Bangkok Bank is likely to rule out participation in the government's plan, because of the uncertain state of the economy the scheme purports to alleviate.

Executive chairman Kosit Panpiemras said Thailand's largest bank in terms of assets would consider the country's economic environment before making a decision. However, given the economic slowdown, the bank would not focus on household loans.

"We must consider the market's demand and supply," he said. "If it lacks demand, then loans cannot be provided."

Caretaker Finance Minister Thanong Bidaya said recently that the ministry would invite commercial banks to discuss the stimulation of loan extension during this second half as a way to boost the economy. The plan focuses mainly on consumer loans, mortgages and auto loans.

Earlier, the central bank said the country's gross domestic product (GDP) would probably grow this year at the low end of its forecast range of 4.25-5.25 per cent.

Kosit, however, said loan demand from corporations and small and medium-sized enterprises remained robust. Large companies like the Siam Cement Group, Thai Airways International Plc, the Charoen Pokphand Group and PTT Plc have given no signs of extending or cancelling funding-mobilisation plans for this year.

He said Bangkok Bank was confident of achieving its lending growth target of 5 per cent this year, after reaching 3 per cent in the first half.

Meanwhile, Kasikornbank president Prasarn Trairatvorakul said his bank had set a growth target for loans this year and intended to meet the goal regardless of the government's plans.

"Although the bank wants to see lending growth, business expansion and loan demand should be in line with the real economic situation. Overinvestment would bring bad results for both lenders and borrowers," he said.

Kasikornbank expects the country's private investment to grow continuously during this half of the year. It forecasts GDP growth of 4 per cent this year, while aiming at lending growth of 6-9 per cent.

Prasarn's remarks were echoed by Krung Thai Bank (KTB) president Apisak Tantivorawong, who said his bank must expand its business regardless of government plans to stimulate lending.

The country's biggest state-owned bank will speed up lending in the second half after failing to meet its target in the first six months. KTB is targeting total loan growth of 7-8 per cent for the year.

Apisak said that in the first six months, KTB's loans were used mainly for business working capital. These were higher than loans for real investment. "If there were no loans for real investment, that would mean new productivity would not come on stream in the next six to 12 months, which might in turn further affect the country's macroeconomy," he said.

Somruedi Banchongduang

The Nation