THAI CREDIT Retail Bank (TCRB) is embracing nano-finance as a growth engine to double its asset size to between Bt60 billion and Bt70 billion within three years, said chief executive officer Winyou Chaiyawan.
Under the nano-finance scheme initiated by the Finance Ministry, each borrower can apply for credit of not more than Bt100,000 at an interest rate of up to 36 per cent per annum without any collateral.
More non-banks have joined the nano-finance programme than banks because the latter do not focus on micro-enterprises. But TCRB applied for a nano-finance licence as it was familiar with small enterprises, and the bank hopes that this kind of lending will be a growth engine in the future, Winyou said.
Small businesses currently account for 60-70 per cent of TCRB's loan portfolio of Bt20 billion.
The bank targets an assets portfolio of Bt30 billion this year.
TRCB grants credit lines of Bt2 million to Bt10 million to small businesses and Bt10 million to Bt50 million to medium-sized enterprises.
He said the bank wanted to focus on small enterprises, so it decided to stop offering housing and auto loans to retail customers.
TCRB has positioned itself as a lender to small businesses, a model that is different from other nano-finance providers, which are mostly hire-purchase (lease to own) companies.
"We have teams to survey small businesses in the fresh markets and among street food vendors. Local staff know the background of borrowers well.
"Since the bank [began providing] nano-finance, no bad debt has occurred because small businesses want to keep their credit in order in case they want more," he explained.
Slight increase in NPLs
The bank's non-performing loans stand at 3 per cent of the total, and have increased slightly in line with loan expansion. He said the bank had also witnessed a rise in debt restructuring but no more than in the banking industry as a whole.
Under its retail banking licence, TCRB is unable to offer corporate loans. It has no plan to upgrade to a commercial bank because it is able to maintain a high net interest margin by lending only to small and medium-sized enterprises.
Winyou said TCRB could be the only bank with an NIM of more than 4 per cent. The high yield allows it to offer high interest rates for its deposit products, its main funding source for lending.
The bank has divided its branches into two models, for deposits and for lending. It has 20 deposit branches and 60 lending branches.
It will increase the number of lending branches based on the location of large numbers of vendors who are not the focus of commercial banks.
Each year, TCRB targets new lending of Bt8 billion to Bt10 billion, and having a nano-finance product should help it achieve that target