Thailand
Thailand: Banks emphasise debt rejig, assets
Local commercial banks are concentrating on debt restructuring and asset quality rather than business growth amid fragile economic conditions that could linger into next year.
Pipatpong Poshyanonda, co-president of Kasikornbank (KBank), said the bank will continue paying attention to helping customers with debt restructuring for next year, together with seeking new business opportunities.
Despite participating in the debt restructuring programme, customers also need additional credit lines to support financial liquidity and continue business operations.
KBank, the country’s largest commercial lender by total assets, expects to manage rising uncertainties anticipated in 2021 from the effects of the Covid-19 pandemic through its sound capital adequacy ratio (CAR) of 17.3%, of which 14.5% is tier-one capital.
Some business sectors facing a heavy impact from the pandemic, such as hotel operators, are expected to have lower asset quality in line with a weakened debt repayment ability.
The bank will have to monitor non-performing loans, though they have remained static under the debt restructuring scheme, said Mr Pipatpong.
The Bank of Thailand allows financial institutions to offer debt restructuring instruments to small and medium-sized enterprises with a credit line of no more than 100 million baht for six months or until June next year, on a case-by-case basis.
Despite fragile conditions next year, KBank expects its total loan portfolio to expand, supported by the debt restructuring programme and new S-curve businesses, he said.
The regional banking business is a key area contributing to KBank’s expansion after it laid a foundation over the past few years.
With its Asean+3 strategy, KBank’s regional banking business covers Asean economies along with China, Japan and South Korea.
“Regional banking business operations should have a clearer outlook next year in terms of business expansion and income after we built up the foundation for a while,” said Mr Pipatpong.
In related news, Krungthai Bank (KTB) president Payong Srivanich said the bank will also concentrate on helping customers to overcome the crisis in 2021 through several debt restructuring instruments on a case-by-case basis.
“We will pay more attention to customer assistance and asset quality rather than growth for next year amid a fragile economy,” Mr Payong said.
KTB expects to see loan growth in government loans and related government business segments, but the bank has yet to finalise its 2021 business plan and financial targets.
The bank will also consider setting aside additional loan-loss reserves in line with the economy.
KTB’s existing CAR is 18.4%, of which 15% is tier-one capital, which will lend support for the bank to cope with ongoing uncertainty.
Chartsiri Sophonpanich, president of Bangkok Bank (BBL), said the bank will continue helping customers on debt restructuring to overcome financial burdens.
BBL’s strong capital buffer includes a CAR of 19.2%, of which 16.4% is tier-one capital, which should be sufficient to cope with uncertainties, said Mr Chartsiri.
Source: https://www.bangkokpost.com/business/2012403/banks-emphasise-debt-rejig-assets