Krungthai Bank loan growth: No contraction in confidence

Krungthai Bank (KTB) remains confident in meeting its loan growth target for this year, despite a lending contraction during the initial six months. The bank focuses on achieving a 3% total loan growth throughout 2024, according to its President, Payong Srivanich.

The Thai economy’s uneven recovery in the first half of the year and persistent uncertainties in the latter half present challenges. Nonetheless, KTB observes positive loan demand from specific customer groups, including business and commercial individual segments, while prioritising asset quality.

As of June 2024, KTB’s total loans outstanding were recorded at 2.56 trillion baht, a decrease from 2.61 trillion baht as of March 31, 2024, and 2.58 trillion baht as of December 31 last year.

KTB, the country’s largest state-owned bank and the second-largest commercial bank in the industry, has a substantial government loan portfolio compared to its peers. However, this segment saw a contraction in the second quarter of the year relative to the previous quarter.

By June this year, KTB’s government and state enterprise loan portfolio amounted to 401.8 billion baht, down from 423.8 billion baht as of March 31. Despite this decline, the segment experienced a 6.3% growth in 2023, reaching 377.8 billion baht.

Retail loan products, such as mortgages, credit cards, and personal loans, are key contributors to the bank’s lending expansion. However, these segments posted marginal growth rates of 0.7-1.4% on both a quarter-on-quarter and year-to-date basis.

Loan growth

Payong emphasised the bank’s commitment to selective and prudent loan growth during the second half of the year, aligning with the economic situation and maintaining asset quality. He also mentioned the bank’s intention to set aside loan loss reserves based on economic conditions and client risk profiles.

During the first half of this year, KTB and its subsidiaries prudently set aside 16 billion baht in expected credit losses, marking a 1.1% year-on-year increase, while maintaining a high coverage ratio.

Non-performing loans (NPLs) were valued at 98.7 billion baht, a decrease from December 31, 2023, with an NPL ratio of 3.12%.

In the first half of 2024, the bank’s consolidated net interest income (NIM) reached 59.6 billion baht, an 11.7% year-on-year increase attributed to portfolio optimisation management and a justified risk-adjusted return amidst economic uncertainties.

The bank’s NIM stood at 3.35%, up from 3.1% in the first half of 2023.

Payong also highlighted KTB’s ongoing support for vulnerable customers, particularly small and medium-sized enterprises, through various long-term debt restructuring methods. He noted that the government’s fiscal budget disbursement is anticipated to bolster economic activities and partially enhance clients’ debt repayment capabilities, reported Bangkok Post.