BOT attributes it to slowdown in domestic demand and exports
Amid Thailand’s economic slowdown, commercial banks witnessed lower second-quarter loan growth than in the same period of 2012, while their special-mention lending, particularly auto instalment loans, rose, according to the Bank of Thailand.
Special-mention loans are those with higher risks such as default.
Anupap Kuvinichkul, senior director of the Financial Institute Strategy Department at the BOT, said commercial banks’ lending expanded by 12.8 per cent in the second quarter, lower than a year earlier, because of slowdown in domestic demand and exports.
Business loans, which account for 69.9 per cent of the total, grew by about the same rate as in the previous quarter, at 10.1 per cent, on some major borrowings. Loans to small and medium-sized enterprises, which amount to 36.7 per cent of total business loans, grew more slowly at 14.9 per cent.
Consumption loans, which accounted for 30.1 per cent of the total, expanded at 19.5 per cent, a slower rate due to the end of deliveries of vehicles under the government’s first-car programme. Personal and credit-card loans continued rising due to consumers’ spending and commercial banks’ competition for loan extension.
He said loan quality remained good. Outstanding non-performing loans totalled Bt263.9 billion in the second quarter, up Bt7.9 billion from the first quarter. Gross NPLs to total loans remained stable at 2.2 per cent while the rate for net NPLs was 1 per cent.
Outstanding special-mention loans amounted to Bt260.1 billion in the second quarter, up Bt8.8 billion year on year. Most of these came from consumption, particularly auto lease-to-own. In the quarter, the ratio of special mention to total loans edged up to 2.2 per cent.
Commercial banks set aside higher provisions to deal with future economic uncertainties, Anupap said. The ratio of actual versus required provisions rose to 162.5 per cent.
Combined net profit of commercial banks was Bt58.1 billion. Net interest margin rose to 2.53 per cent after an increase in interest-based income from higher expansion of loans, particularly higher-return consumption loans.
Commercial banks’ capital base rose thanks to consistent profits, but risky assets grew sharply. Ratios of total capital and Tier 1 capital to risky assets remained stable at 15.7 and 12.3 per cent respectively.
Restricted home loans
Meanwhile, the Housing Finance Association believes the rising rejection of home-loan applications will help keep down banks’ NPLs and ease the high level of household debt, chairman Kitti Pattanapongpiboon said.
He said the property market should not grow by much more than gross domestic product, so annual home-loan growth should stay at 5-10 per cent. Mortgage lending in the first six months grew by 5 per cent.
He said that even though the rejection rate was likely to increase, the mortgage situation was not in danger, as the banks’ caution would lead to stability in the property market.
“We agree with the banks’ refusing to grant mortgages to customers who might have insufficient ability [to repay them] because otherwise, those customers might be bad debtors,” he said.
The NPL rate for housing loans is 2 per cent.
The banks have become more cautious with their mortgage lending after the BOT expressed concern over rising household debt.
Kitti added that even though the government has no measures to support the property market as it does the tourism sector, the real-estate market could gain indirectly from the boom in tourism.
He said the association wanted to see the government help drive the second-home market rather than the new-home market by waiving fees and income tax from house sales.
Chatchai Payuhanaveechai, secretary-general of the association, said such waivers would help enhance the second-home market.
He said mortgages this year were expected to expand by 8-8.5 per cent compared with 11.4 per cent last year in line with the economic situation.
Rising household debt has led developers to try to shore up their sales by scaling down the size of units, which has lowered the average unit price.