KBank to ease off on new corporate loans after 9% rise

KBank’s outstanding corporate loans in the first half grew 9 per cent to Bt513.137 billion, which was faster than the target of 4-6 per cent due to one-off lending to a big corporate customer.
Patchara Samalapa, executive vice president, said yesterday that lending to corporations requires ample capital, while the bank has to give importance to provisions because provisioning has implications for capital.
Even though reserves for corporate loans are not much, as this segment has lower risk than SMEs, the bank has to set high provisions for SMEs, so capital management is a big issue for the bank.
The bank will assume a more cautious posture toward extending credit and hopes that corporate clients will pay off a good chunk of their debt in this half year.
This will help the bank control its exposure to corporations.
Enterprise customers have demand for loans even though they enjoy positive cashflow.
The bank is ready to accept low spreads if the corporate customer brings its value chain to the bank. The bank will try to help corporate customers raise funds from the equity market.
KBank has performed well in helping customers issue bonds and launch real estate investment trusts (Reits).
“We have to increase the role of financial adviser to initial public offerings, but the economic situation right now doesn’t support the IPO market this year,” he said.
KBank remains the leader of the Reit and bond markets, with a combined value of Bt8.08 billion, or 40 per cent of the total Bt20.12 billion.
Patchara oversees both corporate and SME business divisions. KBank targets combined loan growth from the two divisions at 5 per cent.
Existing customers are now in the debt-downsizing mode due to the economic uncertainty.
Unlike the corporate portfolio, SME loans in the first half grew 2 per cent to Bt628.69 billion, below the target of 5-7 per cent.
The second half is the season for loan takedowns of SMEs. The bank hopes that the outstanding loans of SMEs will move up in November and December.
SMEs will have more opportunities to access funding sources with the support of government packages, such as the single account measure, Business Collateral Act and National e-Payment system.
Under these schemes, SMEs will benefit from accurate data for business operations, allowing them to access funding sources and achieve future advancement.
Thai business operators are also increasingly adopting various technologies to enhance their potential, leading to sustainable growth, he said.
However, the bank has identified 108 industries out of the total 4,000 for close attention.
Commodities, jewellery and steel are the risky industries for KBank.