Bangkok Bank China (BBC) expects its loan growth to fall short of its target this year even with loan demand picking up in the second half.
Loan demand has started to improve, supported by the bank's local and foreign customers investing in China, but it is unlikely to be enough to offset sluggish demand in the first half, said BBC chief executive Suwatchai Songwanich.
BBC targets double-digit loan growth this year.
For the three months through March the bank delivered 2-3% loan growth, but managed to stabilise its non-performing loans (NPLs) at 1.2% of US$1.1 billion loans outstanding. Figures for the second quarter are unavailable.
Given that the world's second-largest economy is cooling down, the bank will keep its guard up, focusing on existing customers to control risks.
China's economic slowdown and volatility in raw material and product prices has taken a toll on some customers, but most remain healthy with sound debt repayment ability, he said.
For struggling customers, the bank is ready to offer them assistance to maintain its asset quality, said Mr Suwatchai.
China's cool-down and the slump in its stock markets have increased the likelihood that the country's GDP will miss the government's 7% target this year. China grew 7%, its slowest pace in six years, for the first quarter. Its annual growth rate averaged 9.99% from 2005 to 2014.
BBL, Thailand’s second-largest bank by assets, has the country’s No.1 international banking business. Overseas loans represent 18% of the bank’s total loan portfolio at 1.64 trillion baht.
He believes the Shanghai Composite's recent slide will not have a spillover effect on China's economy in the short run as its market value is marginal compared with GDP. In addition, the Shanghai bourse's capitalisation-to-GDP ratio is far lower than its peers.
Margin loans in China’s equity market represent a small portion compared with total loans in the banking industry. But the stock market's recent free-fall has taken a bite out of the wealth of Chinese investors, weakening the country’s domestic consumption. Individual investors in China’s stock market number 90 million, accounting for 85-90% of total investors there.
In related news, Krungthai Bank’s (KTB) first senior executive vice-president Kittiya Todhanakasem said the bank’s Kunming branch in China has not been affected by that country's recent stock slip, as its target customers fall into a niche category.
