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BANKING
SOMRUEDI BANCHONGDUANG
United Overseas Bank (Thai) aims to cut its loan-to-deposit ratio by slowing lending activity over the next several months.
The bank's loan-to-deposit ratio currently stands at 95%, but should drop to 85% to 90% by the end of the year, according to Thanachai Thanachaiary, the bank's senior executive vice-president.
He said slowing loan growth would help push down the ratio, which for large banks, currently stands at around 90% to 95%.
UOB would use the excess liquidity for alternative investments rather than new loans to help increase fee income.
The bank said its loan growth in the first half of the year was on target at 6%, but should drop to 5% to 6% in the second half for the entire year.
On the deposit side, UOB raised 17 billion baht in funds in the first half, on pace for the bank's full year target of 35 billion. But year-on-year, the bank's deposit base fell sharply from mid-2007 due to heavy competition for deposits.
At the end of June, deposits stood at 147 billion baht, compared with 170.5 billion in June 2007. Credit advances rose to 151.59 billion baht at the end of June, compared with 136.9 billion in June 2007.
''Given the current competition, we don't really want to join in the fight, as it would have a significant impact on our funding costs,'' Mr Thanachai said.
UOB has introduced a three-year fixed deposit offering annualised rates of 5%. The bank aims to raise two billion baht from the deposits, which have a minimum requirement of one million baht.
Mr Thanachai said the bank was focusing on long-term deposits even as other competitors were offering new products with shorter durations.
He said UOB expected the Bank of Thailand to keep interest rates unchanged later this month after a quarter-point hike last month.
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