GSB expects credit extension to slow

Chatchai Payuhanaveechai, president of GSB, said the bank’s credit extension may not expand at a high level compared with the growth seen in previous years, as the economy is still recovering.

In the past, the bank’s credit loan extension typically grew at a rate of two or three times the nation’s gross domestic product (GDP) growth, Chatchai said.

He said the government previously had concerns that credit growth was becoming too high. In line with some government measures, loan extensions slowed to 1.5 times that of GDP growth.
 
This year, the country’s credit extension is expected to grow by only one time that GDP of expansion, he said, adding that the economy is estimated to expand at between 3 and 4 per cent in 2017.

 “When the credit expansion is only one time the country’s GDP growth, there’s not much need to accelerate deposit mobilisation,” he said. “Now, the bank has sufficient liquidity to cope with its operations, or about Bt300 billion. The system’s liquidity is about Bt3 trillion. 
“Meanwhile, we target extending credit at 3-4 per cent of GDP.”
Commenting on the bank’s Bt50 billion debenture issue, Chatchai said the bank did not have a liquidity problem.
He said the issuance was a way of keeping funding costs low to cope with the government’s seven-year, Bt160 billion soft loan project.
The bank’s savings bonds and general deposits have less maturity, he said, and the bank had to find long-term funds to match the project as a means to mitigate risks amid the upward trend of interest rates, Chatchai said.
GSB offered five-year, Bt36 billion debentures to institutional investors with a coupon rate of 2.3 per cent per annum and plans to issue more as a tool for cost management.
“We plan to launch more debenture issues and the issuance amount is not a problem. Although we raised the amount, most of our depositors are still in retail. The debenture amount opened is Bt50 billion or 1.5 per cent of the bank’s deposit base,” Chatchai said.