Thursday, July 31, 2008

Thailand's TMB has posted B55 billion baht of bad loans over past 2 years has to wonder how these smiling faces below will affect people on the 'street'. From my vantage point here in Bangkok, it is already obvious with the cranes of new construction going silent every day. All one has to do is ride the Skytrain around town to see the impact, and these are not the same cranes still swaying in the wind from the 1997 financial tsunami. These are new ones from new projects. I will post photos in coming days of huge projects which have gone silent. - Saigon Charlie

Largest sale ever for a Thai bank


Discussing the bank's outlook yesterday, from left: Ramky Subramanian, chief of retail banking; new TMB chief executive Boontuck Wungcharoen; and Bart Hellemans, chief risk officer.

TMB Bank plans to sell off 30 billion baht worth of distressed loans and assets this year as part of a sweeping overhaul of the bank's portfolio. Boontuck Wungcharoen, the bank's new chief executive officer, said TMB would sell 20 billion baht worth of non-performing loans and 10 billion in non-performing assets by the end of the year.

The sale is part of a seven-point, three- to five-year strategic plan aimed at positioning the country's sixth-largest bank in asset size to become a leading bank in Thailand.

Mr Boontuck, a veteran of Kasikornbank, takes up the helm of TMB as the bank continues to evolve following last December's entry of the Netherlands-based ING Group as a 30% strategic partner.

TMB has posted losses of more than 55 billion baht over the past two years because of the need to raise provisions to cover possible loan losses as well as charges against goodwill from the 2004 merger of the bank with DBS Thai Danu Bank and the Industrial Finance Corporation of Thailand.

For the first half of the year, the bank posted consolidated net profits of 2.74 billion baht, a sharp turnaround from losses of 18.147 billion in the same period last year. First-half results included new loan-loss provisions of 1.63 billion baht.

Net interest income, however, rose only a modest 2.5% year-on-year in the first half, with non-interest income up 3.2% thanks to gains in fee and service income from subsidiaries and gains on foreclosed properties. Net interest margins rose to 2.6% in the first half from 2.3% in the same period last year.

The bank's loan book contracted by 6.2% from the end of last year to 436.17 billion baht at the end of June as it moved to clean up low-yielding loans.

Mr Boontuck said the bank expected new lending of 20 billion baht in the second half of the year after a decline of 27 billion in the first half.

With the non-performing loan and asset sale _ the largest ever for a Thai bank _ TMB was expected to see a decline in lending for the full year, he said.

Gross non-performing loans are projected to fall to below 10% of total loans by the end of the year from 16% now with the asset sale.

Mr Boontuck said the bank had already fully provisioned against the 30 billion baht in bad assets for sale, adding that its capital adequacy ratio of 16.5% was sufficient to cover future growth.

TMB, which had deposits of 434.8 billion baht at the end of June, aimed to expand its deposit base by 25 billion in the second half after a 6.6% decline in the first half.

The bank plans to open 40 new branches in the second half from 473 now, and renovate another 20 branches.

Mr Boontuck said TMB was also planning to expand into wealth management as part of a strategy to offer a full-range of financial services for clients, with an aim to attract customers with minimum deposits of three million baht.

The bank's two asset management firms, TMB Asset Management and ING Asset Management, could also be integrated in order to present a clearer picture of the full group, he said.

Shares of TMB closed yesterday on the Stock Exchange of Thailand at 1.12 baht, up one satang, in trade worth 41.68 million.

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