Banks Brace for Potential Losses Linked to ITD


Siam Commercial Bank (SCB) and Krungthai Bank (KTB) have set aside funds for potential loan losses linked to Italian-Thai Development Plc (ITD), aligning with the asset quality of a leading contractor.

SCB’s Chief Executive Arthid Nanthawithaya noted at a recent shareholder meeting that provisions for potential loan losses related to ITD were established using a forward-looking expected credit loss framework. The bank maintains that ITD is not classified as a non-performing loan, highlighting its robust risk management.

Arthid emphasized that SCB has prepared a substantial loan loss reserve to navigate economic uncertainties. The bank aims for a credit cost range of 160-180 basis points for 2024.

Meanwhile, KTB has allocated a 100% loan loss provision for ITD, with FSS International Investment Advisory Securities (FSSIA) classifying ITD as a stage 2 loan. KTB aims to maintain its NPL coverage ratio steadily at 174% in the first quarter, with a credit cost expected at 132 basis points.

BBL, another major bank involved, faces concerns over corporate loan issues involving ITD and its supply chain. FSSIA predicts BBL’s NPL ratio to increase to 3.26% in the first quarter of 2024, with provisions set to rise accordingly.

These developments underscore the financial sector’s response to challenges posed by ITD’s situation, with banks actively managing risks and preparing for potential losses.


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