Despite the economic slowdown, Thai commercial banks continue to maintain a strong position because of their high provisions, the Bank of Thailand said yesterday, expressing no concern over credit expansion.
Salinee Wangtal, BOT assistant governor for the Supervision Group, said commercial banks had gone through stress tests, which assessed their financial status and capability.
Even in the worst-case scenario, if the Thai economy does not expand for one to two years, commercial banks’ credit remains strong and they can cope with the country’s economic slowdown, she said.
“Thai commercial banks remain strong and supervision of debt quality remains at a very good level. Based on the test, if the economy is sluggish for one to two years, they [commercial banks] can handle it. However, NPL [non-performing loans] may rise at some level. Presently, commercial banks are setting aside sufficient provision. Excess provision is 157 per cent. Commercial banks continue making profits despite the economic slowdown,” she said.
At the end of March 2014, commercial banks’ credit rose 9.8 per cent, compared to 11.34 per cent at the end of last year’s 2013.
NPL stayed steady at 2.3 per cent due to commercial banks’ close monitoring and immediate assistance for borrowers. Small-and medium-sized enterprises’ (SMEs) loan growth in March remained satisfactory at 11.7 per cent, compared to last year’s 14.66 per cent. SME NPLs was 3.6 per cent while SM was 2.1 per cent.
Large-sized enterprise loans in March stood at 6.9 per cent, compared to 6.68 per cent at the end of 2013. Some private organisations issued debentures for borrowings.
Retail loans in March expanded 10.7 per cent, compared to a 12.89-per-cent growth in 2013. Hire purchase in March rose 2.5 per cent, compared to last year’s over 30-per-cent increase in the same period. Personal loans grew about 7 per cent, compared to more than 20 per cent last year. Retail NPLs stayed steady at 2.4 per cent due partly to a policy-rate cut that lessened interest burden. Retail loans’ SM was 3.4 per cent.