Nov 06, 2009 (Bangkok Post - McClatchy-Tribune Information Services via COMTEX News Network) --

Siam Commercial Bank plans to aggressively expand its mutual fund business in the last quarter to maintain its market leadership, says executive vice-president Adisorn Sermchaiwong.

Assets under management of its affiliate, SCB Asset Management, are expected to increase to between 400 billion and 420 billion baht by year-end, from 390 billion, giving it the largest market share of 23 percent. About 90 percent of SCB Asset Management's assets, or 350 billion baht, come from the bank's customer base.

He said the combination of deposits and mutual funds had grown by 100 billion baht from the beginning of the year, with 70 billion baht generated from mutual funds. The healthy expansion is in line with industry growth of 200 billion baht from the beginning of this year, mainly supported by government bonds issued at low rates.

Despite low interest rates, SCB's deposit base increased more than 30 billion baht for the first nine months of the year compared to a system contraction of 100 billion baht. Much bank liquidity was absorbed by large amounts of recently issued government bonds. But liquidity remains plentiful, with the industry's average loan-to-deposit ratio at 80 percent to 90 percent.

Mr Adisorn said the bank, in co-operation with SCBAM, would concentrate on mutual funds rather than deposit products from now until the middle of next year. The business strategy is in line with the current market situation and client demand.

For the remaining two months of the year, the bank will pay attention to long-term funds and retirement mutual funds, with a new investment target of 8 billion baht.

Starting this year, SCB plans to gradually issue five new fixed-income funds investing in investment-grade corporate bonds. The bank also plans to launch a China equity fund this month for the bank's private customers.

"We will focus on deposit products in the second half of next year in line with projected rising interest rates," he said. "The bank forecasts its deposit rates will start to increase over the next six to nine months."

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