Bank of Ayudhya has cut its forecast for loan growth this year to single digits after accelerated lending in the past few years forced large loan-loss provisions that pulled down its bottom line.
“The Thai operating environment will remain uncertain as we continue to face politico-economic and market challenges,” chief executive officer Noriaki Goto said in a statement. “However, we expect economic growth to recover from 2013, driven by stronger exports and a recovery of domestic demand in the second half of the year. Accordingly, the outlook for loan growth for the coming year remains moderately positive, and we project loan growth of 9 per cent for the year.”
BAY reported loan growth of 13.6 per cent last year. The retail segment was the key contributor with balanced growth in auto loans, mortgages, credit cards and personal loans of 15.4 per cent, followed by the corporate segment, which grew by 14.9 per cent, and SME (small and medium-sized enterprises) lending at 8.7 per cent.
Working against this were a higher number of used-car loans going bad, pushing up the proportion of non-performing loans by the end of last year to 2.6 per cent, from 2.4 per cent in 2012.
The bank reported to the Stock Exchange of Thailand yesterday that its net profit for the full year was Bt14.02 billion, down by 4.1 per cent from Bt14.62 billion in 2012, mainly on the increased loan-loss provisions as a countercyclical resource. Total loan-loss provisions were Bt16.82 billion, a surge of 47.8 per cent from 2012. BAY’s net profit in the fourth quarter decreased by 15.9 per cent year on year because of the increase in loan-loss provisions of Bt1.79 billion or 61.8 per cent from the previous year.
Four listed banks, Siam Commercial Bank, Kasikornbank, TMB Bank and Tisco Financial Group, earlier recorded higher profits for 2013 even though they witnessed a drop in net profit in the fourth quarter from setting aside extra loan loss provisions.