Fee to dent GHB's profit

President Woravit Chailimpa-montri told a weekend press conference that if the bank has to pay 0.47 per cent of its Bt572.9-billion deposit base to the national development fund, that would amount to Bt2.7 billion per year.
State-run banks will be required in July to start paying 0.47 per cent of their deposits to the Bank of Thailand – the same rate commercial banks pay.
The requirement was made to satisfy commercial banks’ demand for a level-playing field, as they have to contribute funds to help pay down the Financial Institutions Development Fund’s Bt1.14-trillion debt.
Woravit said that due to the payment, GHB’s net profit this year would dive from Bt7.12 billion to Bt4.42 billion. When the surcharge starts, the bank will seek a consultation with the Finance Ministry on whether the ministry would reduce the profit repatriation ratio, since the bank will earn less income. At present, the bank has to hand over 40 per cent of its net profit to the Finance Ministry.
GHB also has to bear the burden of supporting several government policies including the zero-per-cent first home loan scheme. The scheme was expected to need Bt20 billion to finance the purchases of houses priced under Bt1 million. The scheme alone would dent the bank’s income by Bt2.4 billion. But in this case the bank will get a subsidy from the Finance Ministry, which will not impact directly on its net profit this year.
Since the first-home project kicked off in October, the bank has been approached for loans worth only Bt2 billion.
“If demand at the end of this quarter remains lower than target, we will discuss with the Finance Ministry if the loan conditions should be amended,” he said.
With or without the deposit surcharge, the bank will pursue its planned targets, he said. One is to achieve growth of 5 per cent in mortgages. Last year, it extended Bt104.4 billion in loans to 147,172 customers.
This year, net profit is also targeted to grow 5 per cent from Bt6.9 billion last year.
Last year, outstanding loans rose 3.7 per cent to Bt683.7 billion, while non-performing loans (NPLs) dropped by Bt2.39 billion to Bt47.7 billion, accounting for 7.12 per cent of outstanding loans.
The bank plans to sell Bt13.4 billion of NPLs to asset management companies, with Bt3.4 billion to be sold in April and the rest in the last quarter. This will help the bank cut its cost of managing NPLs.
Last year, the bank’s non-performing assets plunged 44.08 per cent to Bt3.6 billion. GHB expects deposit and loan rates to move down by only 0.5 percentage point this year.
Although residential demand last month was only Bt5 billion, lower than the Bt8 billion-Bt10 billion target, the bank still believes that the market will recover next quarter. This will drive its new home loans and allow it to achieve its loan-growth target.
“Demand should return in the second quarter of this year, especially for condominium units,” he added.