Kasikornbank (KBank), the country's second largest lender by assets, has painted a bleak business outlook for 2020, targeting lower net interest margins (NIMs), a wider range of non-interest income contractions and a higher bad loan ratio.
The bank set a target for gross non-performing loans (NPLs) at 3.6-4% of loans outstanding next year, compared with 3.3-3.7% for this year, according to a filing with the Stock Exchange of Thailand (SET).
KBank targeted non-interest income contraction of 5-17% for 2020, compared with 5-7% shrinkage this year. The bank aims for NIM at 3.1-3.3% in 2020, down from 3.3-3.5% set for this year. The cost-to-income ratio target is set for mid-40% next year, compared with low- to mid-40% this year.
The bank's 2020 outlook triggered sales of its stock and those of other large banks. Yesterday, KBank's shares plunged 11 baht to 138 baht at market close, the lowest level in seven years and eight months. The steep fall in share prices also shaved 30 billion baht off market capitalisation in a single day.
Siam Commercial Bank dipped 7.50 baht to 106.50 baht, and Bangkok Bank slid 4.50 baht, while the benchmark SET index dove 0.64% to 1,620.97 points with trade value of 70.3 billion baht.
Banthoon Lamsam, KBank's chairman of the board, said the economy next year will be challenged by numerous downside risks, particularly the protracted US-China trade rift and the firmer baht.
KBank aims for the maximum cost-to-income ratio to fall to 150 basis points in 2020 from 165 basis points this year.
The bank's target for loan growth is 4-6% for 2020, compared with 5-7% growth this year. According to next year's loan growth target breakdown, corporate loans are expected to expand 2-4%, while SME business loans will grow 1-3% and retail loans will rise 9-11%.
Third-quarter net profit inched higher by 2.12% year-on-year to 9.95 billion baht.
The bank recorded higher net interest income and non-interest income for the third quarter, but a 22.5% increase in loan-loss provisions to 10 billion baht for the period narrowed the bottom line's growth. KBank's gross NPLs rose to 3.53% of loans outstanding at the end of September from 3.34% at the end of 2018.