Bangkok--9 Jul--KASIKORNBANK
KASIKORNBANK forecasts that brighter outlook lies ahead for the Thai economy in 2H14 while the business sector will benefit from the government’s economic stimulus efforts, leading to satisfactory growth in farm and household sectors as well as investment of large businesses. Against this backdrop, the Bank’s performance will record marked growth, putting fee income to expand 10 percent as targeted.
Mr. Vasin Vanichvoranun, Executive Vice President, KASIKORNBANK, said that the Thai economy and business will witness a recovery thanks to three main factors, i.e., acceleration in FY2014 budget disbursement along with preparation of FY2015 budget, effective October 1, 2014, approval of BOI-promotion projects worth more than 700 billion Baht and the government’s payment of 92 billion Baht owed to farmers under the rice pledging scheme. These impetus would boost the Thai GDP in 2H14 to 4.3 percent, putting the 2014 GDP average to rise to 2.3 percent from the earlier projection of 1.8 percent. The higher GDP will stem from brighter outlook in its key components, including government spending, private investment and consumption. Meanwhile, exports, another GDP constituent, are expected to pick up to the 3-percent growth, from the negative (-) 0.2 percent in 2013.
Infrastructure-related businesses, especially building contractors are set to receive a windfall from public spending, leading to greater cash injection into the system. Prospective projects that would open for bid during 2014-2015 may be worth a combined 480 billion Baht. Most of them are transport-related projects namely Suvarnabhumi Airport Development Project Phase 2, Don Mueang Airport upgrade, dual-track railway project, Green Line electric train extension, etc. Brighter prospects of infrastructure projects coupled with renewed confidence among investors are quite positive to private investment. Real estate business is thus likely to enjoy higher growth of 5.8 percent in 2H14, with housing completions in the Bangkok Metropolitan Region (BMR) likely to expand 3.4 percent, compared to the negative (-) 13.1 percent in 1H14. Meanwhile, household spending will rise in 2H14 due to higher consumer confidence. Increasing cash in circulation has stemmed partly from the government’s payment of the long-overdue 92 billion Baht owed to farmers under the rice pledging program, a key contributor to growth in retail sector and consumer goods spending amid renewed demand in the market. As evidenced, the initial public offering (IPO) price of a beverage company, of which the Bank is an underwriter, went beyond the target and its IPO shares were 18 times oversubscribed amid overwhelming demand of institutional investors. Presently, market turnover of the food and beverage business tops 1.8 trillion Baht and greater room for growth is still there. Meanwhile, retail business is also set to see a rebound during 2H14 thanks to the launch of new department stores, and many giant property projects adjacent to the Chao Phraya River are expected to cash in on soaring demand and consumer spending.
In addition, exports in 2H14 are expected to witness remarkable growth over 1H14, albeit the downward revision of 2014 growth to 3 percent from 5 percent. Among major beneficiaries would be automotive industry which is expected to grow 12 percent in the latter half of this year, after the 3-percent growth in 1H14. Also, projects applying for BOI promotional privileges, now pending approval, are worth more than 400 billion Baht this year. These projects, to be implemented at the earliest, are expected to be a boon to the overall economy in the second half of this year.
Mr. Vasin concluded that amid positive signs in the Thai economy in 2H14, financial transactions via KBank may be not less than 24 trillion Baht, thus significantly boosting the Bank’s fee income in 2H14 over the first half. KBank’s fee income for the 2014 entire year may thus enjoy growth of 10 percent, as targeted.