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Published on March 6, 2008

The bank's president Apisak Tantivorawong said the forecast was made under the assumption that the country's gross domestic product (GDP) would grow by 4.5 to 5 per cent in 2008. However, if GDP growth was 6 per cent, as promised by the government, the bank's lending would be even higher.

In an attempt to distance himself from the negative image of politicians intervening in the affairs of banks, coming from the first Thaksin government, Surapong said he would leave professionals to run the banks without his intervention.

The finance minister, who supervises Krung Thai Bank as a state enterprise, met the bank's executives yesterday to discuss their business plans for this year. He said the executives had seen business opportunities arising from the government's stimulus package announced earlier this week.

KTB will give "full loans" to support small  and medium-sized enterprises (SMEs) with potential, he said. It will also work with the Bank of Thailand, which has agreed to provide soft loans totalling Bt40 billion to SMEs adversely affected by the appreciation of the baht. The interest rate will be 4.5 per cent per year. SMEs that export their products will also benefit from the central bank's soft loans package.

KTB will also support micro-credit projects, such as village funds, by training local staff to run evolving village funds.

"We do not aim to simply expand village funds. We want to improve the quality of micro-finance services," Surapong said.

The KTB will also assist state officials who want to restructure their accumulated debts.

Asked whether the KTB should lower its lending rates, Surapong said he did not ask the bank to cut its rates. This decision was left to the bank.

Meanwhile, Apisak said Krung Thai Bank's net lending would be about Bt60 to Bt70 billion, of which loans to SMEs would account for 30 per cent. Net lending growth will be about 6 per cent, year on year.

"SMEs have not only suffered from the appreciation of the baht, but they also face the drying-up of credit lines," said KTB's independent director Santi Vilassakdanont.

SMEs are not happy with the current baht rate of just over Bt31 to the US dollar because it makes Thai products expensive on world markets. They are also worried that the baht might strengthen to Bt30 to the US dollar in the period following abandonment of the central bank's 30-per-cent reserve requirement, he said.

"The baht has been stable for the past three days [following cancellation of the reserve requirement], but we need to closely watch movements for next two or three weeks," Santi said.

Wichit Chaitrong

The Nation