KTB handling NPLs via SME support

KTB handling NPLs via SME support

Trade war staggers exports, agriculture

Krungthai Bank closely monitors its SME borrowers amid sluggish economic growth. (Bangkok Post photo)
Krungthai Bank closely monitors its SME borrowers amid sluggish economic growth. (Bangkok Post photo)

Krungthai Bank (KTB) has closely monitored its small and medium-sized enterprise (SME) borrowers amid sluggish economic growth and focused on non-performing asset (NPAs) management to contain bad loans.

The escalating trade brawl between the US and China has dealt a blow to the country's exports and SMEs in supply chains, particularly for the agricultural sector, said KTB president Payong Srivanich.

The bank provides financial assistance to SME customers on a case-by-case basis to keep a lid on non-performing loans (NPLs), he said.

As SME loans have grown slowly since the beginning of this year, the bank expects loan growth will be flat for the year, said Mr Payong.

The bank wants to continue monitoring SME borrowers, although their loan quality remains controllable, he said.

The bank's NPAs for SME business are likely to increase on the heels of debt refinancing, said Mr Payong.

KTB plans to use several tools including NPA disposal to handle any potential uptick in distressed assets.

At the end of April, the bank's net foreclosed properties amounted to 32.3 billion baht, he said.

Despite gloomy economic prospects and uncertainties, the bank managed to keep both SME and overall NPLs on target, said Mr Payong.

With a solid cushion following recent massive loan-loss provisions, the bank can handle unexpected situations.

KTB's gross NPL ratio was 4.48% at the end of March.

He warned that the bank's lending growth would be 4% this year, below the target of 5%, after recording marginal loan growth of 0.55% during the three months through March from the end of last year.

Despite the subdued loan growth, KTB is maintaining its loan growth target for this year and continues to monitor the economic situation.

"The economic stimulus package expected to be launched by the new government will support economic growth in the second half. Government, corporate, and retail loans will be major contributors to the bank's loan expansion in the second half," said Mr Payong.

He said nano-finance business operated by subsidiary Krungthai Card (KTC) will be a new income source.

The new business has a high growth potential and the bank's profitability will be strengthened in the long term.

SET-listed KTC recently set up a new company, KTC Nano Lo, with registered capital of 50 million baht, of which 75.05% is owned by KTC and the remaining 24.95% is held by KTB.

KTB is collaborating with the Highways Department to offer M-Pass payment via QR code on KTB's mobile banking app.

Around 30,000 of 150,000 M-Pass users are expected to pay tolls via the digital platform, said Mr Payong.

Sayumrat Maranate, country head of business banking for UOB (Thai), said the bank expects its SME loan growth target of 6% or 20 billion baht will be achievable this year despite the sluggish economy.

The bank's SME loans grew 5 billion baht for the first three months this year while the overall NPL ratio fell to 5% from 6%, in line with its target to limit NPLs to no more than 5% by year-end.

UOB Thai's SME loan portfolio amounted to 100 billion baht at the end of last year, with several business strategies including digital service expected to support the bank's SME loan expansion, he said.

The bank has joined hands with Business Online to offer digital SME lending through the MatchLink app.

UOB expects to lend 300 million baht worth of SME loans via the digital platform in the first year of operation.

KTB closed on Tuesday on the Stock Exchange of Thailand at 19.30 baht, up 20 satang, in trade worth 1.09 billion baht.

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