KBank: Minimum 3.9% GDP growth
President assures that bad loans have peaked
The country’s economic growth is likely to expand by at least 3.9% this year and next, and bad loans have already peaked, says Kasikornbank (KBank) president Predee Daochai.
“The latest export results from October were higher than we expected, so GDP should grow at least 3.9% this year, surpassing our latest forecast of 3.7%,” he said, referring to Kasikorn Research Center’s (K-Research) forecast.
The Commerce Ministry reported exports totalled US$20.1 billion (658 billion baht) in October, up 13.1% year-on-year, while the 10-month figure hit $196 billion, up 9.7% year-on-year.
“If exports continue to grow at this rate the rest of this year, we could see at least 3.9% GDP growth this year or even higher if exports grow at a stronger pace,” Mr Predee said.
He said other than merchandise exports, tourism and public investment would be the main engine of growth for this year.
Mr Predee said the 4.3% GDP growth in the third quarter also beat market expectations, signalling that even stronger recovery momentum should continue through next year.
K-Research forecast 3.7% GDP growth for both this year and 2018, but soon plans to revise the outlook.
He said the economic recovery this year is mainly supported by global demand, while a recovery in domestic demand is expected to be more robust next year after a number of government measures start to bear fruit.
“For example, the EEC Act that is expected to be completed early next year should help strengthen investor confidence and boost private investment,” said Mr Predee.
On a related matter, he said non-performing loans (NPLs) have reached their peak and are now stable.
“I believe NPLs have already peaked. If they are still rising, they will not increase much from the current level. The question is when they will fall,” said Mr Predee.
Commercial banks’ gross NPL ratio at the end of September stood at 2.97%, edging up from 2.95% at the end of June, according to Bank of Thailand data.
He said the small and medium-sized enterprise segment remains vulnerable and the bank will continue to work closely with this customer group to help their business.
Separately, Mr Predee said the bank targets loan growth of 4-6% this year, while the industry’s loan growth is estimated to be 4%.
“As exports continue to grow robustly, more loans should be made to facilitate cash flow for these businesses,” he said.
“Loans made to the construction and materials sectors are also expected to be solid, underpinned by government infrastructure investment.”
KBank targets retail loan growth of 5-7% this year, with falling household debt supporting growth in the sector, said Mr Predee.