China wobble leads to BBC caution for loan approvals

Suwatchai Songwanich, CEO of BBC, said that the bank closely tracked the financial performance of its clients, and some had surely been affected by the situation in China.
But Suwatchai said that most of BBC’s corporate customers in China were maintaining acceptable balance sheets although overall they had slowed their activities to a point that was lower than the bank’s expectation.
He said that the bank needed to be more careful when |giving loans to new customers |in order to reduce risks in the future.
However, he said the bank hoped it could expand its loan growth in the second half of the year based on its existing clients still planning to expand on the mainland.
BBC is this year targeting double-digit loan growth, but such target may not be achieved .
Suwatchai said that the slowdown of growth in China was the result of a reduction in imports and exports, which had also directly affected the Asean region including Thailand due to Asean’s increasing trade volume with China in recent years.
He said the Chinese stock market’s share plunge of some 30 per cent over the past three weeks might not directly impact on the mainland’s overall economy in the short term because the proportion of the stock exchange’s value to the country’s gross domestic product was small when compared with many other countries.
Trading on margins was also small compared to the total outstanding loans on the mainland, he said.
 
Consumption concerns
However, Suwatchai warned that the stock market plunge might impact on domestic consumption due to individual investor losses.
There are about 90 million individual investors on Shanghai’s composite index, accounting for up to 90 per cent of the total investors on China’s stock market.
Over the past year, China’s stock market increased by 150 per cent due to high liquidity in the stock market to enhance economic growth.
The direct trading of the Shanghai-Hong Kong Stock Connect and cuts in lending and deposit rates and the reserve ratio since last November resulted in individual investors flocking to the stock market in search of profit.
In the first three months of 2015, new accounts increased greatly and in March alone there were about 1.14 million new accounts, with the Shanghai and Shenzhen exchange indexes growing while the Chinese economy slowed.
Krungthai Bank has a branch in Kunming, the capital of China’s Yunnan province.
Its first senior executive |vice president, Kittiya Todhanakasem, said local banks were likely to witness more of a challenge than niche players including KTB.
KTB has positioned itself as a niche player in China, as it is focused on transactional activities rather than financing activities, she said.
She also said its major clients were large Thai corporates with firm footprint in Kunming, which could maintain their investments there.
Kittiya added that the bank’s first syndicated loan, a partnership with Kunming-based Fudian Bank to finance a major Chinese construction company for infrastructure projects, might not happen this year as both |the banks are yet get the green light from the Thailand and Chinese governments for those projects.
The infrastructure projects include the high-speed rail link from China to Thailand.