Krungthai Bank has cut its lending-growth target for the year from 7-10 per cent to 4.5 per cent, as it acknowledges that economic growth could now come in at just 3.2 per cent.
The bank is also concerned about rising bad debt.
KTB is the latest major bank to lower its loan-growth goal, after Kasikornbank and TMB Bank both did so in light of the economic slowdown.
President Vorapak Tanyawong yesterday said the bank had to adjust its loan growth in line with the reality that both domestic consumption and investment were contracting. Meanwhile, the continuing political unrest exacerbates the situation.
KTB earlier projected growth in gross domestic product of 4-5 per cent for the year, but has now slashed its forecast to 3.2 per cent.
He said the Constitutional Court’s ruling this week that the government’s Bt2-trillion loan bill was unconstitutional was another factor behind the bank’s cutting of its loan-growth target, because the judgement would have an impact on the lending draw-down of construction contractors.
"Customers in this sector have suspended their work. While they are optimistic that the infrastructure projects will eventually go ahead, the sector will be seriously affected if the political unrest is unresolved by the middle of the year," Vorapak said.
He also said KTB was attempting to get its net non-performing loans (NPLs) down from 1.49 per cent to 1.3 per cent, but he acknowledged that more retail customers and small businesses were showing signs of delayed debt repayment.
Weidt Nuchjalearn, first senior executive vice president of KTB, said that in the first two months of the year, NPLs among small-business clients with credit lines of up to Bt20 million had climbed to 2.6 per cent from 2.3 per cent.
Furthermore, 30-day-late payments and bounced cheques have been on the increase, which is a worrying sign and reflects the fact that small businesses are facing a liquidity shortage, he said.
"The bank’s small-business portfolio is about Bt100 billion, and we are concerned that special-mention [potentially weak] loans will turn into NPLs. If a customer delays payment for more than two months, we will send our staff to meet them in an effort to offer assistance, including a grace period," said the executive.
Vorapak added that the bank was considering lowering its interest rates for both lending and deposits, after the Bank of Thailand’s decision on Wednesday to reduce the policy rate by 25 basis points to 2 per cent to give the economy a shot in the arm.
Meanwhile, Boontuck Wungcharoen, chief executive officer of TMB Bank, said the institution was also considering cutting both its lending and deposit rates.
Siam Commercial Bank and Kasikornbank have already lowered their interest rates after the Monetary Policy Committee’s move.