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Published on September 1, 2007

President Apisak Tantivorawong said its outstanding loans could not meet the target by the end of this year. Although the bank's loan approvals recovered in the second half this year, net lending for the first half was poor.

The goal in net loan growth of the country's largest state-owned bank for this year was set at 6 per cent, accounting for Bt60 billion in new lending. The bank still maintains its growth target unchanged.

In the first half, KTB recorded a net lending reduction compared with the same period last year, though the bank's new loans were high, at Bt80 to Bt90 billion. But the new loans were offset by debt payments from corporate customers, particularly government loans of Bt30 to Bt40 billion.

Besides, some private customers made debt refinancing by debenture issuance, so that 45 per cent of debt payments are long-term loans.

Apisak said lending in the second half this year has been showing signs of recovery. The bank has approved corporate loans to the country's large infrastructure projects, particularly in the petrochemical and energy sectors.

The projects will withdraw the loans for investment expansion next year after the country's general election takes place by the end of this year. A clearer picture of the country's political situation should build people's confidence and thus improve domestic consumption and investment.

Apisak said the government's infrastructure mega-projects investment might be delayed, as the country waits for the new government. In any case, Tan believes Thai financial institutions are ready to support the financing of the projects, which include the three mass transit projects.

Although the financial deal of the mass transit project between the Mass Rapid Transit Authority of Thailand (MRTA) and the Japan Bank for International Cooperation (JBIC) is not yet complete, the project will not fail, since the government has several alternatives for finance.

"The government can choose funding sources for the project from both overseas and local sources, which differ in the cost of funds. But I believe Thai banks are ready to support the project," he said.

Somruedi Banchongduang

 The Nation