Krungthai Bank expects NPLs from retail banking to rise by year-end
KRUNGTHAI BANK expects its non-performing loans (NPLs) from retail banking in the second half of the year to rise from the level at the end of June, because of the weak debt-repayment ability of its borrowers, especially among those who are self-employed.
Tanyapong Thamavaranukupt, KTB first executive vice president for retail banking, said yesterday that half of its retail banking portfolio of Bt800 billion was in the form of housing loans, a category in which a significant proportion of borrowers were either self-employed or small business operators.
With economic conditions in the second half not showing signs of picking up, it is clear that there will be a continued income decline among customers in these key lending segments, he said.
Declining incomes naturally have an adverse effect on debt-repayment ability, causing KTB to monitor these customer categories even more closely, he said.
KTB has strengthened its debt-collection team – both the tele-team and the field team – as well as assigning branches to help collect debt, because local staff have a better knowledge of borrowers than do headquarters employees, he added.
The bank will offer a debt-restructuring programme for the self-employed and operators of small businesses who consider their income and repayment ability will be affected for the short term.
The bank now has to track incomes closely for three consecutive months after a loan is approved because it has found that during the current economic climate, the income of the self-employed often becomes uncertain during the second and third months, said the executive.
As of June 30, KTB’s retail-banking NPLs stood at 2.67 per cent. However, because of weak debt-repayment ability, there is the potential for the level to climb to 3 per cent by year-end, although the bank hopes it will be able to cap it at around 2.8 per cent, Tanyapong said.
“We will be cautious about new lending, and even for approved customers, we have tightened our loan-drawdown conditions in order to prevent NPLs rising.
Our prudent measures have brought the loan approval rate down to 60 per cent from 70 per cent earlier, as well,” he said.
KTB’s overall lending growth for retail banking this year is expected to reach 6-9 per cent, down from the previous target of 11-12 per cent.
Its housing loans are still able to grow even though the bank has witnessed rising NPLs from mortgages, while the bank will focus on lending in connection with quality housing projects and to state-enterprise workers who have never previously been customers, he said.
Meanwhile, the bank yesterday introduced a new branch model by adding a lounge for KTB Precious Plus customers, defined as those with assets under management (AUM) of at least Bt10 million.
KTB has more than 20,000 Precious Plus customers, with combined AUM of Bt300 billion.
The bank plans to promote the service to wealthy customers and will offer more privileges in a bid to reinforce brand awareness.
“In the past, we have focused on offering savings and investment products to these customers, but the trend of financial services for wealthy customers is changing to that of offering privileges, so we should move to ride the trend as well. These privileges will help the bank witness annual growth of more than 20 per cent in both the number of such customers and AUM,” Tanyapong said.
