In the aftermath of recent interest rate cuts, loans extended to small and medium-sized enterprises (SMEs) have increased significantly, while corporate firms are keen to issue bonds to refinance their debt and take advantage of lower borrowing costs.
Siam Commercial Bank (SCB) lent SMEs 10 billion baht in August, the highest for any month so far this year, thanks to the bank's two prime rate cuts, said senior executive vice-president Pikun Srimahunt.
The bank's strategy to help SME borrowers amid the sluggish economy also boosts loan demand, she said.
SCB, the country's largest lender by assets, last month passed on the central bank's rate cut, trimming the minimum retail rate (MRR) by 25 basis points to 7.12% and the minimum overdraft rate (MOR) by 12.5 basis points to 6.745%.
MRR and MOR are the benchmark lending rates for SME and retail borrowers.
Mrs Pikun expects SME loan growth in the second half to improve from the first six months on lower interest rates, seasonal factors and business strategies.
The bank's new SME loans are estimated to reach 30 billion baht for the three months through September, and the upward trend is expected to continue into the fourth quarter.
"Our SME loans will grow at a faster pace than targeted this year after showing signs of improvement in the second half," Mrs Pikun said.
The bank's SME loan portfolio amounts to 345.55 billion baht, with the year-end target set at 370 billion baht. This means 8% growth will be achieved if the target takes hold.
Krungthai Bank president Payong Srivanich said he doesn't expect KTB's SME loan growth to swing back into positive territory for the full year after loans shrank 3.4% in the first half, even with the bank rolling out 11 SME loan packages worth 50 billion baht.
Lower interest rates are prompting large corporations to issue debentures to refinance debt, he said.
The bank expects to deliver marginal growth in corporate loans this year despite brisk expansion in wholesale loans during the first half.
As of June, the bank's corporate loans outstanding totalled 678 billion baht, up 5% from the end of last year.
The bank expects to achieve total loan growth of 4% for the full year, largely due to retail banking.
In August, KTB cut its MOR and MRR by 25 basis points to a single rate of 6.875%.