By SUCHEERA PINIJPARAKARN
THE GOVERNMENT Housing Bank expects its net profit and non-performing loans to be close to target this year thanks to the launch of many lending products with low interest rates to help more people own homes.
Those products are apart from the banks’ “Baan Pracha Rath” project to provide home loans to low- and middle-income earners.
Chatchai Sirilai, president of GH Bank, said it would be a big challenge for the bank to reach its net-profit target of Bt9.69 billion, but it should manage around Bt9.5 billion, after Bt5.158 billion was recorded in the first six months.
Apart from the Baan Pracha Rath endeavour that has provided loans worth up to Bt1.5 million, GH Bank last month launched a housing-loan programme for civil servants.
It is offering a four-year fixed interest rate of 3.25 per cent per annum, and from the fifth year to the end of contract, the rate will be minimum retail minus 1 percentage point (MRR-1), or 5.75 per cent.
The bank is also launching a new housing-loan initiative for people aged over 50 that comes with a low interest rate on August 15, with Bt3 billion set aside to cater to this segment.
For elderly borrowers, the bank has set a term loan of 20 years. In the first four years of the loan the interest rate will be fixed at MRR-3.25 percentage points.
“Sena Development is interested in the programme and it will adjust zones of existing projects to facilitate elderly customers, in order to comply with the bank’s conditions,” Chatchai said.
“GH Bank wants to enhance the property market, and the interest rates should compete with rivals.
“The market will see our lending rate is 3 per cent on average, lower than the 4 per cent [on average] in the housing-loan market.”
Along with the Bt3 billion set aside for housing loans to the elderly, the Finance Ministry wants the bank to provide mortgages to this segment under a budget of Bt20 billion.
Chatchai said GH Bank would discuss subsidisation of the initiative, as the ministry requires the lender to bear a low interest rate for the scheme, meaning an impact on its bottom line.
Under the Baan Pracha Rath scheme, the bank has lent Bt5 billion of the Bt10 billion targeted for this year.
Baan Pracha Rath and the recent housing incentives resulted in GH Bank’s new loans for the first six months rising by 9.93 per cent year on year to Bt75.85 billion.
As of the second quarter, its outstanding loans were up 3.62 per cent from the end of last year to Bt894.089 billion.
This year, GH Bank is targeting Bt170.043 billion in new loans after reducing interest rates to attract customers, Chatchai said.
The bank’s non-performing loans increased slightly to 5.76 per cent from 5.45 per cent as of last year, after it set an NPL target of 5.25 per cent early this year.
“We are trying to manage NPLs but it is not easy to keep the NPL rate at 5.25 per cent amid these economic circumstances,” Chatchai said. “However, for NPLs of Pracha Rath customers, the bank is confident that it will not be above the target of 0.31 per cent.”