News Column

Kiatnakin expects bad loans to ease

July 14, 2014

By Somruedi Banchongduang, Bangkok Post, Thailand

July 14--Kiatnakin Bank's non-performing loans (NPLs) are expected to improve in the final quarter, thanks to the slowing pace of the growth rate in bad loans for property project financing and cars along with the recovery of the economy.

The bank expected its NPLs to peak last quarter with signs of improvement after the military regime took over.

Late repayments of car loans have dropped over the past two months, reflecting the better debt-servicing ability of customers, said chairman and president Apinant Klewpatinond.

"It will take some time to see a clear improvement," he said, adding the bank expects bad loans to gradually improve in the final quarter.

Kiatnakin's NPLs rose to 4.2% or 8.28 billion baht of outstanding loans of 197.70 billion baht at the end of March from 3.8% at the end of December.

Of the bad loans, 3.03 billion baht came from car loans and 2.98 billion from property project loans. Higher NPLs were recorded in almost all its loan categories.

The bank said demand for car loans has been picking up from the start of this month, supported by better sentiment and its internal process development in which it is focusing on improving both loan analysis and service quality. But the bank's car loans are expected to remain at 134 billion baht by year-end, representing the largest portion at 67.9% of its loan portfolio.

Flat growth would be in line with an assumption of a 40% drop in new-car sales this year. Loan demand for used cars still faces a tough time.

Kiatnakin has no plans to reduce its loan portfolio because it is its core business.

"Under reasonable risk management, the high yield of the used-car loan portfolio contributes good income while we are entering low-yield corporate loans," Mr Apinant said.

The small bank with outstanding loans of 198 billion baht began corporate banking at the start of the year after its merger with Phatra Capital Plc. It is confident it will achieve its corporate loan target of 10 billion baht this year after it booked 6 billion in the first quarter.

Mr Apinant said despite positive signs for corporate loans, consumer finance would require about six months to return to normal. As a result, the bank has revised down its 2014 target for total loan growth to 5-6% from 9.5%.


(c)2014 the Bangkok Post (Bangkok, Thailand)

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Source: Bangkok Post (Thailand)

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