Wholesale loan growth has remained stagnant this year, with large corporates opting to wait for more favourable economic conditions before committing to new investments, according to an executive at Bank of Ayudhya (Krungsri).
Prakob Phiencharoen, head of the corporate and investment banking group at Krungsri, said loan withdrawals from corporate customers have paused during the first two months of this year, as they adopt a wait-and-see approach and assess the economic landscape both domestically and internationally.
Internally, businesses in the building and construction sectors are eagerly waiting for the government's fiscal 2024 budget disbursement, he said, while the policy rate direction of both the US Federal Reserve and the Bank of Thailand is another crucial factor influencing private firms.
Mr Prakob said some corporate clients are directing their attention towards cross-border investments.
Traditionally, corporate loan withdrawals are linked to opportunities for business expansion, new project investments and seasonal factors.
However, the bank anticipates a more favourable landscape for investment and business expansion among large corporates in both Thailand and Southeast Asia, aligned with expected economic growth.
Krungsri Research projects 2.7% growth of Thai GDP this year and an average growth rate of 4.7% for the grouping of: Thailand, Singapore, Malaysia, Indonesia and the Philippines.
Given this outlook, Krungsri set an ambitious target for corporate loan growth of 4-6% this year, from 499 billion baht recorded in 2023.
With heightened competition in the business landscape anticipated this year, the bank is adopting a selective client strategy to expand its business segment, he said.
The primary focus is on the food and beverage, healthcare, energy and real estate sectors, Mr Prakob said.
He said green finance is another focal point, aiming to expand sustainable finance to 100 billion baht by 2030.
This area can be a strength for Krungsri amid increased competition in corporate banking, said Mr Prakob.
Krungsri, the country's fifth-largest lender by total assets, is scheduled to implement an environmental, social and corporate governance product programme in the third quarter of this year, aligning with the Bank of Thailand's taxonomy initiative.
The initial stage of the central bank's taxonomy initiative concentrates on the energy and transport sectors.
On the corporate banking front, he said Krungsri would emphasise debt and capital market services, including initial public offerings and mergers and acquisitions in regional markets.
These activities are expected to contribute significantly to the bank's fee-based income, said Mr Prakob.
He acknowledged the impact of non-investment-grade bond defaults the previous year has influenced sentiment in bond investments.
The bank is monitoring situations that could affect the supply chain of corporate clients, said Mr Prakob.