The Government Savings Bank will budget Bt2 billion to buy equities this year, up from Bt500 million last year, as part of its strategy to boost revenue.
The bank's equity investment is split between assets it selects itself and a portfolio recommended by the Finance Ministry. The Bt2-billion budget this year is for investing on its own.
Its budget for all equities last year was Bt50 billion, of which Bt20 billion was for its own portfolio. Of the Bt20 billion, about Bt500 million was spent on buying stocks for sale - or "available for sale" (AFS) - and the rest was for buying 15 stocks at the Finance Ministry's suggestion.
Tachaphol Kanjanakul, senior executive vice president for financial management, said last week that the GSB this year would increase its budget for AFS to Bt2 billion, as equities have generated a satisfactory return.
The return on equities in general was 3 per cent on average.
This year GSB is interested in property and construction stocks because the economic recovery boosts demand for homes, especially condominiums located along mass-transit routes.
Local stock-market sentiment this year is more stable, so equities should contribute a higher return.
The GSB this year has reserved Bt200 billion for buying bonds, the same budget as last year, with the focus on government bonds. Bonds returned 4.3 per cent last year.
Income from equity and bond investment is 30 per cent of revenue, while the rest is from interest earned on loans.
Last year the GSB posted income from equities and bonds of Bt10 billion. Its total revenue was Bt46.27 billion and net profit was Bt15.9 billion.
GSB president and CEO Lersuk Chuladesa said the business direction this year would continue to be providing loans to retail and SME customers. The bank has improved its core banking system so it can approve and dispense loans faster.
The bank has targeted 10-per-cent growth in all businesses, including new loans and non-performing loans. It wants to reduce NPLs this year to lower than 2 per cent of outstanding loans, from the current 2.2 per cent.
Net profit last year surged 18.92 per cent to Bt15.9 billion on rising loans and the greater ability of debtors to service loans.
"We have developed a core banking system to provide fast-track loans with easier conditions. We will also add more branches and renovate some existing branches to survive the intensifying competition among financial institutions," he said.
The GSB has more than 600 branches countrywide.
Financial institutions this year are expected to secure new borrowers to boost revenue and profit in response to the improving economy, Lersuk added.
