BANKING : Kiatnakin sees strong loan growth this year

DARANA CHUDASRI

Kiatnakin Bank Plc (KK) projects strong growth of 15-20 billion baht for its lending portfolio this year, with more than half coming from hire-purchase contracts. However, Tawatchai Sudtikitpisan, the president of KK, warned that interest margins were likely to narrow this year despite the downward interest-rate trend.

He said the bank's interest margins this year were likely to drop to 5.5-6% from 6.2% at the end of 2006.

''With half of our loan portfolio in the form of fixed-rate hire-purchase loans, it will take time before changes in market rates filter through our portfolio,'' Mr Tawatchai said.

Hire-purchase loans, which accounted for half of KK's consolidated loan portfolio of 51.1 billion baht at the end of 2006, are expected to increase to around 60% of total loans by the end of the year.

''We will continue to focus on hire-purchase assets, despite the growing competition in the market,'' Mr Tawatchai said.

Commercial loans are projected to grow by only three billion baht this year, while property lending is expected to remain flat.

Mr Tawatchai said the bank hoped to lend one billion baht in new personal loans this year, primarily to its existing hire-purchase base of 160,000 clients.

KK also expects to reduce its non-performing loans to 10% of total assets, or around six billion baht, by the end of the year, primarily through debt restructuring and asset foreclosures.

Bad loans on a consolidated basis stood at 14.79%, or seven billion baht, at the end of 2006.

The bank, one of the smallest in Thailand with net assets of 76.76 billion baht, reported net profits of 2.03 billion last year, down slightly from 2.43 billion in 2005. Fourth-quarter net profits totalled 416 million baht, or 0.74 baht per share, down 2% from the previous quarter.

Net interest and dividend income fell by 25% in the fourth quarter from the previous quarter due to higher loan expenses, although net interest income rose strongly by 374% quarter-on-quarter to 413 million thanks to asset revaluations and transfers from its restructuring programmes.

Shares of Kiatnakin (KK) closed on the Stock Exchange of Thailand at 28 baht yesterday, unchanged, in trade worth 12.16 million baht.

Thailand News : Business News
Bangkok Post
Friday January 26, 2007