Sep. 15--Kasikornbank expects flat corporate loan growth this year, with a rebound coming in the second half after a sharp 13 percent contraction in the first seven months.

Surasak Dudsdeemaytha, a first senior vice-president for KBank, said the bank's corporate loan book fell to 267 billion baht as of the end of August, down 13 percent from the end of 2008.

The slowdown cut loan demand from large companies and multinationals. Many companies also took advantage of low market interest rates to issue bonds instead of seeking bank credit.

But KBank expects its loan portfolio to recover to about 300 billion baht by the end of the year, as Mr Surasak noted outstanding credit in August declined just 0.7 percent from the previous month. Loan applications and international business fee revenues also saw improvements in August.

The bank has a revenue target of 11 billion baht for its corporate business, in line with 2008. Revenues stood at 6.6 billion baht for the year to August, with interest revenues accounting for 60 percent of total corporate business revenues and fee-based income the rest.

KBank separates its corporate business into two sub-divisions: one handling large companies with annual sales of more than 5 billion baht and the other for companies with annual sales of 400 million to 5 billion baht.

"With the improvement in the global economy and gains in commodity prices, loan growth in the fourth quarter is almost certain to pick up," he said.

"The improvement in the global economy will also benefit the tourism sector and related industries, which represent as much as 40-50 percent of our total corporate loan portfolio."

Vasin Vanichvoranun, a KBank first senior vice-president, said the bank will also aim to strengthen its client relationships and understanding of customer industry trends.

KBank's goal is to create additional value for customers, he said.

"Our target industries are those that will be affected by the government's megaprojects, such as the new rail projects, water management projects or rubber asphalt road projects," he said.

"These projects will affect credit demand from contractors and building material manufacturers. The change in how crop subsidies are managed will also have a significant impact on working capital management for the agriculture sector."

Mr Vasin added that KBank's strategy was not necessarily to expand its loans, but to maximise utilisation of existing credit lines approved for customers.

KBank counts around 3,000 accounts for its special, large corporate clients, and another 7,000 accounts in its general corporate banking unit.

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