Economic, loan growth forecasts for the year to be revised: BAY chief
Thailand's economic growth forecast and loan target may have to be adjusted in view of the current situation, Seiichiro Akita, president and CEO at Bank of Ayudhya Pcl (BAY), has said.
“Before the outbreak of new coronavirus (Covid-19), the bank had estimated the Thai economy to expand at 2.5 per cent and had set a loan growth target of 5-7 per cent,” he said. “But these numbers must be adjusted according to the situation and the bank is currently analysing which customer groups are impacted by the outbreak.”
Akita further explained that the original goal of 5-7 per cent loan growth could be broken down into: 4-6 per cent growth in large business loans, 5-7 per cent growth in SME loans, 5-7 per cent growth in individual business loans, 6-8 per cent in automotive loans, and 4-6 per cent growth in property, credit card and personal loans.
“The outbreak of Covid-19 could affect these estimations, but we will try our best to achieve an overall operation that is better than last year’s,” he added.
As for the trend of non-performing loan (NPL), the CEO is confident that the bank will be able to control the ratio to remain under 2.5 per cent. “Last year, NPL ratio was at 1.98 per cent thanks to the bank’s more rigid loan granting criteria and risk management,” he added. “However, this year has presented huge challenges to many businesses and we expect the NPL ratio to rise, but be still within a manageable range.”
When asked about the Bank of Thailand's (BOT) plan to adjust the bank fee structure, he replied: “This measure will surely affect the bank’s revenue and we are now estimating the extent of the impact. From a preliminary study, the bank’s revenue from fee could go down by 3 per cent, but we will find more sources of revenue to compensate the loss to make sure that total non-interest revenue could reach the target of 3 per cent expansion.”
Akita added that the bank is currently having a reserve ratio at 160 per cent but it is still too soon to estimate whether this ratio will go up or down. “In the past, our reserve was enough to cover any situations that have impacts on the economy, and we have no policy to turn the surplus in reserve into future profits.”