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Demand for liquidity to rise in stable business climate

THE IMPROVING economic climate is making businesses require more liquidity to support their activities but new credit to support the investment of corporations might not be seen until next year, according to Bangkok Bank, the biggest corporate lender.

Among its corporate customers, the bank saw a pickup in loan demand in June, mostly for working capital, while project finance might have to wait for 2015 because they want to be sure that certain projects are forthcoming from the government, Charnsak Fuangfu, a senior executive vice president, said last week.

Although its corporate lending was flat in the first half, for the entire year, it should still rise 5-7 per cent.

However, demand for project financing can still be seen in specific industries such as renewable energy and among businesses with capacity utilisation exceeding 80 per cent.

Noossara Roonsamrarn, executive vice president of Thanachart Bank, said the bank has seen credit drawdowns by corporations. Some companies have dusted off business plans that were shelved in the early years.

The rebounding activities of corporations make the bank confident that its corporate loan growth will meet the target of 10 per cent for this year. Its outstanding loans are nearly Bt150 billion.

The bank has seriously targeted mid-sized corporations with annual revenue of Bt1 billion-Bt4 billion in 40 industries. It has boosted its exposure to this category in the past two years and for this year, its corporate loan portfolio is still expanding.

Mid-sized corporations need banks that understand them in all situations, he said.

Some banks such as Land and Houses Bank hope that they have the opportunity to increase their loan portfolio by serving small and medium-sized enterprises.

The assistance measures of state-owned Thai Credit Guarantee Corporation (TCG) will help build awareness of LHBank among SMEs.

LHBank is among 19 financial institutions that joined TCG's credit guarantee programme for micro entrepreneurs and Otop, or One Tambon One Product, enterprises.

Sutharnthip Phisitbuntoon, senior executive vice president at LHBank, said the bank is attempting to grow its SME customer base to one-third of its portfolio, including corporate and mortgage loans, within three years.

LHBank is the smallest commercial bank with a loan portfolio of Bt150 billion, of which 15 per cent is from the SME sector.

"We are interested in tapping medium enterprises with annual sales from Bt50 million, which is the suitable size that LHBank has the ability to service. The bank plans to recruit more staff to reinforce the existing 100 front-end staff because if it wants to grow much, it has to have a lot of human resources," she said.

The bank this year targets growth of 15 per cent in total loans and 22 per cent in SME loans, while mortgage loans are expected to grow 5 per cent.

"SMEs that are subcontractors for public projects are one of our potential businesses. We will also focus on logistics and local hire purchase upcountry," she said.


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