Krungthai Bank has increased its monthly loan-loss provision from Bt500 million to Bt700 million after experiencing lending expansion.
According to KTB first senior executive vice president Kittiya Todhanakasem, the bank adopted a normalised provision policy in December 2008 based on its Bt958.08-billion loan portfolio as at the end of 2007.
At the end of March this year, the portfolio was Bt1.76 trillion.
The bank had planned to increase its loss-provision policy to Bt700 million early this year to deal with the larger portfolio expansion but because of the economic slowdown and KTB’s non-performing loans (NPLs) increasing, it postponed the decision until the second quarter.Kittiya said NPLs in the second and third quarters were likely to climb because of the political unrest before the coup on May 22. But after the military’s ruling National Council for Peace and Order (NCPO) gets public spending back on track and now that farmers are being paid under the rice-pledging scheme, positive consumer and investor sentiment is returning, she said.
Lending growth and a lower NPL rate might be seen by the fourth quarter, she said.
Maybank Kim Eng Securities (Thailand) noted in a study released yesterday that KTB increasing the monthly loan-loss provision would not have an impact on its forecast of the bank’s net profit as it had factored this in according to the new provision policy announced earlier.
The brokerage firm said KTB should benefit from the Bt3 trillion in infrastructure projects announced by the NCPO.