KTB warning on Q2 profit

Krungthai Bank (KTB) says its full provisions for loan losses concerning beleaguered Energy Earth Plc, coupled with a recent cut in the lending rate, took a bite out of second-quarter net profits for the country’s second-largest lender by assets.

The cash-strapped coal miner Energy Earth owes a total debt plus interest of 12 billion baht to SET-listed KTB, said bank president Payong Srivanich, adding that KTB has already suspended loan offerings to the troubled firm.

The bank is waiting for Energy Earth to provide a plan on how it will handle its debt and will support the company’s efforts to continue operations.

Loan-loss provisions for Energy Earth were at the top of the bank’s monthly normalised provisions of 1 billion baht.

KTB is due to release its second-quarter results next week.

Mr Payong said the bank is maintaining its non-performing loan (NPL) ratio target at no more than 4.8% of the loans outstanding at the end of this year.

KTB’s gross non-performing loans surged to 100 billion baht at the end of March from 91.1 billion at the end-2016, while its NPL ratio also rose to 4.36% of total loans at the end of March from 3.97% at the end of December.

Energy Earth last month said in a filing with the Stock Exchange of Thailand that it had already defaulted bonds, bills of exchange and bank loans worth almost 7 billion baht.

He said that the bank has tightened the loan scrutiny process by adding indepth business structure and financial issues to the loan criteria to guard against sour loans.

Apart from loan-loss provisions, the central bank’s reduction in the minimum retail rate — a rate for individual and small-business borrowers — by 50 basis points in May also dealt another blow to KTB’s bottom for the three months to June, Mr Payong said.

Regarding the bank’s lending growth target of 4-6% this year, he said that it could be revised as it is unlikely to achieve the upper end, but KTB will make an effort to hit 4% growth.

Loan growth prospects for the second half look brighter due to the ramped up government investment in large-scaled infrastructure developments, Mr Payong said, adding that KTB is focusing on government loans.

KTB shares closed yesterday on the SET at 19 baht, up 10 satang, in trade worth 842 million baht.