KBank to restrain consumer lending even if policy rate cut

Bank president Predee Daochai said yesterday that the regulators have many solutions to enhance economic growth besides a cut in the policy interest rate. 

A rate cut might help further the baht’s depreciation, but if the United States decides to stop injecting money into its economy through quantitative easing, the flow of foreign funds will be turned back to the Western markets and the Thai economy might witness a slowdown. The central bank’s Monetary Policy Committee is expected to slash the rate on May 29, and the prospect of a lower interest burden could fuel the demand for loans. However, KBank will try to maintain its loan-growth target of 9-11 per cent and will not expand housing loans by 10 per cent as it projected earlier. 

Given the fear of a bubble in the property, both financial institutions and developers are also more cautious on the pace of housing-project launches and granting of mortgages, Predee said. 

The condominium supply currently is only 15 per cent of low-rise projects and the pace of condo launches is likely to slow, he said.

He said the growth of GDP was driven by many factors including consumption, investment and export. In terms of consumption, it is a worry for KBank as it does not want to contribute to the overheating of consumer borrowing, especially in the housing sector, so the bank will have to be more careful on granting such loans.

If the MPC cuts the policy rate, commercial banks might not immediately cut their interest rates because each bank has targeted loan growth, which means they have to mobilise deposits to support their lending.