The bank is in the process of resolving one big corporate NPL.
With the stabilisation of Krung Thai Bank’s (KTB) asset quality, the bank's non-performing loan (NPL) ratio could fall to around 4% in 2019 from 4.5% in 2018 especially with one big corporate NPL resolution in the pipeline, according to a report from UOB Kay Hian.
The bank’s management also guided for a further recovery in loan growth to around 5% in 2019 from 4% in 2018. They noted that they will focus more on small and medium-sized enterprises (SMEs) and retail loans aside from lending to government and state enterprises.
With the improving loan mix towards good performing SMEs and retail lending, UOBKH believes that earnings yields should continue to grow.
KTB is in the process of investing on heavy IT platform which UOBKH estimates a capex of around $320-480m (THB10-15b) every year from 2019 to 2021.
“We therefore expect its cost-to-income ratio to come under pressure, rising from around 45% in 2018 to around 47% in the next few years,” UOBKH noted.
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