KTB’s loan growth rallying after slow start to 2017

Krungthai Bank’s (KTB) loan growth has started to pick up significantly in March after experiencing tepid rise in the first two months of this year, as hefty state investment prompts the private sector to draw loans for investments, its chief says.

Given the rebound, the country’s second largest lender by assets expects that its 6% loan growth target for this year is reachable, said president Payong Srivanich.

The bank’s loans outstanding went up 0.24% from the end of December 2016 to 1.74 trillion baht at the end of February.

Commercial banks’ lending growth has shrunk in recent years amid the thin loan demand from corporations due to subdued investment, while fragile economic recovery and bloated household debt have compelled lenders to tighten loan scrutiny to tamp down on bad loans.

Kasikorn Research Center, a research arm of Kasikornbank (KBank), reported that the banking sector during the Januaryto-March period saw a 0.14% loan contraction from the end of last year.

However, the industry’s total loan growth bounced back in February to a 1.57% month-on-month increase at 10.6 trillion baht.

According to the report, Bangkok Bank (BBL), Thailand’s largest lender by assets, was the only one among the four largest banks that recorded a decline in loan growth at 1.75% for the first two months of this year. Siam Commercial Bank (SCB) and KBank delivered a mere 0.15% and 0.96% growth, respectively.

Mr Payong said KTB’s non-performing loans will continue to increase slightly, given the characteristics of time lags.

The bank’s bad loans are expected to peak in the second quarter, so additional loan-loss provision is still needed, Mr Payong said.

In 2016, KTB and its subsidiaries set aside a combined 33.4 billion baht in provisions for impairment loss of loans and debt securities, up by 2.88 billion baht or 9.46% from the previous year.

The bank’s monthly normalised provisions last year increased from 700 million baht to 1 billion baht to match the outstanding loans while the additional provisions were slightly lower.

The bank’s senior executive vice-president Praralee Ratanaprasertporn recently said KTB plans to set normalised provisions to 1.2 billion baht per month, totalling 14.4 billion baht for 2017.

KTB shares closed yesterday on the Stock Exchange of Thailand at 20.20 baht, down 10 satang, in trade worth 533 million baht.