Thailand's largest lender by assets, Bangkok Bank, acknowledges that its profits this year could be lower than in 2013 because of reduced borrowing by business clients.
In the first quarter, BBL’s net profit dropped by 0.5 per cent from the same quarter last year as lending showed flat growth from the final quarter of 2013.
Moody’s Investors Service reported on Wednestday that it expected Thai banks to see their profits slump to the lowest in three years because of the political unrest. BBL president Chartsiri Sophonpanich echoed Moody’s report, saying it was highly possible that the bank’s net profit this year would be lower than last year’s Bt35.91 billion.
He said BBL was still relying for its profitability on the same areas, mainly corporate customers, which represent 44-45 per cent of the total loan portfolio despite a slowdown in demand.
The bank has no plan to expand into new areas that generate high yields such as instalment loans, he said. According to the bank’s financial results in the first quarter, BBL’s net interest margin fell to 2.21 per cent from 2.23 per cent at the end of last year.
However, Chartsiri believes that the bank’s lending performance has room to grow in the remaining months of the year from clients in the manufacturing and export sectors. The bank will fully support its clients wishing to expand and find new markets locally and overseas, he added.
He said the bank had maintained loan growth of 3-5 per cent, but this was the first time he had mentioned a figure as low as 3 per cent.
Previously, the bank predicted loan growth of 5-7 per cent this year. However, Chartsiri insisted the new range of 3-5 per cent was not really a revised forecast, as 5 per cent was still the basic target. Actual growth could be a bit higher or a bit lower than that, depending on its clients’ activities in the remainder of the year.
BBL projects that gross domestic product will grow by 2 per cent this year.
Meanwhile, Chone Sophonpanich, president of Bangkok Life Assurance (BLA), a subsidiary of BBL, acknowledged that its premium income in the first two months had missed the growth target and was lower than that of the overall life-insurance industry, again blamed on the political unrest plaguing the nation.
Still, BLA witnessed a good level of policy renewals, a good sign that customers were still able to pay their premiums.
BLA projects total premium growth of 25 per cent this year. It will announce its first-quarter performance today.
Separately, Teeranun Srihong, president of Kasikornbank, said it had maintained its loan-growth target of 8 per cent, backed by demand from large corporate clients, especially in the infrastructure, energy and export sectors.