Sep. 24--Kasikornbank believes it will meet its 2009 loan growth target, thanks to rising loan demand in the second half in line with the economic recovery, said president Prasarn Trairatvorakul.

The bank expected to book loan growth of around 4 percent by the end of this year, in line with its 2009 target of 4-5 percent. Loan demand has picked up in the second half, buoyed by the demand of power plant projects in the energy sector. But recently, loan withdrawals by the projects have slowed down pending a clearer economic climate.

Loan demand has improved in all business areas including the corporate sector, small and medium-sized enterprises and consumer finance. For commercial loans, however, the demand is mainly for working capital rather than long-term loans. The bank's shrinking loan growth in the first half of this year was due mainly to a contraction in short-term loans.

KBank, Thailand's fourth largest bank by total assets, will likely be the first to announce loan expansion for 2009. Its loan portfolio contracted by 2 percent in the first half this year.

Dr Prasarn said improving loan withdrawals reflect investors are more confident in the economic recovery both globally and locally and in particular, the G3 economies. China's strong rebound also supports the recovery.

The Thai economy is moving out of recession and the country's gross domestic product is expected to expand in the fourth quarter this year compared with the same period last year. But for all of 2009, GDP would contract by around 3 percent compared to 2008.

Despite the positive outlook for the rest of this year, KBank is not sure whether it will meet its net interest margin goal of around 3.7 percent to 3.8 percent this year.

Commenting on the economy, Dr Prasarn forecast the Bank of Thailand would keep its policy rate unchanged at 1.25 percent by the end of this year and interest rates in the banking system would be held steady as a result.

He predicted the central bank's one-day repurchase rate would start to increase in the second quarter of 2010, in line with stronger economic recovery next year. But the money market rate, as well as the loan and deposit rates of the banking sector, would likely be raised in the first quarter next year before the policy rate moves up.

Shares of KBank closed yesterday on the Stock Exchange of Thailand at 79.75 baht, up 1.5 baht, in trade worth 660.4 million baht.

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