News Column

BBL puts corporate loan growth at 5-6%

August 4, 2014

By Somruedi Banchongduang, Bangkok Post, Thailand

Aug. 04--Bangkok Bank (BBL) expects corporate loan growth of 5-6% this year, driven by short-term loans and following the country's improving economy.

Senior executive vice-president Chansak Fuangfu said demand for wholesale loans, largely short-term working capital loans, started picking up in June along with the brighter economic prospects.

The main reasoning for the expected expansion is that corporate clients require liquidity to run their business operations amid a rebounding economy.

Trade finance is another key area showing higher loan demand in accordance with improving exports, particularly to regional markets.

In the first half of this year, Thailand's exports to neighbouring countries, particularly Cambodia, Laos, Myanmar and Vietnam, accounted for 12% growth year-on-year.

Exports to the US and EU have also improved following a recovery in developed economies.

Much of the economic data was positive, particularly improvements in business confidence, manufacturing and exports.

However, large corporations are still waiting to see improvements in public spending before making new investment decisions.

As a result, demand for long-term loans and project financing are expected to resume in the first half of next year.

"The country's economy has already bottomed out, but private investment needs more time to recover," Mr Chansak said.

BBL, the country's largest bank by assets, booked total first-half loan growth of 0.7% year-on-year.

Separately, the small Land and Houses Bank (LH Bank) plans to double its SME loan proportion to 30-35% of outstanding loans in the next three years from 15% now while reducing corporate loans from 50%.

It plans to balance the three core business segments of mortgages, SME loans and wholesale loans equally at one-third apiece.

The move is part of LH Bank's risk diversification and efforts to obtain a better margin. Mortgages will lead slightly at 35%, up from 30%.

LH Bank expects overall full-year loan growth at 7-8% after booking healthy first-half growth of 6.06%.


(c)2014 the Bangkok Post (Bangkok, Thailand)

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Source: Bangkok Post (Thailand)

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