High-yield products to be focus for KTB
Apisak Tantivorawong said yesterday that as Krung Thai Bank had achieved the ambitious goal of reducing its reliance on state loans by half during his seven years as president, the bank should now look ahead to high-yield products.
Apisak, who took over the helm in December 2004 and whose term ends in November, used to say that KTB, a state-run bank, must gradually reduce state loans and build up private loans to pull up its profitability.
State loans in the past were 30 per cent of the lending portfolio but have moved to 18 per cent as of the end of last year and 15 per cent as of June 30.
Even though KTB is controlled by the government, it will not bid for state projects or offer a low bid if it cannot meet its return-on-equity target.
“We have set strict credit scoring and non-performing loan screening to ensure that state agency loans and some involved with politics will not hurt the bank,” he said.
The shift to non-state lending has led to improvements in the quality of assets and the bottom line. This year should produce another record-breaking profit after the bank earned Bt17.02 billion last year. Assets have reached Bt2.12 trillion as of June 30 from Bt1.96 trillion last year and Bt1.76 trillion in the prior year.
This is now the time to embark on yield improvement. KTB’s net interest margin (NIM) is 2.7 per cent, which is low among the top four banks.
To boost its NIM, KTB will aggressively push high-yield products such as small business and consumer loans.
The SME business will likely not grow as fast as retail and corporate. SME loans are stable at 20 per cent of the portfolio, unlike corporate loans that have increased to 38 per cent from 36 per cent and retail loans to 27 per cent from 26 per cent.
SME BANKING REORGANISED
The bank has completely reorganised SME banking by dissolving the operating unit to pave the way for smooth credit approval and tighter control of bad debt.
Branches will report directly to SME bankers.
The bank has also refocused on small businesses after neglecting this segment for four to five years. Credit lines for small business top out at Bt20 million.
SME loans are expected to increase to 23 per cent of the portfolio in two to three years.
As part of the yield-enhancement plan, KTB is also doing consumer finance by itself instead of its subsidiary KTB Leasing, which is left with auto loan and leasing.
