KBank set for lowest growth of 9% in total income to SMEs
Kasikornbank, the market leader in lending to small and medium-sized enterprises (SMEs), is targeting 9 per cent growth in total income for its SME business division, its lowest ever, as the bank will have to reduce its margin to help affected clients in
According to Patchara Samalapa, executive vice president, the bank is worried about the situation of SMEs in the tourism sector because the low purchasing power of major foreign tourists, such as Russians, will affect SMEs involved in hotels, restaurants and ocean parks businesses.
Russians are a major tourist community in Thailand but the depreciation of the ruble has affected their purchasing power. The bank believes SMEs in this sector should shift their focus to new travellers, including Thais.
SMEs in the tourism sector account for Bt23 billion of KBank’s loan portfolio. The bank will waive interest and offer a grace period for repayment of the principal amount to help them lower financial cost and improve cash flows.
The agricultural sector remains a worry because of the low price in many products. KBank’s loans to this sector account for Bt80 billion-Bt90 billion of its total lending.
This is a proactive measure to defend non-performing loans, he said, adding that the bank maintains its loan growth target of 7.7 per cent this year. The growth is based on many risk conditions that could leadmight bring the NPL to the bank.
"We hope that NPLs this year will improve to 2.39 per cent from 2.56 per cent last year with the help of the measures," he said. Last year, KBank reported total income of Bt39.60 billion, a growth of 13 per cent, while loans last year expanded by 9.7 per cent to Bt568 billion. Outstanding loans this year are expected to rise to Bt612 billion.
He said the delayed recovery of the Thai economy makes it difficult for SMEs because the lower purchasing power and the lower consumption will hit the operations of SMEs.
However, KBank says it has an advantage over other banks because of its wide customer base of more than 200,000.
He said the revised law related to loan guarantees in the Civil and Commercial Code would definitely impact banks and borrowers. Although this law is not expected to affect loan growth, the process of loan approval will take longer.
"Amid the economic condition, it is not easy for banks to ask for lower guarantee from borrowers. Guarantors used to share the risk with the borrowers but under the new law, banks would need to take more time in considering applications from existing borrowers," he said.
The bank has already added risks from the new law in its estimates. New loans this year are expected to reach Bt280 billion, said Patchara.
