Tisco Bank pumps brake on loan gains
With concerns over high household debt and an uptick in bad loans, Tisco Bank has set a conservative loan growth target of 5% this year, far below the 11.8% loan growth it recorded last year, partly driven by a 33-billion-baht retail loan transferred from Standard Chartered Bank (Thai) (SCBT).
The bank predicted the banking industry's non-performing loans (NPLs) would peak around mid-year before gradually declining in the second half, said group chief executive Suthas Rusngmanamonkgkol.
Even though the bank is more optimistic over Thai economic prospects, it is still cautious in some areas, particularly the rising NPLs for retail and small business loans, he said.
Tisco Bank conservatively aims for 5% growth in auto lending this year, though it has predicted new car sales will increase to 920,000 units this year from 850,000 last year.
Auto loans comprise the largest portfolio at the bank at 129 billion baht, representing 51% of its loans outstanding.
Despite the larger loan portfolio following the loan transfer from SCBT, Tisco Bank saw its NPL ratio fall to 2.3% at the end of last year from 2.5% in the previous year.
With the lower bad loans, Tisco Bank's impairment costs for credit losses declined by 20.9% to 3.14 billion baht last year. The bank's loan-loss provision has fallen from 5.28 billion baht in 2015 and 3.97 billion in 2016.
Stronger risk management is the key factor for the lower provision expense. The goal is to control NPLs at no more than 2.3% by the end of 2018, said chief financial officer Chatri Chandangam.
"Given its solid coverage ratio of 197% after it set aside a bad debt buffer to comply with the new International Financial Rating Standard version 9, the bank does not need an additional provision this year," he said.
After SCBT transferred its complete retail loan portfolio to Tisco Bank in the final quarter of last year, Tisco Bank's interest income surged by 15% quarter-on-quarter.
In 2017, the bank's interest income was 11.7 billion baht, rising 6.7% year-on-year. Its loans outstanding also jumped by 11.8% to 251 billion baht at the end of last year.
Tisco delivered a 21.7% increase in 2017 net profit to 6.09 billion baht. Non-interest income is another contributor to the bank's strong earnings growth. It recorded non-interest income of 6.87 billion baht last year, up 17.8% year-on-year.