Kasikornbank (KBank), the country’s largest commercial lender for small and medium-sized enterprises (SMEs), aims to keep its bad-loan ratio for SME loans at a maximum of 5.1%, which it recorded at the end of last year. It further aims for 4-6% loan growth in 2017.
The bank will continue monitoring the agricultural sector this year despite the improving trend for commodity prices, said executive vice-president Surat Leelataviwat.
The increase in non-performing loans (NPLs) on SME loans to 5.1% of its outstanding loans totalling 657 billion baht at the end of 2016 was sparked by tumbling farm product prices. That contributed to KBank’s overall NPL upsurge to 3.3% at the end of December, up from 2.7% a year earlier.
SME operators are among those who are vulnerable to the country’s uneven economic recovery, with droughts in recent years, soft agricultural product prices last year and the ongoing floods ravaging the South having dealt a heavy blow to those in the farm sector.
The bank has no plans to divest itself of NPLs for the business segment, he said.
“Small businesses with annual sales below 50 million baht are the major contributor to the increase in NPLs on SME loans last year, and we will closely monitor them,” said Mr Surat.
KBank increased its credit costs by 200-220 basis points last year to set loan-loss provisions to be a buffer against rising bad loans. The bank’s credit costs in 2015 rose by 204 basis points.
By comparison, KBank’s wholesale loans turned sour at a rate of 1.5% of its outstanding loans at the end of last year. That rate for retail loans was 3%.
He said debt restructuring is the key instrument to control bad loans for SMEs, while the bank will further expand its loan portfolio to support SME customers.
It sets 2017 SME loan growth in the range of 4-6%, with the aim of maintaining market share at the current level of 28% amid tougher competition in the business segment.
Construction, medical tourism and online businesses have high growth potential among SMEs this year, said Mr Surat.
KBank also aims for 4-6% corporate loan growth from 511.7 billion baht at the end of last year.
It aims for 1% revenue growth in the wholesale banking business this year from 21.4 billion baht in 2016. For its retail banking business, it targets loan growth in the range of 5-7% this year from 374 billion last year and revenue growth of 5-7% from 31 billion in 2016.
KBANK shares closed yesterday on the Stock Exchange of Thailand at 189 baht, up 1.50 baht, in trade worth 326.5 million baht.