KBank says lower interest won’t improve national economy

BANGKOK, April 26 (TNA) -- A recent cut in lending interest rates by 25 basis points by commercial banks to major and retail borrowers would not help stimulate national economy, said Bantoon Lamsum, president and CEO of Kasikornbank (KBank). Admitting that non-performing loans (NPLs) have climbed up due to slowdown in the national economy, Mr Bantoon said the cut in interest would only help business players and lower operational costs for small and medium-sized enterprises affected by current sluggish economy. It was proven in the past that national economy could not recover even interest rates were cut to zero, he said. Banks’ NPLs have risen because of the economy slowdown and banks have to increase reserve for bad debts as well as debt restructuring for borrowers. Economy has improved and this could been from exports which grew in the past two months, but still lower than the same period last year, said Mr Bantoon. Thailand is now facing high risks if the European Union (EU) issues red card on the country’s fishery industry if the government is unable to solve unlawful fishing problem as charged by the EU, he said. Fishing industry is one of major industries and involves a large amount of workers. The repercussion would affect related industries, he said, adding that local politics is still facing problem and it could indirectly hurt the national economy. Simultaneously, president of the bank Teeranun Srihong said that the cut in lending rates by commercial banks would assist minor business operators and SME while he believed national economy would recover from the third quarter this year. Defaults by SME operators are on the rise but banks are still making profits, said Mr Teeranun. Banks have set aside reserves for NPLs by 3 per cent from last year, Mr Teeranun added. (TNA)