KTB considers lowering loan growth target in retail segment
KRUNGTHAI BANK may lower its lending-growth target in retail banking after finding that the financial status of its customers, especially white-collar workers, has been weakened by the burden of high household debt.
The deterioration of KTB’s asset quality in the first quarter was much faster than the banking-industry average.
At the end of March, the bank reported a gross non-performing-loan (NPL) rate of 3.5 per cent, up from 2.9 per cent at the end of last year,
The increase in NPLs derived mainly from small businesses |and retail customers because of their sensitivities to the economy and the rising level of household debt.
Retail customers and small and medium-sized enterprises constitute more than half of KTB’s loan portfolio.
Tanyapong Thamavaranu-kupt, first executive vice president for retail banking, said the bank earlier decided to tighten its lending criteria for individuals and small businesses by checking with the credit bureau together with tracking their debt-payment records in a bid to lower the NPL rate.
He said the loan criteria would be adjusted based on the careers of customers as well, because the economic slowdown has had different impacts on the incomes of each customer segment.
KTB previously said it would be more active in the small-business segment to enlarge its loan portfolio.
However, amid the economic slowdown, the bank needs to be more vigilant with its analysis of
the viability of each small business to ensure that they have sufficient earning potential.
Tanyapong believes the bank should wait and see the results of its tightened criteria for at least a month or two before considering whether to adjust its loan-growth target to comply with the economic circumstances.
At the beginning of this year, KTB targeted loan growth for retail banking at more than 10 per cent.
Fee income soars
Tanyapong’s division projected new loans of Bt90 billion, and so far this year, new lending is going according to plan, but fee income is outperforming the demand for loans.
Fee income in the retail-banking division in the first five months grew by 15 per cent, compared with growth of 6 per cent in the same period last year.
He added that the bank |had able to increase its market |share in post-financing to |home-buyers of top property deveopers, a key strategy as KTB expands its client base in the private sector.
