The state-owned Government Savings Bank (GSB) managed to lend 40 billion baht, half of the lower end of this year's target range, during the first four months this year, driven largely by the improving economy, its head says.
With strong loan demand during the four months through April, the bank expects the full-year lending growth target of 4-6% this year is reachable, said president and chief executive Chatchai Payuhanaveechai.
The bank's total loans outstanding amounted to 2.01 trillion baht at the end of last year.
He believes competition in lending will intensify following banks' removal of transaction fees for digital banking, which will have operators to seek more income to offset the foregone revenue.
GSB agreed to waive transaction fees for customers who make intra-bank or cross-clearing zone fund transfers, bill payments and top-ups via online banking, but it still aims for its fee-based income to surge to 7 billion baht this year from 5 billion last year, said Mr Chatchai.
The state-controlled bank will be able to raise its fee-based income as it accounts for a small portion of the bank's total revenue and it can earn higher income from cross-selling products such as credit cards, mutual funds and insurance policies, he said.
GSB aims to expand its fee-based income ratio to 10% of total revenue over the next three years under its new business model in preparation for the digital age. Fee-based income represents to a mere 5% of the bank's total revenue.
The bank has six target customer groups comprising children, the elderly, recipients of the government's welfare and subsidy scheme, those who are indebted to loan sharks, rural people and startups.
In the meantime, Mr Chatchai estimates the bank's five-year savings certificates worth 60 billion baht will be sold out within one month, after already fetching 14 billion baht within the first three days of the sales.
Earlier, GSB estimated the savings certificated will be sold out within two months after the subscription started on June 2.
The brisk sales could be ascribed to higher returns for the savings certificate than the interest rate for deposits.
GSB offers interest of 0.8% per year for those who hold the savings certificates below 1 million baht, 1.52% for those who put at least 1 million to 10 million in the savings certificates, and 1.59% for above 10 million. Moreover, the savings certificate holders are eligible to win a prize worth 5 million baht per month.
Although the savings certificates cost higher than savings account, there is strong demand from customers and this allows the bank to maintain its customer base, he said.
GSB's savings certificates outstanding amount to 900 billion baht, accounting for 40% of the bank's total deposits.