KTB bases targets on low spending
Krung Thai Bank (KTB), the country's largest state-owned bank, has set two growth scenarios for this year in the aftermath of the great flood.
Under the more conservative scenario, people who suffered from the flood will save their money and spend less to avoid increasing their financial burden, and as a result, domestic consumption will not grow. In this circumstance, KTB foresees that its lending will expand by 5-7 per cent.
KTB president Apisak Tantivorawong noted that the flood seriously affected the economy and pulled down consumption in the fourth quarter of 2011. If this mood continues through the first half of 2012, the bank will not enjoy strong growth.
However, he believes the government can handle the situation if it sees that domestic consumption is likely to fall.
The country should rely more on domestic consumption because the health of the global economy is uncertain, he said.
A less-gloomy scenario, driven by private-sector investment and a resumption of industrial operations, is for higher consumption, with loan growth doubling that of gross domestic product, Apisak said.
However, the bank gives more weight to the conservative scenario because it wants to control risks and ensure sustainable growth.
"The bank should base its business plan on the worst-case scenario. If growth is better than targeted, that means our performance is strong," he said.
The business direction in 2012 will continue to focus on a loan-portfolio mix aiming for high yield.
The bank must base its growth on the corporate, SME (small and medium-sized enterprise) and retail sectors rather than on |government loans, he said. Government loans account for 17 per cent of KTB’s loan portfolio.
Apisak will retire this year after seven years as president of KTB.
He said risk management, profitability, and operational and personal excellence were the four elements he focused on during his two terms and he believes they will continue as the foundation of the bank’s sustainable growth.
KTB is the second-largest commercial bank in terms of assets. It reported loan growth in the first 11 months of last year at 14.2 per cent, higher than its target of 10 per cent.
