BANKING / FUND-RAISING

SCB projects higher net profit

Siam Commercial Bank said yesterday that its 2007 net profit would be higher than the 13.3 billion baht it earned last year as it would not have to set aside high loan-loss provisions. SCB chairman Vichit Suraphongchai said higher loan growth and fee income would also lift the bank's earnings this year.

''Because we had already fully set aside reserves to comply with IAS 39 in 2006, we have no such huge burdens this year. Our profit and revenue should be higher than last year,'' Mr Vichit said, referring to International Accounting Standard 39 imposed by the Bank of Thailand.

He did not give specific profit forecast figures, but 19 analysts polled by Reuters Estimates on average predicted a 34% rise in the bank's 2007 earnings to 17.8 billion baht.

SCB, like other banks, faces tough new loan-loss reserve rules which will require banks to set up 100% reserves of non-performing loans. The rules will be phased in through 2007.

The country's third-largest bank set aside 5.1 billion baht provisions in its fourth-quarter results, dragging its full-year 2006 earnings down 30% to 13.3 billion baht.

For 2007, the bank plans to reserve 900 million baht per quarter for good loans, higher than its normal 300-450 million baht per quarter, said an SCB executive.

SCB, which had 748 billion baht in loans at the end of 2006, aimed to lend 165 billion baht, up 23% from last year, mainly to small- and medium-sized enterprises and for hire-purchase financing, she said.

With interest rates falling this year, demand for new loans should improve after business sentiment was weakened by the sudden imposition of capital controls last month and the New Year's Eve bombs in Bangkok, analysts said.

SCB shares closed yesterday on the Stock Exchange of Thailand at 59 baht, down 50 satang, in trade worth 160.88 million baht. REUTERS.

Bangkok Post
Wednesday January 31, 2007