Rapid lending growth by GSB unsettles Central Bank
The Bank of Thailand is worried that the Government Savings Bank is lending too aggressively and its workforce and information-technology system may not be able to keep up, but the Finance Ministry wants all state-run banks to speed up lending to support
A Finance Ministry source said that the central bank had expressed its concern over the fast growth of loans at the GSB.
The BOT has recommended to the GSB’s board of directors and its executives that the bank should be more cautious about its lending as its resources may not be able to cope, the source said.
However, Deputy Finance Minister Viroon Tejapaibul on Monday met with executives of state-run banks, telling reporters that he urged them to provide more loans to households and businesses affected by last year’s flooding.
He said the boards and management of state-owned banks might not understand the government policy issued by then finance minister Thirachai Phuvanatnaranubala correctly.
Loans at five specialised financial institutions have increased by 1.62 per cent from Bt3.26 trillion outstanding at the end of last year, he said.
Lersak Chuladesa, president and chief executive officer of the GSB, said the bank’s loans rose 2 per cent in the first two months of this year over the same period last year.
Lending by the GSB in these two months was obviously lower than last year, when loans grew sharply. ??? should this be lending growth??
Lersak earlier said his bank’s loans last year surged by 21.60 per cent, or Bt240.15 billion, to Bt1.35 trillion, and assets rose by 21.12 per cent to Bt1.77 trillion.
The bank earned Bt17.6 billion, while cutting non-performing loans by 1.2 per cent to only 0.94 per cent of total loans.
The bank’s deposits grew tremendously by 29.27 per cent, or Bt345.51 billion, to Bt1.53 trillion.
Since the Deposit Protection Agency will slash its insurance coverage from Bt50 million per bank account to only Bt1 million in August, depositors may have turned to the GSB, a state-run bank that provides 100-per-cent protection to its customers. The GSB’s deposit base already outstrips that of Bangkok Bank, the largest commercial bank by assets.
Bangkok Bank’s deposits rose by 11.4 per cent to Bt1.52 trillion at the end of last year from Bt1.37 trillion at the end of 2010.
