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KTB joins mortgage price war as B10bn refinances

KTB's housing loans grew 2.4% in the first half. Patipat Janthong

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Krungthai Bank (KTB) has joined the price war among mortgage lenders in an effort to keep its customers after a number switched to other lenders offering cheaper rates.

KTB lowered housing loan rates after 10 billion baht worth of the bank's mortgages were refinanced at other lenders this year, said president Payong Srivanich. The special-rate mortgages are only available to borrowers with a good payment history, said Mr Payong.

Despite the large chunk of refinancing at other banks, KTB managed to deliver 2.42% growth for its home loans outstanding to 358.4 billion baht for the first half this year.

With the first-half growth, the bank expects its mortgage loan growth this year will outpace last year's, he said.

"With this pricing strategy, we can stop the bleeding and expand our mortgage lending. But the attractive rates must be justified in line with borrowers' risk profile," said Mr Payong.

Data analytics is a key instrument for the bank to select good customers, he said. The technology has helped KTB keep mortgage non-performing loans below 1% of its total housing loans.

In another development, Mr Payong said the bank stands ready to provide financial support to Thai Airways International Plc (THAI) after the State Enterprise Policy Commission approved the company's new aircraft purchase plan.

The national carrier typically uses several financial instruments to raise funds from both domestic and international sources, and local bank loans is among those tools, he said.

THAI is a corporate client with KTB and it is also a state enterprise, so providing financial support to the carrier is normal practice, said Mr Payong.

KTB also signed a memorandum of understanding on Thursday with the National Housing Authority (NHA) to provide project financing to developers building low-cost residential projects promoted by the government. The NHA said around 20 residential projects with a combined investment of 10 billion baht are expected to seek KTB project financing.

NHA governor Tachaphol Kanjanakul said the authority's 20-year plan calls for developing 2.7 million housing units, with at least 100,000 units per year. Its annual budget is sufficient to develop 20,000-30,000 units a year.

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