Kasikornbank takes cautious approach on property loans
Kasikornbank has refrained from jumping into property financing for next year as consumers' purchasing power is not yet recovering strongly.
KBank did recently sign a contract to finance a condominium project worth Bt1.35 billion by listed property firm Ananda Development and a Bt517-million deal with non-listed Origin Property. However, Vasin Vanichvoronan, the bank's executive vice president, said this did not mean it was getting aggressively involved in the property sector.
"We considered [granting the loans] based on the background of the property developers. They must have experience, strong financial status, low debt-to-equity and prime locations. Both projects are close to BTS routes [and have the potential] to attract buyers," he said.
Although Origin Property is not a big-name developer, its project concept and location near Bearing Station is attracting buyers, as proved by high presales, he said.
Still, the bank remains cautious on the property market because high household debt will have an impact on the ability of consumers to make their mortgage payments.
Moody's Investors Service this week noted that Thai banks would face two domestic risks - rising housing debt and property prices.
Vasin said KBank was closely monitoring domestic consumption, which has not seen a recovery, and this could put pressure on the property market.
However, the outlook for condominium projects in Bangkok is better than upcountry, the bank believes.
The property-market picture is expected to come clearer in the second half of next year if the global economy and exports can improve rapidly in the first, Vasin said.
Civil engineering will be a bright business next year as contractors cash in on public investment, and KBank is ready to engage in this category, he said.
If exports next year fully recover, the electronics industry will also benefit, while digital TV is another area that will boost the demand for corporate loans. However, the digital TV sector is seeing more intense competition than the bank expected, he added.
KBank last week reported loan growth of 6.5 per cent in the first nine months, with corporate lending growing in line with that overall rate.