Investors spooked:
Two big banks will set aside large loan-loss buffers this year following a rise in bad loans, prompting investor concern over their earnings prospects.
Bangkok Bank (BBL) will set aside a large amount of impairment charges to cushion against the uncertain economic environment, said executive chairman Deja Tulananda.
He said BBL’s non-performing loans (NPLs) will remain high this quarter.
The country’s largest lender by assets had impairment costs of 5.80 billion baht for the three months to March, up 61.4% from 3.59 billion in the final quarter of last year.
The bank’s NPLs tallied 77.8 billion baht at the end of March, rising 13% from 68.8 billion at the end of last year.
BBL’s NPL ratio edged up to 3.5% at the end of March from 3.2% at the end of December, while its coverage ratio declined to 160% from 174%.
Mr Deja said the NPL situation is expected to improve in the second half, supported by better economic momentum led by public investment.
Those positive factors will facilitate the bank’s loan expansion and declining NPL ratio as well, he said. The bank is maintaining its 2017 total loan growth target of 5%.
BBL’s total loan portfolio fell 0.9% from the end of 2016 to 1.92 trillion baht at the end of March.
Meanwhile, Arthid Nanthawithaya, chief executive at Siam Commercial Bank (SCB), said the bank expects to set aside 5.1 billion baht in loan-loss reserves for the remaining three quarters — the same amount as the first quarter.
Thailand’s third-largest l ender by assets significantly raised its impairment charges to 5.1 billion baht during the January-to-March quarter, up from 1.99 billion in the final quarter of 2016, when the Central Bankruptcy Court approved a business rehabilitation plan for one of its large borrowers, Sahaviriaya Steel Industries Plc.
“With the tougher risk management measures, we expect to maintain credit costs this year at their current level despite the murky economic outlook,” he said.
BBL shares yesterday closed on the Stock Exchange of Thailand (SET) at 179.50 baht, down 50 satang, in trade worth 502 million baht. SCB shares yesterday closed on the SET at 156 baht, down 1 baht, in trade worth 859 million baht.