THURSDAY, March 28, 2024
nationthailand

KTB maps out three strategies to keep bad debt from balloning

KTB maps out three strategies to keep bad debt from balloning

KRUNGTHAI BANK hopes its non-performing-loan (NPL) ratio will maintain its recent downward trend despite the fact that many of the clients who borrowed from the bank between 2011 and 2014 are still not strong enough financially to service their debts suff

In the first four months, gross NPLs climbed to Bt63 billion from Bt53 billion as at the end of last year. A large number of these were non-performing mortgages borrowed by self-employed or middle-income people.
 Between 2011 and 2014, KTB aggressively acquired housing loans, and it is now the second-largest lender in this segment among commercial banks, behind only Siam Commercial Bank.
Vorapak said that even though the NPL rate in May and June showed some recovery, the bank would be hard-pressed to get gross NPLs this year lower than the Bt53 billion seen at the end of 2014. However, it will try to cap the net NPL rate at 2 per cent. Last year, the net NPL rate was 1.6 per cent.
KTB has highlighted three measures to lower NPLs.
First, it has adjusted risk analytics based on customer data. Second, it checks loan applicants’ credit history with the National Credit Bureau. Third, it has assigned its branches to make an effort to collect debts, including offering debt restructuring.
Vorapak said the bank would continue to be conservative when setting loan-loss provisions, as even though NPLs in May and June showed sign of improving, this did not mean the bank should relax its provisioning.
KTB might lower its loan-growth target for this year from the previous 6 per cent as it does not want to chase loans aggressively while there is still not significant improvement in the economy.
Teeranun Srihong, president of Kasikornbank, said its gross NPL rate could increase slightly to 2.7-2.8 per cent, despite its attempt to cap the rate at 2.5 per cent.
Because of the upward trend of bad loans, credit costs at KBank should be increased by 0.4-0.5 percentage point as these costs are driven by loan-loss provisions. The bank previously set its credit cost at 1 per cent, but the economic situation is against this, he added.
Teeranun said the bank increased provisions in the second quarter.
“If our policy is efficient and the economic conditions in the second half are better than in the first half, perhaps we might not increase provisions, as we don’t want to see higher credit costs,” he said.
He said loan growth this year might not reach 6 per cent because some of its small and medium-sized business clients were struggling, so demand for loans from this sector was not likely to be very strong.
Earlier, KBank set a loan-growth target in the range of 5-7 per cent.

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