CIMB Thai Bank targets 200 billion baht in sustainability loans

CIMB Thai Bank (CIMBT) aims to capitalise on the burgeoning demand for sustainability-linked loans, projected to be worth 200 billion baht (US$6 billion) among major local corporate clients within the next two years, particularly targeting the oil, gas, and energy sectors.

Jason Lee, CIMBT’s head of sustainability, projects that around 300 large Thai corporations will seek transition financing over this period, generating substantial demand.

The bank has yet to define a specific target for sustainable finance, as it awaits the parent company, Malaysia’s CIMB Group, to finalise its medium-term business plan for 2025 to 2030. Lee mentioned that from 2021 to 2024, CIMB Group provided 100 billion ringgit (roughly 770 billion baht) (US$23 billion) in sustainable finance.

Between 2022 and 2023, CIMBT extended 30 billion baht (US$905 million) in sustainable financing to large local corporations, representing 4% to 5% of its overall corporate loan portfolio.

CIMB Group aims to progressively increase the share of sustainable financing in its total loan portfolio yearly, following Malaysia’s central bank guidance, which encourages the sector to expand sustainable finance to 50% of total loan portfolios over time, said Lee

“CIMB Group is expected to set ambitious sustainable finance targets in its upcoming five-year business plan.”

CIMBT is planning to boost the share of its sustainable finance portfolio to 20% of total corporate loans by 2030.

In the initial phase of transition financing in Thailand, CIMBT will focus on assisting businesses in the oil, gas, and energy sectors to transition from higher carbon emissions (brown) to lower carbon emissions (less brown).

Lee noted that while the Bank of Thailand’s taxonomy encourages commercial banks to support local businesses in reducing carbon emissions, it does not specify targets for the proportion of sustainable finance in commercial banks’ loan portfolios.

Currently, sustainable finance comprises about 5% of total corporate loan portfolios across the commercial banking sector, though one state-owned bank has increased its sustainable finance portfolio to 20% of its total corporate loans, according to Lee.

Besides sustainability-linked loans, CIMBT now offers a variety of sustainable finance products to corporate customers, including transition loans, transition bonds, and sustainable derivatives, reported Bangkok Post.

The bank has also established an Environmental, Social, and Governance (ESG) Advisory unit to assist Thai companies in aligning their operations with international net-zero emission standards.