Bangkok Bank (BBL), the country's largest lender by assets, plans to set aside additional reserves for credit losses next year as a cushion against future uncertainties, says executive chairman Deja Tulananda.
The escalating US-China tariff war is a major risk that could deal a blow to exports next year, Mr Deja said.
Improving profitability should also enable the bank to build buffers against bad loans, he said.
"We've tried to raise the coverage ratio to the previous level of 200%," Mr Deja said.
BBL's impairment charges for loan losses rose to 19.2 billion baht during the first nine months this year from 17.8 billion during the same period a year earlier. Its coverage ratio stood at 180.1%, while its gross non-performing loan ratio fell to 3.69% at the end of September from 3.92% at the end of 2017.
The bank delivered a 11.1% increase in nine-month net profit to 27.3 billion baht.
With the solid capital buffers, BBL is ready to comply with International Financial Reporting Standard 9 (IFRS 9), Mr Deja said.
The new accounting standard, which will be implemented in 2020, will require banks to set aside higher loan-loss provision through an expected credit loss impairment model, while the current International Accounting Standard 39 (IAS 39) uses an incurred loss impairment model.
Mr Deja said BBL aims to keep a lid on bad loans next year and focus on the asset quality of small and medium-sized enterprises (SMEs), particularly those engaged in exports.
"We will closely monitor SME customers whose business is related to exports amid higher global uncertainty," he said. "In case of any problem or impacts, the bank can help clients immediately."
Despite the higher risk to exports, the bank forecasts that Thailand's GDP will expand by 4.2% in 2019, underpinned by domestic demand.
Investment from both the public and private sectors and strong domestic consumption will support economic growth next year, Mr Deja said. With this optimistic view, BBL aims for total loan growth next year of 3-5%, the same as this year's target.
The bank will focus on wholesale banking related to infrastructure investment projects, in line with positive demand in the loan segment, Mr Deja said.
BBL shares closed yesterday on the SET at 216 baht, up two baht, in trade worth 363 million baht.
