Kasikornbank has singled out as risky the garment and jewellery sectors, keeping lending to them a relatively small proportion of its small and medium-sized enterprise (SME) loans due to their lack of competitiveness in world markets.
Executive vice-president Patchara Samalapa said the bank reduced its loan portfolio for the two sectors to below 15% of total debt outstanding.
Normally KBank maintains about 10-15% of its total loans in each of the sectors to diversify risk.
He said exporters in the two sectors have been walloped by several factors, from the weakening global economy to falling competitiveness, the baht appreciation, and the country's minimum wage hike to 300 baht per day.
Mr Patchara said the bank's existing customers in the two industries have adjusted to cope with the new environment, but only 250 mid-sized customers have hedged against foreign exchange risk out of the bank's 7,200 total customers.
Weera Charoensintaweekoon, director of Full Thai Knitting Factory Ltd and a KBank customer, said the stronger baht has led the company to quote export prices at around 28-29 baht to the dollar when dealing with US and European partners, compared to 30 baht fairly recently.
His company has undertaken natural hedging against foreign exchange fluctuations by keeping zero stock of imported raw materials.
To deal with higher wages, it is studying opening a factory in Myanmar.
"With around 400 employees, wages are our major costs, representing 30-40% of total expenses. Building a factory in Myanmar would improve cost management but we will wait for the country's infrastructure development," he said.