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Published on March 25, 2008

Speaking at a seminar yesterday, Bank of Thailand Deputy Governor Bandid Nijathaworn emphasised the seriousness of external risks, including the US economic recession and long-lasting oil price increases.

He said that as the situation in the US has developed rapidly over the past three weeks, policy-makers have had no time to open textbooks to look for solutions.

Nonetheless, bank loans last month grew 9.1 per cent year on year.

Citibank's Thailand Investment Daily yesterday said Thai banks' loan growth appeared to be resilient to the global economic slowdown. The big banks' growth was driven by working capital loans, while consumer loans were flat. However, growth of the former finance companies was led by auto hire purchase loans, the bank said.

"We believe further interest-rate cuts will help lift domestic confidence and translate into improved demand in 2008," Citibank said.

Loan momentum was sustained even, excluding the impact of Bank of Ayudhya's acquisition of GE Capital Auto Lease (Gecal).

February's aggregate loan growth was Bt99.4 billion, which included the Bt52- billion (53 per cent of growth) refinancing loan to Gecal. Excluding Gecal's refinancing loan, system loan growth was still 7.6 per cent year on year and 0.6 per cent month on month, deviating from the normally weak season.

In addition, Bangkok Bank and Kasikornbank, two other large banks, are on track to meet their 2008 loan growth targets.

Krung Thai Bank posted strong loan growth in February. The growth was largely led by loans granted to Gecal and the government.

Only Siam Commercial Bank and TMB Bank reported negative loan growth. Repayment of working capital loans resulted in SCB's loans contracting for the month.

However, despite high loan growth in February, deposit-raising programmes have

been under way among Thai banks for the last few months. Year to date, at the aggregate level, deposit growth of 4.5 per cent has outpaced loan growth of 1.9 per cent - easing the system's liquidity. The loan-to-deposit ratio dropped from 93 per cent to 91 per cent.

The Nation