Kasikornbank (KBank), the country's third-largest lender by assets, is a little more bullish on business prospects next year by targeting lower credit costs and a narrower range of non-interest income.
The bank set a target for credit cost, the percentage of loan-loss provisions to total loans, of up to 165 basis points for next year, down from up to 185 basis points this year because of stable non-performing loans (NPLs) and improving asset quality in accordance with economic momentum, said KBank president Predee Daochai.
The lower credit cost target implies KBank will set a smaller provision for credit loss in 2019 than this year.
KBank set aside 24 billion baht in loan-loss provisions for the first nine months this year, down 20.4% from a year earlier, helping the bank deliver 9.76% growth in net profit for the period to 31.4 billion.
Its gross NPL ratio target is within 3.3-3.7% for 2019, compared with 3.3-3.4% in 2018 as the bank has no plans to divest distressed debt next year.
Managing bad debt contributes to higher returns and the country's economic outlook is bright next year, he said.
"Collateral-backed loans are the key asset the bank will manage itself. With the improving economic momentum, the recovery rate is expected to be better next year," said Mr Predee.
The bank targeted non-interest income contraction in a range of 5-7% for 2019, compared with 6-8% shrinkage this year, and this suggested the digital transaction fee waiver, starting from late March, will continue taking a toll on KBank's fee-based income.
Slower fee-based income growth will be seen in the bancassurance business next year, weighed by steeper competition, which is expected to deal another blow on the bank's non-interest income, he said.
KBank's non-interest income ratio is expected to decline to 35% of total income next year from 40% this year.
"KBank looks forward to achieving loan growth of 5-7%, which will be consistent with 2019 economic growth, breaking down to corporate loan growth of 3-5%, SME loan growth of 2-4% and retail loan growth of 9-12%," chairman Banthoon Lamsam said.
The bank also set a net interest margin at 3.3-3.5% and a cost-to-income ratio of low to mid-40s in 2019.
KBank's targeted interest margin is 3.2-3.4% this year, and its cost-to-income ratio is in the mid-40s.
The bank's financial targets for next year are based on the assumption the economy will expand 4.3% from 4.6% predicted for this year.
KBank, in collaboration with Thailand Greenhouse Gas Management Organisation and Mitr Phol Group, yesterday signed a contract with eight leading green companies for carbon emissions trading in support of Thailand's 2020 carbon emission targets.
This participation by all sectors marks a promising start in moving Thailand forward to achieve the goal of greenhouse gas reduction by 20-25% within 2030. KBank is the first bank to join the carbon credit trade.
KBANK shares closed yesterday on the SET at 199.50 baht, down 6.50 baht, in trade worth 2.82 billion baht.