FUND MOBILISATION by Thai companies is expected to fall to Bt700 billion this year from an annual average of Bt1 trillion in the past few years, as global and local economic uncertainties have discouraged the business sector from making new investment in
Fund mobilisation by Thai corporations was Bt1.2 trillion in 2012, and is expected by KBank to have come in at Bt1 trillion last year.
Vasin Vanichvoranun, executive vice president and head of KBank’s corporate business division, said the bank – a major player in corporate activities in terms of the financial and capital markets – now expected private-sector fund mobilisation this year to be Bt700 billion, of which his institution would participate in around Bt300 billion.
This would represent corporate-loan growth of 12 per cent for KBank, the same level as last year.
He said that even though the developed economies had shown recovery signs, the global economy remained fragile because of factors such as the changing monetary policies in many countries and slower growth in emerging markets in Asia.
“The baht has started to weaken and the trend for policy rates should be upward in line with the recovery in the US, which is tapering its quantitative easing. However, the Thai political turmoil is a barrier to raising the policy rate in Thailand,” he said.
Local banks have slashed their loan-growth targets below double digits and are also more wary of lending to retail customers and to small and medium-sized enterprises, said the executive.
This year, KBank’s corporate business division targets loan growth of 6-8 per cent, compared with 6 per cent last year, and fee-income growth of 14 per cent, down from 12 per cent in 2013.
Vasin said that even without the state’s Bt2-trillion mega-infrastructure projects and Bt350-billion water-management scheme, corporate investment this year could expand by 2.2 per cent, after dropping 0.9 per cent last year.
“We have to maintain recurring fee income to keep growth [on target] this year, and move to upward-trend business sectors,” he said.
Digital TV, logistics and infrastructure-related businesses such as power plants are among the activities that require fund mobilisation, in KBank’s view.
The value of digital TV and related businesses is expected to be Bt200 billion, while investment in power plants is ongoing and the bank foresees an investment value of around Bt286 billion this year in providing electrical-power capacity of 5,700 megawatts.
Meanwhile, agricultural products will benefit from the baht’s depreciation and Asean consumption growth, said the bank’s corporate business chief.