Kiatnakin Bank (KK) has set a conservative lending growth target of 8% this year, far below last year's 18.5% increase, amid several uncertainties, particularly the possibility of new lending regulations.
The bank wants to be more prudent in extending loans this year because of increasing uncertainties and the impact from the central bank's more stringent rules for mortgage lending, said Aphinant Klewpatinond, chief executive of Kiatnakin Phatra Financial Group (KKP).
KKP is Kiatnakin Bank's parent firm.
"We expect the regulator could implement other measures to regulate car and corporate loans," Mr Aphinant said.
The Bank of Thailand's more stringent requirements on minimum down payments for second and subsequent mortgages, going into force on April 1, will take a toll on KKP's mortgage and property loans, he said.
Last year the bank's housing and property loans surged 65.7% and 36.6%, respectively, largely due to low bases.
With 18.5% growth overall, KKP's lending expanded at the fastest pace in the industry last year.
Mr Aphinant said the industry's auto loans delivered significant growth in 2018, thanks to the business cycle and the lapse of the five-year ownership lock-up period for cars bought under the first-time car buyer scheme.
Greater competition and underpricing of risk among auto lenders, as seen by the lower down payment requirement of 5% from 20% in the past, are elevating industry risk, he said.
KK plans to focus on lower-yield assets to control risk this year.
The bank will slow expansion of consumer financing and commercial loans, especially in property, but continue to focus on positive yield products and small corporations, auto loans, advisory and the capital market.
KK sees interest spread between deposits and loan rates narrowing to 4.5-4.7% this year from 5% last year.
The bank also aims to bring its non-performing loan ratio to below 4% by the end of this year from 4.1% last year, and further reduce proportion of its core business, auto loans, to 45% by 2020 from 47% now.
Auto lending once accounted for 75% of Kiatnakin Bank's lending portfolio.
Pipat Luengnaruemitchai, assistant managing director and head of private wealth management research at Phatra Securities, said the general election will create more uncertainty and a possible political vacuum.
"Under the new election rule of Mixed Member Apportionment System, higher political uncertainties would be created, particularly during the formation of the next government," he said. "The new premier must get a majority of votes from senators picked by the National Council for Peace and Order, in addition to winning the popular vote."
