Business Community Gains Confidence In Economy

[george]

Business community gains confidence in economy

BANGKOK: -- Thailand's business community have begun to show more confidence in the country's economy although they remain concerned at the continued rise in oil prices which they fear will affect profits and the cost of doing business, according to the 2008 business outlook report by the Bank of Thailand.

The report was made based on an exchange of economic and business data between the central bank and nearly a hundred business leaders in varied sectors nationwide.

In a dialogue with 99 businesspersons, it found entrepreneurs are confident that private consumption and investment will gradually improve, particularly if the efforts to achieve a political situation in the post-election period proceed smoothly.

In addition, entrepreneurs and investors have expressed more readiness to invest this year in the belief that the investment atmosphere will gradually improve, particularly if the new government has clear policies on various matters.

Simultaneously, investment has begun to shows signs of a slight recovery, as demonstrated by greater activity on the part of both local and foreign investors to invest in industrial estates.

Major entrepreneurs continued to invest and had plans for overseas investment as well.

However, entrepreneurs are still concerned that surging oil prices will affect prices of products, inflation rates, and local demand. The continued impact of such a negative factor could discourage their increased investment.

The report said a continued decline in interest since early last year due to the Bank of Thailand's reduction of the policy interest rate will help stimulate the property market this year.

Still, entrepreneurs believe that selective lending by financial institutions and the Finance Ministry's decision to end a reduction of the house ownership transfer fee might delay a recovery in the property sector until the middle of this year.

Regarding risk factors to and constraints in business growth this year, the report found that in addition to the surging oil prices, economic and politica uncertainties would curb profitability in the business sector and fuel prices of products and raw materials.

Should the new government issue measures to control product prices this year it would help entrepreneurs adjust themselves by reducing labour costs, wich would eventually affect consumer purchasing power and the recovery of local consumption.

--TNA 2008-01-21

[Jai Dee]

Thai Stocks Likely To Decline

While the political uncertainty in Thailand appears to be coming to an end, it likely won't be enough to overcome weak global cues and keep the Thai stock market above water when the Stock Exchange of Thailand kicks off trade on Monday.

The Thai Supreme Court ruled Friday in favor of the People's Power Party, which will allow the PPP to formally establish the country's new coalition government at Monday's parliament meeting - its first in two years. A suit had been filed against the PPP to block the new government, and the party was also being investigated for election fraud.

Despite the removal of that cloud of uncertainty - the SET has lost nearly 3 percent since the Dec. 23 election - the SET is expected to follow the rest of the region to the downside on increasing fears of a U.S. recession.

The market was slightly lower on Friday on light volume ahead of the court decision.

For the day, the SET lost 1.58 points or 0.2 percent to close at 789.67. Volume was 2 billion shares worth 20.59 billion baht. There were 175 decliners and 127 gainers, with 121 stocks remaining unchanged.

Among the actives, PTT Exploration and Production finished lower, while energy giant PTT finished the day unchanged.

In corporate news, Krung Thai Bank saw a larger-than-expected 55.7 percent decline in 2007 profit, down on sluggish lending and large bad debt charges. Its full-year net profit was 6.11 billion baht, or 0.55 baht per share, below the forecast of a 8.59 billion baht profit and compared with 13.8 billion in 2006.

Also, the Bank of Bangkok announced Monday that its 2007 Q4 net profit came in lower than expected at 4.09 billion baht. Analysts had been expecting a net profit of 4.98 billion baht.

Source: NASDAQ - 21 January 2008

[Jai Dee]

Bangkok Bank Q4 profit nearly flat, below forecast

Thailand's top-ranked Bangkok Bank BBL.BK (BBL) reported a lower-than-expected one percent rise in quarterly profit on Monday as loan growth and rising fee income offset higher-than-expected expenses.

The absence of big provisions that hurt profit at most Thai banks last year also helped lift Bangkok Bank's fourth-quarter and its earnings should continue to rise in 2008, analysts said.

BBL reported net profit of 4.09 billion baht ($123 million), or 2.14 baht per share, for the October-December period, up slightly from 4.05 billion baht a year earlier but below a mean forecast of 4.9 billion from five analysts polled by Reuters.

Its 2008 earnings are forecast to rise 9.8 percent to 21.9 billion baht, according to Reuters Estimates before the results announcement, as investors hope a new government will revive business sentiment weakened by political uncertainty since a bloodless coup in September 2006.

The new coalition government, due to take office soon, is expected to bring more certainty to economic policy, which could boost demand for loans, especially for government infrastructure projects, analysts said.

The bank's 2008 loans were expected to grow 5-7 percent in an economy likely to grow 4.5-5 percent, bank president Chartsiri Sophonpanich has said, compared with the sector's expected average loan growth of 9-10 percent this year.

EXPENSES, TAX WEIGH

Bangkok Bank, with $47 billion in assets, said in a statement loans grew 8 percent in 2007, above its 4-5 percent target and 5.1 percent growth a year earlier.

The bank has benefited from a series of interest rate cuts by the central bank last year that helped reduce funding costs and widen interest rate margins as well as stimulate loan demand.

The fourth-quarter profit was helped by net interest and dividend income rising 3.7 percent to 12.2 billion baht from a year earlier as margins improved to 3.15 percent in 2007 from 3.14 percent in 2006.

"But its expenses were more than we expected in the fourth quarter and the bank's tax also surged threefold," KGI Securities analyst Worawat Saisuphatphol said.

The bank's quarterly non-interest expense rose 7 percent to 9.85 billion, while tax expenses were up to 1.9 billion baht, more than double the 515 million baht it booked in a year earlier, the bank said without giving details.

BBL said it set aside 5.3 billion baht in provisions in 2007, down sharply from 2006 when it reserved 9.9 billion due to the adoption of strict new bad loan provisioning rules.

Its non-performing loans dropped to 7.86 percent of loans by the end of 2007 from 8.68 percent at the end of September.

Smaller rivals reported mixed earnings in the fourth-quarter. Second-ranked Krung Thai Bank KTB.BK reported an unexpected 69 percent fall in fourth-quarter profit on Friday due to bigger than expected provisions. [iD:nBKK321829]

No. 4 Kasikornbank KBAN.BK posted a 5.9 percent rise in net profit to 3.63 billion baht, more than expected, as rising lending and fee incomes outpaced higher expenses and provisions.

TMB Bank TMB.BK, the sixth-largest lender, reported a much bigger-than-expected 2007 net loss of 43.7 billion baht, up from a 12.3 billion baht loss in 2006 as it was hit by huge loan-loss provisions.

Third-ranked Siam Commercial Bank SCB.BK was due to report quarterly earnings later on Monday.

Shares in Bangkok Bank, which has a market value of $7.2 billion, closed unchanged at 112 baht on Friday, when the SET index .SETI dropped 0.2 percent.

The stock has fallen 5.09 percent since the start of this year, after rising 7.27 percent in 2007, while the index is down 7.98 percent. ($1=33.05 Baht)

Source: Reuters - 21 January 2008