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Friday, 28 March 2008

The Islamic Bank of Thailand sets 40% loan-growth goal

The Islamic Bank of Thailand has set a lending target of 40% or 4.5 billion baht this year, according to chairman Kitti Patpong-pibul.

The bank, which operates under strict Islamic law forbidding the payment of interest, has outstanding loans of 10.5 billion baht.

Mr Kitti said that while lending growth this year in percentage terms was relatively high, the bank had actually slowed the pace of operations relative to past targets, which had set new lending targets at seven to eight billion baht per year.

He said the bank also had delayed plans to raise new capital through a share issue. ''We want to build up our profits for the next three years to help strengthen our capital base before raising new capital,'' Mr Kitti said.

The Islamic Bank, which posted a loss of 400 million baht last year, expects to turn a profit of 200 million this year.

Mr Kitti said interest among foreign investors in the bank was quite high. Less than 1% of the bank's stock is now owned by foreigners, compared with a foreign limit of 33%. ''In negotiating with investors, we should do so from a position of strength, to help maximise our share price,'' he said.

The Islamic Bank has capital of 3.2 billion baht, sufficient to cover operations over the next four to five years. Its capital adequacy ratio stands at 24%, well above the central bank's minimum requirement of 8.5% for commercial banks.

Deposits at the bank stand at 13 billion baht, with a growth target of 2.5 billion for the year. Non-performing loans stand at a relatively high 15% of total loans.

Mr Kitti said the bank planned to accelerate lending activities to the southern border provinces in support of government policy.

Lt Ranongrak Suwanchawee, a deputy finance minister, told bank officials yesterday that they should ensure that the bank met with international and Islamic banking standards, including the IAS 39 accounting standard. She also urged executives to reduce non-performing loan levels, support staff development and boost lending to the Deep South.

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