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Published on January 16, 2008

The largest state-run bank carries government loans making up 30 per cent of its total loans, and its capital-adequacy ratio (CAR) stands at 15 per cent, president Apisak Tantivorawong said yesterday.

Both Basel I and Basel II weight government loan risk at zero compared with 100 per cent for corporate loans.

The banking industry as a whole would see a downside of 1.5-2 percentage points this year in complying with the new international financial standard.

Siam Commercial Bank and Kasikornbank earlier said Basel II would shave around 2 percentage points and 1 percentage point, respectively, from their CAR. However Tisco Bank, a mid-sized bank, said on Monday the new standard would help boost its CAR by more than 1 percentage point from 11.92 per cent now because Basel II lets banks set aside less provisioning for retail loans.

Krung Thai Bank has targeted loan growth of Bt60 billion or 6 per cent this year, Apisak said.

Even though the bank plans to diversify its loan portfolio into several sectors, retail financing would expand by about 10 percent due to its low base. Corporate and SME loan growth would be in single digits.

The bank's public-sector lending, partly to mega-infrastructure projects, would start picking up late this year. With the unclear economic picture, the bank will tighten its approval process, he said.

Assuming the political factor stays normal, the bank predicts gross domestic product growth of 4-4.5 per cent.

Apisak sees the policy signal rate staying at 3.25 per cent, as the Monetary Policy Committee's meeting today will focus on rising inflationary pressure.

Somruedi Banchongduang

The Nation