Krungthai Bank (KTB) expects to achieve its loan growth target for this year despite experiencing a lending contraction in the first six months.
Despite the uneven recovery of the Thai economy in the first half of the year and ongoing pressure from various uncertainties in the second half, the bank aims to achieve a total loan growth of 3% throughout 2024, said Payong Srivanich, KTB's president.
According to Mr Payong, there is positive loan demand from certain customer groups, including both business and commercial individual segments. However, the bank remains focused on maintaining asset quality amid an uneven economic rebound, he said.
As of June 2024, KTB's total loans outstanding stood at 2.56 trillion baht, down from 2.61 trillion baht as of March 31, 2024, and against 2.58 trillion baht as of Dec 31 last year.
KTB, the second-largest commercial bank in the industry and the country's largest state-owned bank, has a larger government loan portfolio compared with its peers. However, the bank experienced a contraction in this segment in the second quarter of this year compared to the previous quarter.
As of June this year, the bank's government and state enterprise loan portfolio tallied 401.8 billion baht, down from 423.8 billion baht as of March 31 this year. Nevertheless, this segment showed positive growth of 6.3% in 2023 to 377.8 billion baht.
Retail loan products, including mortgages, credit cards and personal loans, are key segments contributing to the bank's lending expansion, albeit with marginal growth rates of 0.7-1.4% for both quarter-on-quarter and year-to-date periods.
Mr Payong said the bank would continue to grow loans selectively and with greater prudence in the second half, in line with the economic situation, while appropriately controlling asset quality. The bank would also consider setting aside loan loss reserves according to economic circumstances and client risk profiles.
In the first half of this year, the bank and its subsidiaries prudently set aside an appropriate level of expected credit losses amounting to 16 billion baht, an increase of 1.1% year-on-year, while maintaining a high coverage ratio.
NPLs were worth 98.7 billion baht, which decreased from Dec 31, 2023, with an NPL ratio of 3.12%.
In the first half of 2024, the bank's consolidated net interest income (NIM) amounted to 59.6 billion baht, increasing by 11.7% year-on-year from the company's portfolio optimisation management with a justified risk-adjusted return in economic uncertainties.
The bank's NIM was registered at 3.35%, compared to 3.1% in the first half of 2023.
Additionally, Mr Payong said the bank would continue to assist vulnerable customers, particularly small and medium-sized enterprises, through various long-term debt restructuring methods. The government's fiscal budget disbursement is expected to support economic activities and partially improve clients' debt repayment abilities, he added.