Bangkok Bank (BBL), the country's third largest lender by assets, expects its bad loans to continue rising this quarter given the country's sluggish economy, says Deja Tulananda, the bank's executive chairman.
The bank's non-performing loans (NPLs) are projected to increase slightly in the fourth quarter, said Mr Deja.
However, the higher NPLs are not a concern as they are controllable using a strong risk management policy, he said.
BBL's NPLs at the end of September amounted to 86.2 billion baht, an increase of 6.08 billion baht or 7.6% from the end of last year. BBL's bad loans stood at 3.6% of loans outstanding at the end of September.
Mr Deja said the bank plans to set aside normal reserves for loan loss this quarter.
Additional provisions to comply with the new accounting rule, Thai Financial Reporting Standard 9, are not needed because the bank's current impairment loan reserve is far above the Bank of Thailand's requirement, he said.
As of September, the bank's total allowance for doubtful accounts amounted to 158 billion baht, representing 247% of the central bank's minimum requirement at 64.1 billion. BBL's loan-loss-reserves-to-NPL ratio was 183%.
In another development, Mr Deja expects the bank's lending growth next year will exceed the country's economic growth, projected at 2.5%, based on corporate loan demand improving because of the government's infrastructure investment.
The bank set its loan growth target of 3% in 2020, mainly driven by loan demand from large corporates in line with state infrastructure investment plans. Several big-ticket infrastructure projects, particularly high-speed rail links, have made strides and massive funding is required to finance these projects, he said.
"Large corporations have doled out higher loan amounts since October and higher loan demand from this segment is expected to continue into next year," said Mr Deja.
Given higher loan demand from corporate firms, BBL expects loan growth of 3-4% is still achievable this year, though its loans outstanding fell 3.9% from the end of 2018 to 2 trillion baht at the end of September.
The decline in BBL's total loans could be attributed to the economic doldrums and loan repayment by some large corporates, he said.
On a quarter-on-quarter basis, the bank's loan portfolio moderately dropped by 0.8% from the end of June.
Mr Deja said the bank's forecast of the country's 2020 economic growth depends on external risks.
BBL shares closed yesterday on the Stock Exchange of Thailand at 165 baht, unchanged, in trade valued at 445 million baht.