The Thai banking industry reported marginal loan growth for the first four months of this year, thanks to tighter loan criteria amid a sluggish economy.
As of April 2024, the 10 SET-listed banks reported net loans of 13 trillion baht, an increase of 1.2% year-on-year and 0.4% from the end of 2023, according to Kasikorn Research Center.
Aphinant Klewpatinond, chief executive at Kiatnakin Phatra Financial Group, the holding company of Kiatnakin Bank, said the bank booked slim loan growth for the period, attributed to tighter loan approval criteria based on higher credit risks amid weak national economic growth.
The bank tightened loan expansion across all business segments, including retail, small and medium-sized enterprise (SME) and corporate banking. Loan demand declined in line with economic conditions, he said.
"We reported a rising loan rejection rate under stricter loan approval criteria, requiring higher loan-to-value ratios overall. Kiatnakin Bank mainly focuses on high-end customers to control asset quality," said Mr Aphinant.
For instance, the bank concentrates on a minimum house price of 5-7 million baht for mortgage products, he said. By focusing on the upper-income segment, the bank experienced positive growth in mortgages this year, partially because of a low base, with housing loans totalling 60 billion baht or 15% of the total loan portfolio.
Even for large corporations and SET-listed companies, the bank prudently considers their financial status, said Mr Aphinant. Some large to mid-sized local firms have shown weaker debt repayment capabilities, reflected by bond rollovers, he said.
Mr Aphinant said SME businesses are generally fragile and considered to be a vulnerable group, particularly for loans without whole-value collateral.
The bank continues to lend to SMEs under a selective strategy, focusing on loan collateral, he said.
Mr Aphinant said the credit risk of auto loans, which represent around 50% of the bank's total loan portfolio, has been challenging because of slow new car sales and tougher competition in the automotive industry.
Despite auto hire-purchase loans being the bank's largest segment, higher credit risk is affecting all business segments, he said.
Mr Aphinant said Kiatnakin Bank would prioritise asset quality over loan growth for the remainder of the year, given the unclear economic and business outlook for the second half of 2024.
As a consequence, the bank might record flat loan growth for the year, he said.