KKP aims for 10% growth in loans
SET-listed Kiatnakin Bank (KKP) has set an aggressive loan growth target of 10% this year after recording a rise in 2017 — the first time in three years.
KKP aims for minimal growth in its core business, auto hire-purchase loans, which at 104 billion baht represent 53.9% of its total loan portfolio, in a bid to control auto loan quality, said Aphinant Klewpatinond, chief executive of Kiatnakin Phatra Financial Group.
The bank focuses only on high-yield auto loan products, including used cars, taxis and auto refinancing. Used-car loan products represent 56% of its business, with new-car loan products making up the rest.
KKP is a banking arm of Kiatnakin Phatra Financial Group.
The banks outstanding loans surged 9.3% to 193 billion baht in 2017, while total lending fell from 2014 to 2016.
Although the bank’s auto loan portfolio dropped last year, KKP’s non-performing car loan (NPL) ratio increased to 2.1% at the end of last year from 1.9% in the previous year, mainly because of a focus on high-yield products.
“We expect to better control bad auto loans under a stronger risk management regime, and aim for a total NPL ratio of 4.5% by year-end, down from 5% last year, in line with the economic recovery,” said Mr Aphinant.
The bank estimated its credit cost will drop to 0.8% this year from 1.2% last year, when the bank’s loan-loss provision reduced significantly to 700 million baht from over 2 billion a year, he said.
The lower credit cost is based on the assumption of lower auto loan growth due to the bank’s solid loan-loss buffer.
KKP delivered a net profit of 5.73 billion baht last year, an increase of 3.4%. The bank lent aggressively across segments, with the exception of auto loans.
Mortgage lending soared by 205%, lending for micro-SMEs jumped 38.9%, and personal loans surged 35.5%. Commercial loan growth rose by 7.1% and corporate loan growth by 123% in 2017.
New business models and strategies as well as the bank’s small base were the drivers behind healthy loan growth last year.
The bank’s impairment charge for credit losses dropped sharply to 763 million baht last year from 2.31 billion in the previous year, according to a statement recently filed with the Stock Exchange of Thailand.
The bank plans to maintain its existing 66 branches and not make any cuts to its staff of 5,000 after shuttering more than 100 branches in recent years. Digital platform adoption is another focus for the bank in line with the Thailand 4.0 era.
KKP shares closed yesterday on the Stock Exchange of Thailand at 83 baht, down 50 satang, in trade worth 396 million baht.