KTB adds on vintage NPA reserves

KTB adds on vintage NPA reserves

Waiting on property market to revive

Krungthai Bank (KTB) aims to continue setting aside additional loan-loss reserves for vintage non-performing assets (NPAs) this quarter after the planned divestment of bad assets was delayed because of the sluggish economy and property sector.

The bank cannot sell vintage NPAs as planned, so additional loan-loss reserves for the distressed assets are required for this quarter and next, said president Payong Srivanich.

"We will wait for the economy and property market to pick up before trying to sell the vintage NPAs next year," he said.

KTB, the country's fourth largest lender by assets, classified around 40 billion baht worth of soured loans as vintage NPAs. Apart from the additional provision set aside in the third quarter, the bank set reserves for employee retirement to comply with the new law, which resulted in higher expenses.

For the third quarter, the bank set aside impairment charges for credit losses to the tune of 6.09 billion baht, rising 9.6% quarter-on-quarter, and marginally up by 0.2% year-on-year.

The bank aims to maintain a bad loan coverage ratio in the range of 120-130% this year from 126% at the end of 2018. The coverage ratio stands at 128%.

Mr Payong said the bank will monitor asset quality of real estate clients, as normal practice, amid the glut of residential property supply.

Large property developers have slowed down investment in new projects.

Even though a large property developer recently defaulted, the situation was a very specific case and will not have a spillover effect on the overall industry, he said.

KTB managed to deliver mortgage growth with loans outstanding of 388 billion baht at the end of September, rising 3% from the end of last year.

The Bank of Thailand's tougher loan-to-value ratio for mortgages implemented from April this year has not negatively affected the bank, he said.

The government's property stimulus will drive the bank's housing loan growth this year, said Mr Payong.

The bank's loans outstanding rose by 3.3% year-on-year at the end of September, based on all business segments excluding small and medium-sized enterprises.

KTB does not expect to meet its full-year loan growth target of 5-7%, he said.

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