KTB will restructure loan portfolio in 2013

Spotlight turning on SMEs, retail customers

Krungthai Bank (KTB) will diversify its loan portfolio by boosting its small and medium-sized enterprise (SME) business and focusing more on private individual customers

The move is aimed at diversifying risks and balancing client segments.

President Vorapak Tanyawong said KTB plans to strengthen SME loans and raise its proportion of total debt outstanding from 20%.

It will also expand its retail customer base in the private sector.

Currently, retail finance represents 30% of the loan portfolio and the government customer base the rest, said Mr Vorapak.

He said the corporate banking and government loan portions will be maintained at the existing levels of 30% and 10%, respectively.

"We want to diversify our customer base to several segments rather than rely on specific groups, on a risk diversification basis," said Mr Vorapak.

State-owned KTB, with a 55.07% stake held by the central bank's Financial Institutions Development Fund, ranks second in terms of total assets.

It forecasts Thailand's gross domestic product (GDP) will grow between 4.5% and 5.5% next year.

Normally, it sets total loan growth at 1.5 times that of GDP growth, but Mr Vorapak said KTB has yet to finalise next year's business plan or loan growth target.

Vipoota Trakulhoon, a senior executive vice-president, said KTB expects to book corporate loan growth of 15-17% this year, higher than the previous target of 10%.

The healthy growth is supported mainly by the country's positive economic momentum, he said, adding that stronger private investment, both local and international, is boosting corporate loan demand.

Given the positive scenario, KTB's long-term loan proportion has increased to 70%.

"Higher term-loan demand indicates strong private investment and consumption. The bank plans to keep the existing ratio next year to maintain stability," said Mr Mr Vipoota.

KTB's corporate banking business plan for next year will focus on adding value for customers.

As such, financial advice, financial solutions and conventional transactions are key areas.

Mr Vipoota said such financial services will help to strengthen KTB's fee-based revenue, which is lower than that of other large local banks.

Separately, Kittiya Todhanakasem, a first senior executive vice-president, said KTB plans to expand non-interest revenue to 25-30% of the total in the long term from 20% now.

She said this revenue, from from KTB itself and its subsidiaries, is derived mainly from advisory services, branch business, foreign exchange and bancassurance.

Shares of KTB closed yesterday on the Stock Exchange of Thailand at 19.60 baht, unchanged, in trade worth 353 million baht.

About the author

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Writer: Somruedi Banchongduang
Position: Business Reporter