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Krungsri to keep tighter lending criteria

BANK OF AYUDHYA will maintain its tightened lending conditions for retail customers for six to 12 months to ensure its borrowers will be able to make their payments on time.

Bank president Philip Tan said yesterday that the bad-debt rate for unsecured loans had climbed above 3 per cent, bringing gross non-performing loans in the first three months to 2.97 per cent.

The retail banking portfolio accounts for 50 per cent of Krungsri's lending, so when NPLs in that segment increase, this has a strong influence on the bank's overall bad-loan situation, he explained.

The bank has had to tighten approval criteria for high-risk lending such as credit cards and personal loans after more customers in this segment started delaying their payments, he said. As a result, the approval rate for unsecured loans has dropped to 35 per cent from 40 per cent earlier.

The bank has also improved its debt-collection system, sending reminders to customers who fall behind with their payments.

He said the tighter criteria would remain in effect for at least six months because Krungsri wants to limit NPLs to no more than 2.5 per cent as at the end of this year.

Still, Tan expects retail banking to recover quickly. He noted that during every period of political unrest during the past four years, and the flood disaster of late 2011, loan demand slumped, but always resumed soon after each crisis passed. It will be the same this year, as the bank expects the current political deadlock to be resolved in the next three to six months, resulting in a "mini-boom" in customer demand.

"After that, the bank will offer new products to cash in on the demand," he said.

Based on growth in gross domestic product of 1.5 per cent as forecast by the National Economic and Social Development Board, Krungsri believes loan growth this year should be 4.5-5 per cent. However, the bank has not changed its official loan-growth target of 7-9 per cent as it optimistic that demand will recover in the second half, he said.

But if the political impasse remains unsolved and the economy slumps, lending at Krungsri might drop as well, he added.

Separately, the bank has expanded its Krungsri Quick Pay mobile payment service to cash in on the growing activities in e-commerce in such businesses as logistics and direct sales.

Tan said e-commerce transactions through Krungsri last year amounted to Bt200 billion, which the bank aims to grow by as much as 30 per cent from new strategic partnerships this year.


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