KTB sees flat retail, corporate loan growth

It was possible, he said, that lending portfolios from retail and corporate banking next year will show flat growth but profits from both divisions must outperform.

Next year will be the second year when KTB is expected to grow in line with the Kingdom’s gross domestic product (GDP) compared to the target of 1.5 times higher than GDP growth. 

This year, non-performing loans (NPLs) at KTB amounted to Bt11 billion, excluding the one time NPL of Sahaviriya Steel Industries (SSI). Vorapak was happy with the performance because the NPLs were less than other major banks.

However, the bank is slashing its retail loan target this year from Bt110 billion to Bt60 billion-Bt70 billion because the bank has to allocate marketing staff to help the NPL management team to help solve the problems of clients.

“We believe we can handle the NPLs but we’ll be cautious about retail banking next year because there are many factors that could affect retail customers,” he said. 

Outstanding loans of retail banking next year are expected to be Bt700 billion, the same as this year. 

In fact, the bank is interested in self-employed individuals upcountry, where there is demand for loans, but they are high risk. He said if the bank or any banks have data analytics that could verify incomes of self-employed individuals, this segment would be interesting.

Demand for loans from corporates might not increase because many companies have surplus capacities, while high technology is playing an increasing role in the manufacturing sector, leading to a gradual reduction in employment.

A corporate customer from the auto sector recently visited the bank and informed that it would bring robots into the manufacturing process, he revealed. This is an example that corporates are adjusting to high technology to sustain profitability while Thai GDP was seeing a growth slump, he said.

Overall, corporates were not expected to be very active next year except those in construction and subcontractors who will benefit from the investment in infrastructure building, Vorapak said. 

Banks should hence focus on corporates that require capital from debt and capital markets, and help them during volatility.

Corporates who only use loans from the bank would not be a priority for KTB, as the bank aims to increase incomes from corporate banking by servicing customers who use more than one product from the bank, he said.

KTB divides its customers into four categories: retail, corporate, state agencies, and SMEs. 

KTB is banking on SMEs to achieve loan growth next year.

He said KTB would aim to assist SMEs who are the supply chain of corporate clients, start-ups, and existing SMEs who are able to grow well but don’t have capital to provide loans. He added that the bank could support start-ups through the state venture-capital fund. State-run banks will jointly inject the capital into the fund. 

“We have room to grow in the SMEs sector in terms of loan portfolio because the size of loans is smaller than other major banks,” he said.

Previously, Udomsak Rojviboonchai, head of KTB’s business centre group who oversees SME clients, said that KTB would focus on medium-sized enterprises from next year onwards. The bank defines businesses with annual turnover of Bt100 million to Bt500 million with credit lines of Bt20 million to Bt100 million as medium-sized enterprises.

In 2016, the bank targets SME loan growth of 9 per cent, a quarter of which would be accounted for by medium-sized enterprises, according to Udomsak.

Vorapak said the bank will help assist customers of state enterprises with fund-raising from capital and debt markets. The bank will also cooperate with the government in the national e-payment, in which KTB aims to play a role by connecting payments from the government to consumers.