Operations in Indonesia paying off for Bangkok Bank
Play
Since Bangkok Bank opened its third Indonesian branch in Medan last November, loan demand has been surging and the country has become the third-largest contributor to the bank's international business.
Last year, Indonesia was fourth in outstanding loans and income among the 13 economies that BBL is in, while mainland China was third.
Now Indonesia has passed China on robust loan demand from its corporations and small and medium-sized enterprises, Chaiyarit Anuchitworawong, an executive vice president, said yesterday.
Hong Kong and Singapore still rank first and second.
Surabaya in Indonesia is an industrial city, where investment from Japan is pouring in, while Medan is an agricultural city.
The growth of both cities has encouraged local companies to speed up investment to deal with foreign investors. Those activities have benefited the bank.
In mainland China, with five branches in Shanghai, Beijing, Xiamen, Shenzhen and Chongqing, the bank has lowered its gearing in line with the economic slowdown.
China
However, China remains an important market for the bank. A sub-branch will start operating by year-end in Shanghai, which is currently a pilot free-trade zone with bonded warehouses for importers and exporters. However, the government wants this zone to become a financial centre with offshore lending to attract investment into the zone.
The bank will resume operations in Cambodia this year as it has received a licence from the central bank there.
The Vietnam branch is expected to do better. The central bank there is relaxing foreign-currency credit as an economic stimulus measure. It had tightened rules on foreign banks lending in foreign currency as an effort to prevent currency speculation.
According to the State Bank of Vietnam’s Monetary Policy Department, foreign-currency credit by the end of May had grown 9.35 per cent from late last year. The ratio of foreign-currency credit to foreign-currency deposits was as high as 99.5 per cent.
Under the new rule for foreign-currency lending, Bangkok Bank has supported only its existing customers, causing its outstanding loans to decline, while loan quality has improved.
Vietnam’s fundamentals are strong and when the local currency is stable and the rule on foreign currency lending is relaxed, the outlook in that country for the bank is expected to improve, Chaiyarit said.
International activity accounts for 17 per cent of the bank’s business.
