Kasikornbank (KBank) plans to decelerate lending to small and medium-sized enterprises (SMEs) in the second half after loan growth exceeded first-half expectations.
The move falls in line with KBank's risk management strategy.
Executive vice-president Patchara Samalapa said outstanding SME loans stood at 538 billion baht as of June 30, outpacing the first-half target of 530 billion. SME loans expanded by 4.8% from the end of 2013, while the full-year target is 6.8% growth, he said.
The slowdown in SME loan extensions is aimed at keeping the portfolio for these outstanding loans at a maximum of 553 billion baht by year-end.
The country's largest SME lender plans to extend 247 billion baht worth of new SME loans this year — 143 billion was lent in the January-June period, leaving 104 billion to be extended in the second half.
SME loan growth in the industry contracted 4-6% in the first half, so other banks are expected to ramp up their lending in the second half amid stronger loan demand prompted by an improving economy.
KBank lent 35.9 billion baht in June, the largest monthly amount in two years, said Mr Patchara.
"Positive economic sentiment has made the bank more confident in granting new loans to SMEs. However, strong risk management remains in place to assure loan quality," Mr Patchara said.
The bank’s non-performing SME loans were 2.66% of its SME portfolio as of May 31, down from 2.76% at the end of March.
KBank, the country’s fourth-largest lender by assets, is maintaining its 2014 SME revenue target of 39 billion baht or 10.7% growth.
KBank's SME business contributed 19.5 billion baht in first-half revenue, up by 10.7% year-on-year. However, the yield in the second quarter dropped by 20 basis points quarter-on-quarter because of KBank's measures to help SME clients affected by economic and political uncertainty, included granting a maximum six-month grace period on principal and providing financial support to 534 SME clients with a combined credit line of 11 billion baht.
KBANK shares closed yesterday on the Stock Exchange of Thailand at 215 baht, up one baht, in trade with a value of 655 million baht.