Business lending by banks slows down in Q1
The amount of credit extended to businesses by banks declined significantly in the first quarter, owing to low confidence among consumers and in the business community, according to the Bank of Thailand (BOT).
As of March, the amount of loans recorded was Bt5.8 trillion, up just 1.8 per cent from the fourth quarter of last year as interest in borrowing waned on the part of many businesses, including the manufacturing and service sectors. Usually credit to the real sector grows continuously as bank loans remain a key source of funding. This tailed off, however, in the first quarter of the year. The slowdown in credit was in line with sluggish investment and consumption in the first quarter of the year amid political turmoil, rising interest rates and skyrocketing oil prices. Tumnong Dasri, director of the BOT's corporate-debt restructuring advisory department, said banks had become more cautious when it came to loan approvals but the amount of capital inflow had provided businesses with enough capital without their having to rely on borrowing. He was optimistic that debtors would be able to pay their debts as interest rates remained low and non-performing loans (NPLs) continued to decrease. "[NPLs] will not increase much as the Bangkok Asset Management Co is buying the bad assets from the banks' balance sheets and has continuously had low-cost funding from bond issues," he said. Credit to the agricultural sector was down 11 per cent from the previous quarter to Bt86.4 billion, while the mining sector's borrowing was slightly down by 1.06 per cent to Bt17.8, according to the BOT. The fishing industry borrowed Bt15.6 billion, up only 1.1 per cent, and the manufacturing sector Bt1.54 trillion, up only 0.92 per cent. Banking loans to the construction sector stood at Bt157.8 billion, down 5.5 per cent. Housing and consumer loans were down 1.6 per cent to Bt577.6 billion, together with a 6.3-per-cent contraction in loans for land purchase. In the service sector loans were down too, while credit or logistics and transportation plunged almost 2 per cent to Bt249 billion. Loans to hotels and restaurants were up just 1.35 per cent to Bt212.9 billion, and those to the wholesale and retail sectors rose 2.13 per cent to Bt964.9 billion. Bucking the trend, credit taken out for hire purchase and car rental was up 40 per cent to Bt155.3 billion in line with rising sales of vehicles and motorcycles.
Anoma Srisukkasem The Nation
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