GH Bank plans Bt40-bn loans

As the existing mortgage portfolio is expected to be fully utilised soon, the state-owned GH Bank is preparing to offer a new lot of housing loans, its president Chatchai Sirilai said yesterday.
The bank wants to help the government boost the economy while many commercial banks are exercising caution with their lending because of rising non-performing loans (NPLs). GH Bank will offer special low interest rates, he said without elaboration.
Earlier, the Bank of Thailand said the proportion of NPLs had increased to 2.94 per cent of total loans in the first quarter this year from 2.83 per cent at the end of last year. And many mortgages have turned sour partly because of the weak economic recovery.
Chatchai said many prospective borrowers had turned to GH Bank asking for mortgages. 
The new batch of loans needs to be approved by the Cabinet.
“We did not ask for an interest subsidy but we asked for changes in the key performance indicators measuring [our] financial health,” he said.
Asking about the outlook for interest rates after the US Federal Reserve decided to raise its policy rate, Chatchai was cautious about the possibility of a domestic rate increase. Currently GH Bank’s minimum retail lending rate is 6.75 per cent per annum.
He said state-owned banks would maintain low lending rates for as long as possible should financial markets be affected by higher US interest rates. 
The Fed raised its benchmark rate by a quarter-point to 1.0-1.25 per cent on Wednesday and signalled that another increase was likely later this year.
GH Bank has to wait to see how the Bank of Thailand responds to the Fed’s move, Chatchai said.
Should the Thai central bank increase its policy rate, chief financial officers of state-owned banks will discuss whether they will raise their lending rates, he said.
GH Bank targets new mortgages worth Bt178 billion this year, up from Bt168 billion last year. So far lending has reached about 35 per cent of the target. 
Chatchai yesterday awarded cash prizes to architecture students who won a competition for ecological home models with price range not exceeding Bt1 million and Bt2 million. The competition was launched two months ago, calling for designs that were environmentally friendly, used less electricity than conventional designs and would be easy to construct. 
The winning models at www.ghbank.co.th/2016/ghb-ecohome/. Next month, the bank will launch another competition, this one inviting designs for homes suitable for the elderly. Some economists have voiced concerns over government policy to direct state banks to offer lower-than-market interest rates.