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Published on February 15, 2008

A lower funding cost last year contributed to better performance, GHB president Khan Prachuabmoh said yesterday.

However, the bank missed its lending target as it focused more on the quality of loans, he said. It made new loans worth Bt94.08 billion, missing its target of Bt95.5 billion.

Slower economic growth has also caused lower lending, said Khan. In the past three years, average new lending was about Bt100 billion a year.

Khan said the GHB would commit to helping lower and middle-income groups to own houses. It expects to lend Bt21 billion for housing projects subsidised by the government. The bank will also provide loans to state officials who are members of the Government Pension Fund, he said.

The state-owned institution is also seeking new capital from the government totalling Bt10 billion. He admitted that the bank may not expand its lending as much as the new government wants. It has to look at the quality of lending, he added.

While he has not yet decided about the overall direction of lending rates, Khan predicted that the Bank of Thailand might cut the policy rate by 25 basis points at the next meeting of the Monetary Policy Committee. While the US Federal Reserve may cut its key rate by a further 100 basis points to shore up the US economy, this could be done in several stages, he said.

Khan said the GHB would prepare to issue securitised bonds worth about Bt40 billion, or bonds backed by mortgage loans. The funding cost of raising capital abroad through bonds may now be high due to the impact of the sub-prime lending crisis in the United States. If the trend continues, the bank could choose to raise funds from the domestic market. The bank's bad loans - or known non-performing loans (NPLs) - accounted for 9 per cent of outstanding lending worth Bt577.26 billion at the end of last year.

However, NPLs not including bad debt pending in the court were 5.5 per cent of outstanding loans, he said. The bank will try to keep its NPLs at 5.5 per cent this year, said Khan. Its assets at the end of last year were worth Bt636 billion, up 5.17 per cent from the year before.

The GHB will closely monitor bad debt this year. It also has non-performing assets waiting to be put on sale worth Bt2.2 billion. The bank will attempt to sell these assets - homes for sale at a discount - at Money Expo Korat next week, he said.

The GHB yesterday also launched a campaign aimed at attracting children and youths to deposit their money with the bank.

Wichit Chaitrong

The Nation