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* C.bank expects non-performing loans to "peak" this year
* Says loans may grow 4-6 pct this year vs 2 pct in 2016 (Adds details, banks' lending rate cuts)
By Kitiphong Thaichareon and Orathai Sriring
BANGKOK, May 15 (Reuters) - Large Thai banks announced lower loan rates for some customers on Monday, the same day the central bank said it hoped the pace of lending in 2017 will be significantly higher than it was in the first quarter.
Market leader Bangkok Bank, state-run Krung Thai Bank and number four Kasikornbank said they would cut their retail lending rates by 50 basis points from Tuesday to help smaller borrowers. Bangkok Bank will also trim its minimum overdraft rate by 25 basis points.
Third-ranked Siam Commercial Bank said it would cut all loan rates by 25 basis points, effective on Tuesday.
Thai lending increased 2 percent in 2016, the smallest rise in seven years.
The Bank of Thailand (BOT) said on Monday that loans rose 2.8 percent in the first quarter, kept down by uneven economic recovery and high household debt.
Daranee Saeju, senior director of the BOT's financial institutions strategy department, said bank lending may increase 4-6 percent in 2017 if production and investment pick up in the second half.
Earlier on Monday, Thailand reported January-March economic growth was the fastest for a quarter in four years. But growth in Southeast Asia's second-largest economy still lags regional peers.
The economy faces risks, including U.S. trade policies and major economies' monetary policies, senior BOT director Don Nakornthab said.
The central bank has forecast growth of 3.4 percent this year, up from 3.2 percent in 2016.
Most major Thai banks reported weaker-than-expected quarterly earnings as they booked weak loans and high provisions for bad debt.
According to the central bank, NPLs rose to 2.94 percent of lending in the first quarter from 2.83 percent at the end of 2016, largely from small and medium businesses.
The BOT said it expected NPLs to "peak" later this year, but did not indicate what level it expects bad debts to reach. (Writing by Orathai Sriring; Editing by Richard Borsuk)