Kiatnakin Phatra (KKP) Financial Group expects its non-performing loan (NPL) ratio to surge this quarter after the Bank of Thailand's first-phase debt restructuring measures expired in October.
The NPL ratio is expected to increase significantly this quarter given the time lag following the end of the central bank's first-phase debt relief measure for small and medium-sized enterprises (SMEs), said KKP chief executive Aphinant Klewpatinond.
The central bank implemented broad-based debt relief measures on April 23 to help SMEs reeling from the pandemic fallout, but the measures expired on Oct 22.
The Bank of Thailand also implemented targeted debt moratorium measures to help SMEs with financial difficulties, scheduled to end on June 30, 2021. This scheme is for SMEs with a credit line below 100 million baht that are having difficulty servicing loans to financial institutions because their operations have slumped.
KKP will continue helping customers with debt restructuring this year, especially retailers because its retail loan portfolio makes up the largest portion of the bank's total outstanding loans, said Mr Aphinant.
A man walks past a branch of Kiatnakin Phatra Bank on Ratchadaphisek Road. KKP targets to control distressed debts at below 4.5% of total outstanding loans this year. No photo credit
KKP's gross NPL ratio stood at 2.9% of total outstanding loans at year-end 2020, down from 4% registered in 2019. KKP targets controlling distressed debts at below 4.5% of total outstanding loans this year, despite a second-wave outbreak of the pandemic in Thailand.
"Though NPLs are projected to increase, the bank does not need to set a significant amount in loan-loss reserves because we have a strong cushion from previous provisions," he said.
Around 200,000 retail clients applied for the bank's debt restructuring programme in 2020, with combined loans tallying 40% of KKP's total loan portfolio. All applicants managed to exit the scheme in December, in line with a gradual economic recovery.
With the second wave late last year, around 10,000 retail clients applied for the second-phase debt restructuring as of January.
KKP booked a total loan portfolio of 268 billion baht in 2020, of which 168 billion or 62.7% were retail loans. The bank booked total loan expansion of 12.4%, with 15.8% for retail loan growth, while the NPL for retail loans stood at 1.6%.
Given higher downside risks and low interest rates, KKP plans to balance banking business, wealth management and investment banking this year.
