Bt40 billion in new loans this year, because the sluggish economy caused it to be wary of lending to new customers. By managing its deposit base, its cost of funds has declined. That widened its net interest margin from 2 per cent in the first quarter to 2.6 per cent now. The bank will keep this spread.

Compared with other big banks, the spread is still slimmer, because the retail-loan proportion of the bank is small, he said.

The bank has earned Bt400 million to 500 million in fee income for the last six months from its bancassurance tie-up with ING of the Netherlands. It expects to get Bt500 million to 600 million more in the rest of the year. The bank's staff is being trained to sell insurance.

The bank aims to cut its non-performing loans from 14 per cent of total loans to less than 10 per cent by year-end by getting rid of about Bt30 billion of NPLs through debt-restructuring, lawsuits or sales to its asset management company.