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Banks' household loans under watch

The household credit of commercial banks jumped 21.6 per cent last year, against a slower expansion of commercial banks' overall credit, which registered a slight slowdown.



With overall lending growth of 13.7 per cent in 2012, the Bank of Thailand said it was keeping a close watch on credit for the purchase of cars and condominiums.

Anupap Kuvinichkul, senior director of the BOT's Financial Institutions Strategy Department, said commercial banks' lending for household consumption rose 21.6 per cent in 2012, compared with a 15.8-per-cent rise in 2011. Commercial banks' whole credit expanded 13.7 per cent in 2012, compared with a 15.1-per-cent expansion in 2011. Outstanding loans in 2012 totalled Bt9.6 trillion.

Business lending in 2012 expanded by 10.6 per cent, slightly lower than the 2011 expansion of 14.8 per cent. Credit for small and medium-sized enterprises also recorded a slower expansion at 14.1 per cent than the 14.4-per-cent rise a year ago.

Anupap said the overall growth of all types of lending showed no cause for concern. Despite a sharp rise in consumption credit, he expected minimal impact from non-performing loans (NPLs) if the Thai economy continues to register satisfactory expansion. He conceded that the central bank had been keeping a close eye on auto instalment loans, which grew 39 per cent last year, and credit for condominiums, up 24.4 per cent.

Cars and condos

"We don't have much concern yet. However, we are emphasising the monitoring of loans for cars and condominiums. But our close monitoring does not mean these loans were not good. There are many methods of monitoring, including discussions with commercial banks or operators. We have to monitor in several aspects for various information for analysis," Anupap said.

Credit this year, particularly consumption credit, is expected to continue growing as about 700,000 new vehicles under the first-car tax-rebate scheme are expected to be delivered to buyers this year.

NPLs in 2012 amounted to Bt254 billion, a reduction of Bt11.9 billion from the previous year. The 2012 NPL-to-total-loans ratio stayed at 2.3 per cent, compared with 2.7 per cent in 2011. Debt repayment, debt write-offs and sales of NPLs for business loans were cited for the reduction in bad loans.

Delinquent loans in 2012 increased by Bt23 billion to Bt243 billion for business and consumption types of lending. Given the loan-base expansion, the ration of delinquent loan to total loans remained at 2.2 per cent for the year.

"Based on inspection of commercial banks' standards for loan extension, it was found that they extended loans, even for car purchase, with caution. Banks are careful and monitor risks from the global economic uncertainties and set aside higher provisions," Anupap said.


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