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Published on November 17, 2007

This is the lowest such target among the country's large banks. The bank says the target is low because of the uncertain economic environment and its lower-than-expected loan growth this year.

The bank will fail to meet its goal of a 6-per-cent gain in loans this year, as net lending dropped by 0.22 per cent in the first nine months.

Bank president Apisak Tantivorawong said yesterday the bank's loan-growth target for next year was in line with the uncertain economic prospects, in particular the political factors. Though a general election is scheduled for late December, the formation and policies of the new government remain unclear.

"Our loan growth target next year is not conservative - we set it in line with the economic environment," he said.

Bangkok Bank, Siam Commercial Bank and Kasikornbank, Thailand's first-, third- and fourth-biggest banks, respectively, plan to increase loans by more than 5 per cent, 13-15 per cent and 10-15 per cent, respectively.

KTB expects gross domestic product (GDP) growth of 4-5 per cent next year. That is expected to be driven mainly by government spending, in particular by large infrastructure projects.

Mega-projects will proceed gradually in the first half of the year. Some projects will open for bidding and start to withdraw funding next year, but the withdrawals are expected to occur mainly in 2009 and 2010. Private investment next year will rely on investor confidence, which depends on political factors, Apisak said.

BBL also estimates GDP growth at 4-5 per cent next year, but the bank expects to set lending growth higher than 5 per cent next year, its senior executive vice president Chansak Fuangfu said.

"The political situation will remain one risk factor next year, as it's still unclear. Thus, business operations will be prudent," he said.

Loan growth at the country's biggest bank was targeted at 5 per cent this year. For the first nine months, BBL saw an increase in lending of 4.14 per cent, amounting to Bt39.9 billion.

The lower loan-growth forecasts are in line with the expected sluggishness in the economy. Thai authorities are hopeful that next year, after the election, investors will resume their delayed investments while domestic consumption picks up.

Somruedi Banchongduang

 The Nation