"The country's economic environment is having an impact on the bank's borrowers, and some of them can't service their debts on time," SCB president and chief executive Khunying Jada Wattanasiritham said yesterday. "The figures are not a significant concern, but the bank is closely monitoring [the situation] and is ready to help them immediately."

Jada hastened to say that the debt-repayment ability of the bank's borrowers had not worsened significantly over the first four months of the year. Their debts have not been classified as non-performing loans, where borrowers have failed to service debts for more than 90 days.

However, she joins Kasikornbank president Prasarn Trairatvorakul, who said earlier this week that there were early signs of an increase in the number of bank customers failing to service their debts for 30 days.

Separately, Jada said SCB had achieved its targets for both lending and net profit.

The bank's lending for the first five months of the year has been slightly slower in some sectors - as the bank expected.

At present, the SCB is maintaining its target of Bt50 billion for net loan growth this year, but according to normal practice, the figure will be revised along with the bank's business plan in the second half.

Jada said the core risk factor for Thailand's economy in the second half would, once again, be oil prices. However, the global political environment, and particularly the tension in Iran, will possibly increase the risk factor.

Domestic private consumption has also declined because of rising fuel prices and high interest rates that have weakened purchasing power, she said, adding that the consumption slowdown should not be a serious issue because the country has a high employment rate.

Meanwhile, SCB senior vice president Duangkamon Chaiyapuntu said the bank's mortgage lending in the first five months was reason for concern. Although data summaries have yet to be completed, it signals a slow down due mainly to higher costs of living eroding customers' buying power.

"The bank is studying the adjustment of our housing loan package to bring it into line with the economic environment," she said. "We may possibly offer a low interest rate for the first five months, thereafter increasing the rate so it will reduce the interest burden on homebuyers in the current environment of rising interest rates."

In the first four months, SCB's new housing loans amounted to just Bt1.2 billion, compared with the target of between Bt50 billion and Bt60 billion for the entire year.

However, Duangkamon said SCB still dominated the commercial banking industry's mortgage loan market with an increased share of 33 per cent.

In collaboration with Asian Property Plc (AP), SCB yesterday launched an "Amazing Zero" promotion, offering zero interest for the first year to customers who buy houses from AP's seven projects.

Somruedi Banchongduang

The Nation