KTB looks to SMEs for growth

KTB looks to SMEs for growth

KTB targets loan growth of 3-5% in 2020, with an emphasis on expanding SME access. Patipat Janthong
KTB targets loan growth of 3-5% in 2020, with an emphasis on expanding SME access. Patipat Janthong

Krungthai Bank (KTB) aims for 3-5% lending growth this year, focusing on small and medium-sized enterprises (SMEs), but slowing retail loan growth.

The bank's loan growth target for 2020 is based on the country's economic growth forecast of 2.8%, said president Payong Srivanich. Loans will be a smaller economic multiplier amid the county's sluggish economic growth.

As large corporate and multinational firms enter the digital era, SMEs who are in their supply chains also need to improve technology, he said.

"With this scenario, it could create new entrepreneurs and build up a new S-curve growth for SME businesses, particularly in the processed food and logistics sectors," said Mr Payong.

"The bank plans to capture the opportunity to expand in high-growth areas."

The government will pay more attention to SME business this year in terms of both technology development and financial assistance amid the strained economic growth, he said.

KTB, which is 55.07% owned by the Financial Institutions and Development Fund, will also support government policy, said Mr Payong.

Corporate loan demand is expected to improve this year in accordance with the government's infrastructure investment projects.

However, the bank projects slow retail loan growth because of last year's strong growth.

The country's third largest lender by assets delivered 3.2% loan growth to 2.08 trillion baht in 2019.

Retail loans showed robust growth of 6.2%, wholesale loans gained 3.1%, while SME loans contracted 3.4%.

In 2019, the bank's consolidated net profit was 29.3 billion baht, up 2.8% from the previous year.

Mr Payong said KTB wants to control its gross non-performing loan (NPL) ratio at the current level of 4.33% the whole year to avoid a higher burden in setting aside impairment charges for credit loss after the implementation of the Thailand Financial Reporting Standard version 9 (TFRS 9).

According to the forward-looking information principle of TFRS 9, loan quality is classified in three stages: stage 1 is a performing loan that needs a one-year expected loss (EL) for provision, stage 2 is classified as higher credit risk under the lifetime EL for provision, and stage 3 is NPLs, which will be under the lifetime EL for provision.

Moreover, he said the bank set an IT investment budget starting from this year at 14-15 billion baht to develop an infrastructure base and prepare for new business opportunities.

KTB also plans to further support the government's digital platform, said Mr Payong.

Meanwhile, Deputy Prime Minister Somkid Jatusripitak said KTB will use its customer database of 30 million for an in-depth analysis to learn about consumer behaviour and link to SMEs' supply chains.

He said the government plans to use KTB as a centre to link state agencies' big data, saving the country money in the future.

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