Rama IX bridge over the Chao Phraya with the Kasikornbank building, Bangkok. Source: Flickr
Kasikornbank, Thailand’s fourth-biggest lender, has posted a 22-per-cent drop in quarterly net profit, hit by higher provisions and economic uncertainty.
The January to March net profit was 9.65 billion baht (US$277 million), higher than Reuters’ forecast of 9.2 billion baht.
The bank’s lending rose by 0.23 per cent in the quarter, while non-performing loans (NPLs) increased by 2.81 per cent of total lending at the end of March from 2.7 per cent at the end of 2015.
Kasikornbank, like Thailand’s other large banks, has struggled with weak demand for loans and rising bad debt as sluggish exports and feeble domestic demand put the brakes on the kingdom’s ailing economy.
The bank was aiming for loan growth of 6-7 per cent in 2016 versus 5.42 per cent in 2015, and expects its NPLs to rise to 3.5-3.6 per cent of lending by 2017.
Kasikornbank is the leader in the small- and medium-sized enterprises (SMEs) sector with a market share of 30 per cent. The SME segment has been the main cause of bad debts for Thailand’s banks in the past two years.
In an effort to stimulate growth in Asean’s second-largest economy, Thailand’s military cabinet had approved the construction of a 92.5 billion baht (US$2.65 billion) rail link in Bangkok, part of a larger infrastructural push.
Thailand’s generals are keen to demonstrate the benefits of their dictatorial rule by centrally managing large-scale projects to boost transport links and other services.
The rail announcement follows the approval in March of two new rail lines in congested Bangkok, which currently has three over-ground “Skytrain” lines and one more expensive underground line.
The proposed 21.2km Orange Line will connect downtown Bangkok to the eastern suburbs. The cost of the project has fallen by almost 3 per cent from an earlier estimate, although the junta’s accounting process has proved murky in the past.
In late March Thailand’s central bank cut its growth forecast for this year to 3.1 per cent.
