KTB aims to reduce rising NPA pile by selling big lots to investors

This has resulted in a plan by KTB to sell big lots to investors rather than to individual buyers, in order to release the NPAs quickly.
With restructured loans turning bad because of the prolonged economic slowdown, the bank predicts its outstanding NPAs may rise to as much as Bt35 billion by the year’s end, from Bt28.5 billion currently, said Chaichan Palanon, executive vice president and director of the Credit Restructuring and Asset Management Group.
“In the worst case, the combined value of our NPAs this year could rise to Bt35 billion, but in the base case, the figure should be around Bt30 billion,” he said.
KTB has witnessed an increase in NPAs among business clients, and small and medium-sized customers in particular, which lodged assets as collateral to get a loan but found that subdued economic activity meant they were unable to repay debt, resulting in the bank having to seize those assets, he explained.
To release as much of its NPA burden as possible quickly, KTB must focus on selling big lots to investors, including asset-management companies such as Bangkok Commercial Asset Management and Sukhumvit Asset Management, the executive said.
Last year, KTB sold NPAs worth a total of Bt200 million to these two operators.
In the first six months of this year, the bank sold NPAs worth Bt3 billion out of a targeted Bt3.2 billion for the period, with performance limited by the state of the domestic economy.
KTB hopes to sell a total of Bt6.4 billion worth of NPAs this year, Chaichan said, adding that besides the sale of big lots, it will focus on selling NPAs in major provinces such as Chiang Mai and Phuket, where there are potential investors who require assets.
Meanwhile, Bangkok Bank has experienced a slight increase in its non-performing loans (NPLs) among mortgage borrowers, and especially among SME owners affected by the economic slowdown.
Thaweelap Rittapirom, director and executive vice president, said the bank had seen NPLs rise in connection with the purchase of homes priced between Bt5 million and Bt8 million in the first half of the year.
However, Bangkok Bank’s overall NPL situation is under control, he stressed.
Whether an NPL turns into an NPA depends on the legal process, but the bank will continue to strive to manage its NPLs carefully, he added.
Housing-loan NPLs at the end of the first half stood at 2 per cent, compared with just over 1 per cent six months earlier.
As to Bangkok Bank’s housing-loan performance in the first half, new loan bookings grew by 15 per cent compared with the same period last year, thanks to the reduction in real-estate transfer fees initiated by the government.
The fees-reduction programme applied to homes transferred by developers to customers between October 29 last year and April 28, but most customers had left their transfers to April, just before the deadline, he said.
Normally, Bangkok Bank’s home-loan bookings in the first half would be in the region of Bt20 billion to Bt30 billion because the first quarter is not the season for housing transfers, but the government measure helped the bank bring in Bt32 billion in the period this year, he explained.
Outstanding home loans expanded by 4 per cent year on year to Bt224 billion as of June 30.
The bank projected home-loan growth of 8 per cent for the full year, but with new loan bookings in the current quarter unlikely to be particularly active, it has decided to join forces with prime housing developers that are project-finance customers, with a view to following up by offering post-finance for homebuyers, Chaichan said.
“We will use our direct sales team to cater to homebuyers of our project-finance customers, and we will assign staff at branches upcountry to service customers in the provinces, which is a key area for the bank, as well,” he added.
Bangkok Bank’s home-loan borrowers are split 50:50 between Bangkok and upcountry provinces.
The bank hopes that its outstanding loans by the end of this year will reach Bt240 billion.