KBank extends helping hand to small businesses

KBank extends helping hand to small businesses

Grace period to aid troubled borrowers

Kasikornbank (KBank) foresees single-digit growth in revenue from small and medium-sized enterprise (SME) business this year as a result of its cautious move to prevent bad loans from rising amid the fragile economic rebound.

The country's largest SME lender aims at revenue generated by its SME business this year rising by 9% to 43.3 billion baht from 39.6 billion last year, executive vice-president Patchara Samalapa said.

If realised, this would be the lowest level in recent years.

KBank's 2014 revenue surged 13% from the previous year.

Amid the gloomy economy, the bank this year will continue providing financial assistance to cash-strapped SME clients, and this will also erode KBank's top line.

The bank's financial assistance includes a grace period for interest or principal payments, rescheduled repayments and additional credit facility to boost liquidity.

Such measures are expected to be provided to troubled businesses including those in tourism and farming-related sectors.

Russia's faltering economy and the sharp drop in the rouble have dealt another blow to the tourism sector, while sagging farming prices have hit farmers' incomes.

KBank's SME loans to the tourism and farming-related sectors stood at 23 billion and 80-90 billion baht, respectively, compared with the bank's total SME loan portfolio of 568 billion at the end of last year.

The bank's loans outstanding amounted to 1.53 trillion baht at the end of 2014.

"The lacklustre economic circumstances will pressure SME bad loans this year," Mr Patchara said.

"The bank has prepared assistance measures to ease their financial burden, and this in turn will help the bank control non-performing loans [NPLs]."

KBank, the country's fourth-largest lender in terms of assets, expects to reduce SME NPLs to 2.39% by year-end from 2.56% in 2014 through the assistance measures and strong risk management.

It is targeting a 7.7% growth in SME loans to 612 billion baht this year.   

The bank's 2014 SME loans grew by 9.7% to 568 billion baht.

Of this, 360 billion baht was upcountry, delivering robust annual growth of 20% for the year.

Upcountry markets will be the key driver facilitating the bank's SME loan expansion this year.

KBANK shares closed yesterday on the Stock Exchange of Thailand at 228 baht, up six baht, in heavy trade worth 2.28 billion baht.

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