Executive chairman Kosit Panpiemras said his bank would do its best to equal last year's before-tax profits.

"This year, we'll keep our before-tax profit at last year's level. There are higher risks compared with last year, but we'll try our best. Our net profit will decline, owing to a higher tax payment," said Kosit.

Most banks that recorded net losses for several years in the wake of the 1997 financial crisis did not need to pay corporate tax. This is the first time since that period that Bangkok Bank (BBL) be obliged to pay tax on an entire year's operations.

Kosit said high oil prices and foreign-exchange volatility had added to business risks the world over, leaving each country to deal with them in its own way.

However, Bangkok Bank's lending-growth forecast remains unchanged. The bank predicts GDP growth of 4-4.5 per cent this year and expects to be able to reduce its non-performing loans to 7 per cent, better than the estimate of 10.9 per cent made at the end of last year.

Apisak Tantivorawong, president of state-controlled Krung Thai Bank Plc, said yesterday his bank expected its net profit to rise on year this quarter, thanks to higher fees and more efficient cost management.

Krung Thai Bank, the country's second-largest bank in terms of assets, earned Bt3.3 billion in last year's second quarter and Bt4.8 billion in this year's first quarter.

Apisak said Krung Thai planned to float up to US$300 million (Bt11.46 billion) worth of hybrid tier-1 bonds next month. The bank last week submitted its proposal to the Bank of Thailand for approval.

"The key point is the coupon rate. If it's too high, we may issue only a small number of them, or even none at all," said Apisak.

He said earlier this month that the bonds could be pegged at a lower interest rate than some recent dollar bonds issued by TMB Bank, another Thai state-controlled bank. TMB sold $200 million in perpetual hybrid bonds late last month at par, yielding 7.75 per cent.