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KBank expects SME loan demand to jump after farmer payments resumed

Kasikornbank sees signs of loan demand reviving among rice-related small and medium-sized enterprises, including distributors of fertilisers and chemical products, after payments for pledged rice resumed.

Those SMEs had lost a lot of business because their customers, who are farmers, were not receiving money from the government for their crops.

KBank offered new working capital loans to SME customers including rice-related businesses that granted a three-to-six-month grace period on principal payments.

Patchara Samalapa, executive vice president, said yesterday that SMEs in this segment had started ordering more stock to rebuild their inventories to deal with the expected renewed spending by rice farmers, so the prospects for future loan demand were good.

Loan growth at KBank this quarter should improve from last quarter at 2-3 per cent against 1 per cent. Loan growth in the first half is expected to reach 3-4 per cent.

KBank had aimed for SME loan growth of 6-8 per cent this year, but after the rice payments, it is highly possible to beat that target.

The assistance measures help stabilise outstanding loans because many customers wanted to slash their existing debt rather than take out new loans early this year because of a lack of confidence in the political situation.

Non-performing loans stood at 2.68 per cent of outstanding loans of Bt509 billion. The bank hopes to keep SME NPLs at 2.62 per cent this year.

The resumption of infrastructure spending by the National Council for Peace and Order is good news for building and construction SMEs. This segment accounts for 20 per cent of KBank's SME loan portfolio.

However, the bank found that some SMEs have continued to suffer cash-flow problems from the declines in inbound tourism and domestic consumption.

The bank is helping the liquidity of tenants in the Asiatique The Riverfront by waiving one month of principal and interest payments for tenants who apply for a loan.

It has set a credit line of Bt100 million for 300 tenants by the end of this year.

Soammaphat Trisorat, chief executive of TCC Land, which manages Asiatique, said that since the curfew, the shopping complex had endured a drop of 25 per cent in foreign tour groups because travel insurance will not cover them.

Foreign tourists at Asiatique represent 70 per cent of all customers. Spending per head at the complex has dipped below Bt1,000 from Bt1,200.

The company might consider delaying rent hikes for some tenants, whose rates are adjusted every three years.

Walapa Trisorat, president of TCC Land, said the company's hotels had taken a severe beating from the political instability. Hotel revenue has been cut by more than half, as most guests come for meetings, incentives, conferences and exhibitions.

In general, MICE customers book hotels one year in advance. The company might lose them for next year because some countries will not issue documents to their citizens to go to any country with a curfew.

The company has to give assurances to foreign banks and foreign partners and explain the situation here because they are both partners and supporters of TCC's master plan for development projects.

"We are reviewing our master plan, which includes the second Asiatique The River project. A clear picture of the master plan will be available when foreign confidence resumes," she said.

Soammaphat said the second phase of Asiatique might move from Charoen Nakhon Road to Charoen Krung Road, close to the existing Asiatique project.

Other property projects that are not in TCC's master plan will be developed when construction starts on the mass-transit extensions in Bangkok.


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