KTB to raise loan-loss provision coverage
Ratio well below that of industry average
Krungthai Bank (KTB) aims to raise its loan-loss provision coverage ratio to be on par with industry peers next year to prepare for an unexpected bumpy economic situation, its chief says.
However, the country’s second-largest commercial lender in terms of assets has not decided when or how much to put aside for the loan-loss provision in order to balance the planned increase in the coverage ratio and dividend payments to shareholders, said president Vorapak Thanyawong.
KTB’s consolidated coverage ratio fell to 105% in the three months to June from 113% at the end of last year, well below the industry average of 130%.
He said the bank would make a decision when the additional loan-loss reserves will be set aside after non-performing loans (NPLs) showed signs of improvement.
KTB increased its normalised provisions in the first quarter to 1 billion baht a month from 700 million. For the first half, it set aside a loan-loss provision of 16.4 billion baht, compared with 11.2 billion in the same period a year before.
Consolidated operating profit rose by 17.8% on year to 37 billion for the JanuaryJune period, but net profit edged down by 0.97% to 16.2 billion.
KTB’s coverage ratio was also lower than that of the other three big players. Bangkok Bank’s loan-loss buffer stood at 164.5% in the second quarter, Siam Commercial Bank’s at 130% and Kasikornbank’s at 136.2%.
Its NPL-to-total loan ratio stood at 3.89% and is expected to decline by the year-end due to better control of new NPLs in the second half, said Mr Vorapak, adding that a marginal increase in NPL re-entry is not a cause for concern.
In a separate development, he said the bank’s total loan growth is highly likely to be flat this year.
Outstanding loans amounted to 1.83 trillion baht in the first half, down 3.6% from the end of last year when they contracted for the first time in four years.
Loan demand from both the government and private sector remained sluggish in the first half.
KTB, in collaboration with the Royal Thai Police, will offer a payment service for traffic ticket fines at the bank’s 1,200 branches and via internet banking from Sept 1. The service will be extended to ATMs from Sept 5. The bank charges 15-20 baht per transaction.
KTB shares closed yesterday on the Stock Exchange of Thailand at 18.90 baht, unchanged, in trade worth 437 million baht.