The Thai banking sector has recorded modest loan growth in the initial four months of the current year, largely influenced by stricter loan standards in the backdrop of a sluggish economy.
By April 2024, the ten SET-listed banks disclosed a net loan portfolio of 13 trillion baht. This marks a 1.2% year-on-year increase and a 0.4% rise from the end of 2023, as per findings from the Kasikorn Research Center.
Aphinant Klewpatinond, the Chief Executive of Kiatnakin Phatra Financial Group, the parent company of Kiatnakin Bank, noted subdued loan growth during this period. This was attributed to intensified loan approval criteria owing to heightened credit risks amid the tepid national economic landscape.
The bank adopted a more cautious approach towards loan expansion spanning retail, small and medium-sized enterprises (SMEs), and corporate banking segments. Loan demand dwindled in parallel with economic challenges, he remarked.
With a surge in loan rejection rates due to stricter criteria demanding higher loan-to-value ratios overall, Kiatnakin Bank has principally targeted high-end clientele to uphold asset quality standards, Mr. Aphinant highlighted.
For instance, he emphasized the bank’s focus on mortgage products with a minimum house price ranging from 5-7 million baht. By directing efforts towards the upper-income bracket, positive growth was seen in mortgages this year, attributed partly to a lower baseline figure. Housing loans accounted for 60 billion baht or 15% of the total loan portfolio.
Regarding large corporations and SET-listed companies, the bank exercises caution by evaluating their financial standings meticulously, he added. Several local companies with moderate to significant sizes have displayed weakened debt repayment capabilities, evident through bond rollovers.
SMEs are perceived as a vulnerable group due to their general fragility, particularly for loans lacking full-value collateral, Mr. Aphinant mentioned. Therefore, the bank adheres to a selective strategy while lending to SMEs, focusing on collateral-backed loans.
Challenges persist in the credit risk domain, especially concerning auto loans, which constitute about 50% of the bank’s overall loan portfolio. Factors such as sluggish new car sales and heightened competition within the automotive industry have made auto hire-purchase loans more challenging.
Given the uncertain economic and business outlook for the latter half of 2024, Kiatnakin Bank aims to prioritize asset quality over loan growth for the remaining year, potentially resulting in stagnant loan growth figures, Mr. Aphinant concluded.
