Kiatnakin Bank (KKP), an arm of Kiatnakin Phatra Finance Group, expects auto loan growth to be flat for the full year after shrinking for the first six months.
Despite improving signs in June, the bank expects a flat showing in auto loans for 2019 after a 2.7% contraction from January to June, said president Philip Chen Chong Tan.
The bank has slowed loan expansion and shifted focus to controlling bad loans after non-performing car loans climbed. NPLs increased to 2.6% of loans outstanding at the end of June from 2.3% at the end of 2018.
"Under the bank's tightened risk management to control bad auto loans, new NPLs have declined gradually since July," Mr Tan said. "They are expected to continue that trend until year-end."
He said the bank aims to spend about 18 months improving the asset quality of the car loan portfolio, especially old NPLs.
The bank will keep expanding auto loans because this is the core business, paying more attention to risk management for the high-yield segment.
Auto hire purchase is the bank's core business with a total portfolio of 105 billion baht, representing 45% of loans outstanding at the end of June. KKP's auto loan portfolio amounted to 108 billion baht at the end of last year.
Chief executive Aphinant Klewpatinond said the bank also expects flat growth in net profit this year after posting a 11.9% year-on-year decline for the first half to 2.69 billion baht.
The bank's lower net profit for the six months through June was further brought about by a 14% year-on-year rise in impairment charges for credit loss to 1.1 billion baht.
KKP recorded a net profit of 6.04 billion baht last year, up from 5.74 billion baht a year earlier.
Mr Aphinant said the bank lowered its 2019 loan growth target from 8% to 5% after lending grew a mere 2.1% in the first half.
The bank expects to control gross NPLs at no more than 4% this year, down from 4.2% at the end of June and 4.1% at the end of 2018.