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Kiatnakin, GH Bank ready to help small property developers

Bangkok Post Mar 9, 2009

Kiatnakin Bank Plc (KK), a main source of financing for small and medium-sized developers, will focus on its existing customers while the Government Housing Bank (GH Bank) will consider helping customers of SME developers to get housing loans through guarantees.

KK president Tawatchai Sudtikitpisan said his bank's existing customers, mainly low-rise housing developers, were professionals as other operators had withdrawn as the market slowed.

"There are no signs of non-performing loans (NPLs) among our current customers," he said. "We will give them more project loans only if their previous projects have good sales."

Currently, KK has at least 100 developers as repeat customers.

Mr Tawatchai said the bank would increase its requirement for project loans with a focus on better locations, as this reduces risk and targets real demand while the economy is poor.

KK remains focused on small and medium-sized projects with a sales value under 400 million baht, which have lower risk and less difficulty closing sales than larger projects. For condominiums, it would consider low-rise projects with fewer than eight storeys near BTS and MRT, rather than high-rise ones beyond the reach of mass transit.

KK targets growth of less than 5% in new property project loans. Last year it recorded project loans of 10 billion baht, 80% of which went to existing customers.

KK plans to be more active in supporting housing loans. To compete with other banks it will offer services including faster procedures, waiving 1% of its upfront fee and making no extra charge for payments ahead of time.

KK expects to provide housing loans for 800 units worth around 1.2 billion baht this year, compared with 400 units worth around 600 million in 2008.

GH Bank, meanwhile, will consider relaxing requirements for approving home loans to customers of small developers after it cut its loan-to-value ratio for housing loans to 80% from 90-100% to reduce risks, said Jamaree Savetachinda, an executive vice-president.

"We will help [SME developers'] customers get mortgages more easily," she said. "We will consider offering higher than 80%, but the extra amount must be guaranteed by the company,"

GH Bank is considering a new campaign for houses priced under 1 million baht, excluding Baan Ua-arthorn low-cost housing. Mortgages with a fixed rates for less than 12 months, with a total credit line of 5 billion baht, would be launched by April.