Loan demand from small and medium-sized enterprises (SMEs) has improved slightly, particularly for those in farming businesses following rice pledging payments. The payouts have restored consumer confidence and spending, says Kasikornbank’s executive vice-president Patchara Samalapa.
Clothing retail stores at Asiatique, a mall on the banks of the Chao Phraya River, are receiving loan extensions from KBank. Thongrob Promchin
SMEs have not yet asked for credit extensions despite rising stocks of agriculture-related businesses, corresponding to higher liquidity among farmers as pledging payments were approved by the National Council for Peace and Order (NCPO) on Monday.
SMEs have been adversely affected by the political tension, resulting in lower loan demand, but the farm sector is expected to rebound.
The bank expects to book SME loan growth of 2-3% in the second quarter, beating its marginal growth rate of 1% recorded over the first quarter.
Patchara: Payouts for rice to pace loans
SME debt refinancing from other banks, particularly upcountry, could facilitate the bank’s loan expansion as it has seen a number of provincial clients moved significant loan portfolios to KBank.
Mr Patchara said the bank expects to see higher SME loan growth than its target of 6-8% this year as the junta's economic team has taken charge.
"Improving sentiment is supported by payouts to farmers and the likelihood of a massive infrastructure investment plan by NCPO," said Mr Patchara.
KBank, the country’s fourth-largest bank by assets and leader in SME business reported an SME loan portfolio of 510 billion baht. The business sector represents 20% of the bank’s SME loans outstanding.
Recently the bank teamed up with Asiatique, granting financial support to tenants in an effort to boost tourism and spending. The bank expects to provide up to 100 million baht in loans to 300 tenants this year. Tenants applying for this programme will be exempt from instalment repayment on principal and interest for one month.
Sommapat Traisorat, chief executive of TCC Land and property manager of Asiatique, said foreign travellers, which comprise 70% of Asiatique visitors, have dipped 20%, especially during the curfew as the mall is open from 5pm to midnight.
There have been no shop closures or delays in rental payments, but rent may remain static for next year.