Kiatnakin Bank (KKP) aims to cut its bad-loan ratio to 4.5% by year-end by adding better-performing commercial property loans to its lending portfolio.
The bank is focusing on commercial real estate loans to SET-listed property developers and shifting away from loans to small companies, said Aphinant Klewpatinond, chief executive of Kiatnakin Phatra Financial Group.
Small property developers were once the bank's favoured segment because of higher yields.
Kiatnakin, a small lender, saw its non-performing loans (NPLs) edge up to 9.67 billion baht at the end of March from 9.65 billion at the end of 2017. Its NPL ratio, however, fell to 4.7% at the end of March from 5% at the end of the previous three months.
The bank's bad commercial lending to real estate developers, amounting to 4.54 billion baht, accounted for 47% of Kiatnakin's NPLs at the end of March, down from 47.2% at the end of 2017.
Soured commercial real estate loans declined to 19.1% of the segment's total loans at the end of March from 21.4% at the end of 2017.
NPLs to commercial real estate developers are largely vintage loans in default for several years and under the legal process, Mr Aphinant said.
Kiatnakin will reduce bad debt in the commercial real estate sector but has no plans to sell the soured loans, he said, as the sector is the bank's area of expertise and recovering the loans would create better returns.
"We have no exact goal to trim the NPL ratio of the sector [property developers], but we aim to hold the gross NPL ratio to no more than 4.5% by the end of the year," Mr Aphinant said. "Bad loans in other business segments declined in the first quarter."
The bank's loans outstanding rose by 5.7% from the end of 2017 to 203 billion baht at the end of March.
Retail banking business, which was the bank's largest portfolio at 129.08 billion baht or 63.3% of loans outstanding, had an NPL ratio of 2.4% at the end of March, down from 2.5% at the end of 2017.
Auto loans, the lion's share of retail loans and Kiatnakin's core business segment, totalled 105 billion baht or 51.2% of total loans.
KKP shares closed Friday on the Stock Exchange of Thailand at 74 baht, up 25 satang, in trade worth 367 million baht.