Commercial bank loan growth decelerated in September as there was less demand for retail and corporate loans, with domestic investment waning and loan scrutiny tightened, says a senior official at the Bank of Thailand.
Despite campaigns, banks find it harder to lure borrowers these days. THANARAK KHOONTON
Retail loans, which previously expanded at a rapid pace, slowed noticeably last month, said assistant governor Salinee Wangtal.
Growth of corporate loans also dipped moderately as companies shifted to fundraising through debenture issuance, she said.
However, small and medium-sized enterprise (SME) loans continued their robust expansion, growing 14%.
Swelling household debt compelled banks to become more prudent in providing auto and consumer loans, and this is proper, said Mrs Salinee.
She said non-performing loans (NPLs) and special-mention loans (30 to 90 days overdue) remained stable.
As of the first quarter, Thailand's household debt increased to 8.97 trillion baht, or 77.5% of GDP, compared to 1.36 trillion or 28.8% during the 1997 crisis. The rate increased to 9.27 trillion or 79.2% of GDP in the second quarter.
However, the central bank said earlier a decline in household debt was evident in recent months. The government's first-time car buyer tax rebate was no longer a factor as most cars have been delivered, while tighter bank loan scrutiny was helping to put the brakes on household debt.
A recent filing of the 11 SET-listed commercial banks to the Stock Exchange of Thailand showed their outstanding NPLs rose 6% to 279 billion baht at the end of September from 263 billion at the end of 2012.
Mrs Salinee said commercial banks are expected to record solid earnings in the third and fourth quarters as they completely set aside required loan loss provisions according to the probability of default and losses given default, she said.