KBANK CEO warns against over-lending

Banthoon, who is chief executive officer at Kasikornbank, said lending growth in the banking system should not surpass 1.5 to two times GDP growth.
GDP expansion this year is predicted to come in at between 5 and 6 per cent.
The banking sector’s lending report for the first five months of the year showed loan growth of 5.2 per cent to about Bt75.8 billion from the end of last year, but 14.6-per-cent expansion on a year-on-year basis.
KBank is attempting to maintain its loan growth at 9-10 per cent this year, because lending expansion in line with GDP performance would benefit overall stability, he said. The bank’s loan growth in the first half of the year was 5 per cent.
While liquidity in the banking industry is sufficient to meet new lending requirements, he said banks should focus on the quality of debts, as well.
“Many sectors, include the government, have requested loans, but if banks lend huge amounts but pay no attention to credit quality, this could shake stability,” he warned.
Banthoon said that even if the euro-zone crisis did not directly affect Thai banks, many of their customers – particularly exporters – were being hit by the recession in the area.
He also suggested that banks should strengthen the understating and knowledge among clients of doing business sustainably, and that there was more to it than simply borrowing. “The survival of businesses cannot be assisted by lending,” he said.
However, he urged state agencies to find both short- and long-term solutions for supporting the competitiveness of Thai businesses.
For the short term, the government should help companies find emerging markets in which to sell their products, as well as relax operating-cost burdens on entrepreneurs.
For the long term, the government must quickly invest in infrastructure to increase the country’s competitiveness ahead of the Asean Economic Community’s implementation in 2015. The country should be able to cash in on the huge business opportunities presented by the AEC, but this means coping with the intense competition that such a trading bloc implies, he said.
Meanwhile, he said China’s slower economic growth would not affect KBank’s business direction, as it was normal for all countries to face a slowdown from time to time.
The Chinese market still has great potential for KBank, he said.
KBank has business centres to serve Chinese investors in Thailand and its |network in China through local banking partners.