KTB plans to increase MRR for profit margin

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KTB plans to increase MRR for profit margin

Official predicts pending key rate

Payong Srivanich, chairman of Krungthai Bank, predicts that the Bank of Thailand will leave interest rates unchanged for the rest of the year. (File photo)

Krungthai Bank (KTB) is looking to raise its Minimum Retail Rate (MRR) to be on par with industry peers if needed to maintain profitability this year, while Permanent Finance Secretary Prasong Poontaneat believes the central bank will suspend key rate hikes this year.

“If necessary to maintain the net interest margin [NIM] and let’s take advantage, we could increase the MRR, ”said KTB chairman Payong Srivanich.

“The right timing depends on loan demand and the bank’s liquidity. It has nothing to do with the general election or the new government.”

KTB, the country’s largest public bank and the fourth largest bank in terms of assets, and Kasikornbank charge the industry’s lowest MRR at 7.12%. In comparison, Bangkok Bank’s MRR is 7.125% and Siam Commercial Bank is 7.37%.

For 2018, KTB’s NIM was 3.23% with recorded net profit of 28.5 billion baht.

Mr. Payong said the bank wants to increase interest and non-interest income this year to maintain profitability.

Based on KTB’s MRR, which is on average 0.25 percentage points below its competing competitors, the bank’s interest income would be baht 1 billion lower than others for every 400 billion dollars. baht from his loan portfolio.

The bank is targeting 5% loan growth in 2019, assuming 4.1% GDP growth.

Personal loans, which are expected to increase by 6-7%, and loans to small and medium-sized enterprises (SMEs) are expected to be the main contributors to the bank’s total lending growth.

KTB will slow the extension of government loans this year, in line with declining demand and returns from the commercial segment.

He said the bank is targeting 2.5% growth in non-interest income this year, despite lower transaction bank fees following waivers of digital transaction fees.

Other sources of paid income, especially in bancassurance, are expected to help the bank achieve its goal.

The bank aims to increase the number of users of the Krungthai NEXT mobile banking app to 10 million by the end of the year, from 4.5 million.

KTB has set an IT investment budget for 2019-22 at 19 billion baht, of which 12 billion baht is expected to be spent this year. Even going digital, an omnichannel strategy is needed, Mr. Payong said.

Over the next two years, the number of branches of the bank will be reduced to around 1,000 nationwide from 1,100, and the number of branch employees will be reduced by 30% from 21,000 employees, a- he declared.

On a related note, Prasong said the Ministry of Finance believes the Bank of Thailand understands the effects of the policy rate hike on SMEs and local people, although two members of the Policy Committee Monetary (MPC) voted for a 25 basis point hike this month. Meet.

The MPC voted 4-2 to keep the key rate at 1.75% on February 6, indicating growing anxiety over rising household debt after raising the rate by a quarter point last December. Two members voted to increase the policy rate by 0.25 percentage points from 1.75% to 2%, while one member was absent.

There is a need to help SME operators, salaried workers and low-income people who have debt to service, and rising interest rates would hurt those groups, he said.

Mr Prasong said the ministry had been monitoring the strength of the baht for some time, but that was the responsibility of the central bank.

The stronger baht could be attributed to the country’s current account surplus, he said.

The baht is Asia’s best-performing currency, gaining nearly 4% against the US dollar this year.

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