"We have increased the number of credit analysts to primarily screen the quality of loan applicants before they come to the credit scoring process, which is the company's double-check system. Under the current environment we need to be more prudent," he said.

 Despite a more stringent approval process,  loan demand remains high compared with the past few years. Loan applicants number about 3,000 daily, against 1,000 in recent times.

However, the company's loan rejection rate is unchanged at 50 per cent. Prime lending rates have risen more than 100 basis points since the middle of last year and this has raised concern about the repayment ability of borrowers. The country's four largest commercial banks' minimum lending rate now stands at 7.5 per cent, minimum overdraft rate at 7.75 per cent, and minimum retail rate at 8 per cent.

Earlier, JMT Network Service, a leading debt-collection agency, said more mortgage and auto loans were likely to turn to distressed assets this year as fast-rising domestic interest rates and skyrocketing fuel prices have undermined the debt-servicing ability of home and car buyers.

Niwatt said that amid the current uncertain Thai climate, KTC would attempt to control operating costs, particularly in its advertising budget, which is significantly lower this year. KTC's advertising and marketing budget was Bt547 million in 2004 and Bt570 million last year.

Such controls will help the company slim down its costs, which have increased continually to comply with a series of Bank of Thailand policy signal-rate hikes.

Somruedi Banchongduang

The Nation