Islamic Bank of Thailand (IBank) was given the green light on Wednesday to exit its rehabilitation plan by the State Enterprises Policy Commission (superboard) thanks to its improving operating performance.
Piyawan Lamkitja, deputy director-general of the State Enterprise Policy Office (Sepo), said the financial status of IBank has significantly improved after the Finance Ministry pumped new funds worth 18.1 billion baht into the bank through a recapitalisation last year.
The Finance Ministry's shareholding in the bank increased to 99.71% from 48.5% before the recapitalisation.
Ms Piyawan said IBank delivered a net profit of 590 million in 2018, marking the first profit in five years.
"The superboard sees the bank has produced good operating results and net profit last year, and management and working procedures have improved, which will help tackle the bank's financial problems and enhance efficiency in the future," said Ms Piyawan. "Thus IBank was approved to exit the rehabilitation plan, with the Finance Ministry assigned to continue supervising the bank."
IBank president Wuttichai Suraratchai recently said the bank aims for loans outstanding to grow to 12.5 billion baht this year, up from 8 billion in 2018, while net profit is estimated to jump to 1.08 billion this year.
Both Muslim and non-Muslim customers are the bank's targets. IBank caps lending to non-Muslim borrowers at 500 million baht per borrower.
IBank is one of seven state enterprises forced into business rehabilitation after accruing high non-performing loans and net losses.
The other six are Thai Airways International, the State Railway of Thailand, the Bangkok Mass Transit Authority, TOT Plc, CAT Telecom and the Small and Medium Enterprise Development (SME) Bank of Thailand.
SME Bank exited its rehab plan after earnings turned a corner.
The bank has seen its non-performing financing (NPF) drop significantly after transferring NPF worth 50 billion baht to Islamic Bank Asset Management Co Ltd, which is wholly owned by the Finance Ministry, in return for 22 billion baht in promissory notes.
Over the next three years IBank wants to focus on restructuring loans extended to troubled debtors who still have repayment ability, Mr Wuttichai said. It will take legal action against those who can no longer negotiate.
