BAY sees bank’s loan growth rising above GDP expansion

Given the estimated economic growth rate of 4 per cent this year, the bank expects its lending will grow by 6 per cent to 8 per cent year on year, Noriaki Goto, Krungsri president and chief executive officer told the press conference yesterday.

“Four per cent growth in GDP is a pretty good number and the bank will tap into the momentum of economic growth this year, he said. 

However, the government’s Eastern Economic Corridor(EEC) project would not have much of an impact on banks’ lending as it is still in the planning stage. Large private investment is expected to come in 2020 or later, said Goto.

“ The interest rate may slightly increase and it may put pressure on bank's net profit margin,” he responded when asked how the global trend of rising interest rate would affect the bank’ lending this year. It had a profit of Bt 23.2 billion last year, up 8.4 per cent from Bt21.7 billion in 2016. He said non-interest rate revenue is on the rise with last year’s revenue reaching Bt 31.94 billion, up from 29.51 billion from the previous year. 

He said the bank will maintain its leadership on retail banking over the medium- term business goal between 2018-2020.

Last year its retail lending portfolio was worth Bt730 billion , representing 47 per cent of total outstanding lending of Bt1.5 trillion. Retail lending included Bt 340 billion in auto hire-purchase, 220 in mortgage loans and Bt 170 billion in credit card and personal loans.

 The bnak’s retail lending is expected to rise to 50 per cent of total lending in 2020 with estimating growth rate of 7 to 9 per cent rise annually, said Duangdao Wongpanitkrit, chief financial executive.

Competition 

Asked whether mortgage borrowers would shoulder higher cost should the rate rise this year, she said that the market is very competitive so it is hard for the bank to shift the extra cost to customers.

The market has expected the US Federal Reserve to raise its policy rates three times this year and it would lead to rate rises worldwide.

The rate hikes would adversely affect funding cost of financial institutions and companies, she added .

Amid the trend of rate rise and strict rules imposed by the Bank of Thailand, it would inevitable affect the bank's funding cost. The challenge is how to manage funding cost and bank operations, she said. 

The bank's non-performing loans last year was 2.05 per cent, the lowest level since the 1997 Asian financial crisis, according to its executives. 

The EEC investment projects would indirectly boost consumption and private investment loans, added Duangdao.