KBank aims to cap soured loans for small businesses

KBank aims to cap soured loans for small businesses

KBank reported SME loan growth of 3% in the first half of the year as it garnered 28% of market share. PATIPAT JANTHONG
KBank reported SME loan growth of 3% in the first half of the year as it garnered 28% of market share. PATIPAT JANTHONG

Kasikornbank (KBank), the country's third-largest lender by assets, aims to keep delinquent loans for small and medium-sized enterprises (SMEs) at their current level this year as asset quality improves.

Non-performing loans (NPLs) for SMEs has improved, particularly for new NPLs, thanks largely to the broader-based economic recovery, said executive vice-president Surat Leelataviwat. The bank expects its NPLs this year to maintain their level despite the higher loan growth projection in the second half.

As of June, the bank's SME NPLs stood at 5.3% of outstanding SME loans, up from 4.9% at the end of last year.

That percentage is considered quite large, so the bank is working to restructure those debts, he said.

KBank, the market leader for SME loans, managed to expand its outstanding loans for the segment to 3% by the end of June to 679 billion baht from the end of 2016.

With many SME loan deals in the bank's pipeline, KBank is expected to achieve the upper-end of its 4-6% growth target this year, said Mr Surat.

"Normally, loan growth in the second half represents a larger portion of around 60% of new loans extended for a year. Improving economic momentum, the export recovery and the government's infrastructure investment will be key factors facilitating the bank's SME loan growth in the second half," he said.

Mr Surat said the bank's lending to its SME value chain portfolio shot up by 41.2% to 61.3 billion baht at the end of June from 43.4 billion at the end of last year. There are 1,500 companies under the bank's value chain, ranging from SMEs to large corporations.

With the robust growth in SME loans, the bank expects to secure its foothold with market share of 28% this year.

Meanwhile, the Small and Medium Enterprise Development Bank of Thailand (SME Bank) prepared 3.5 billion baht in loans to assist flood-hit SME operators in the Northeast, said president Mongkol Leelatham. Around 1,000 borrowers who secured 1.5 billion baht worth of loans from the bank were reportedly affected by the flood, he said.

He expects that SME Bank's plan to lower its NPLs to 16.6 billion baht or 16% of total loans by year-end is reachable.

The state-owned bank's NPLs totalled 17.3 billion baht, representing 17% of its outstanding loans at the end of June.

For its new loans, the bank has lent 21 billion baht in the six months to June and its full-year loan extension will exceed the 30-billion target if it takes the 15-billion-baht Public-Private Collaborative's SME Development Fund into account.

"The bank's improving performance in bringing down NPLs and extending new loans make us hopeful that the bank will exit from its business rehabilitation required by superboard this year," he said.

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