KTB shifts its focus to SMEs
TO CONCENTRATE more on prudent risk management, Krungthai Bank (KTB) has lowered its loan growth target for next year from 1.5 times gross domestic product growth to even with GDP growth.
Vorapak Tanyawong, president of KTB, a state-owned commercial bank, told employees during an awards ceremony held by the bank yesterday that CNBC named him "Thailand Business Leader of the Year" last month based on the trend in the profitability of the bank, not on current financial results.
KTB is trying to change the culture of the privatised organisation, he said.
On the sidelines of the ceremony, Vorapak said sentiment towards the economy is improving thanks to the government’s stimulus packages and investment projects.
The outlook of the banking industry next year should be better than this year, but the global economic uncertainty is a concern, as it could impact the bank’s competitiveness.
Actual loan growth of the bank in the first nine months of this year was 1.7 per cent – lower than GDP growth of 2 per cent and lower than the bank’s estimate of 5-7 per cent – due to huge loan repayments by state borrowers.
State loans fell to 6 per cent of its portfolio from 9 per cent last year.
The bank also has had to devote much more resources to managing bad debt.
Excluding the case of Sahaviriya Steel Industries (SSI), KTB’s non-performing loans (NPLs) peaked in April. Including SSI loans, the bank’s gross NPL ratio is 4 per cent.
For this whole year, KTB might witness loan growth of 2 per cent and it projects GDP growth next year at about 3 per cent.
SMEs will be the focus of the bank, he said, and SME loans next year are targeted to expand 9 per cent, of which 25 per cent will be from medium-sized enterprises.
The government is also supporting SMEs, so next year will be a good time for employees who want to become SMEs.
As a state bank, KTB will benefit from government spending. However, lending to state agencies is low risk, low yield. The bank has to consider its liquidity before making a decision to support state projects.
This year has been challenging for the bank because it has faced rising NPLs from SSI and AQ Estate, formerly known as Krisda Mahanakorn. AQ Estate occupies a site of more than 4,300 rai that was mortgaged to the bank with both local and foreign investors.
When AQ Estate sells the land, it will pay off its debt to the bank, of which Bt10 billion is the principal. The transaction is not expected to close this year, so the bank expects to book the repayment from AQ Estate next year, he added.
