Another year of high loan growth seen
The banking industry is expected to register double-digit growth in net loans for the third consecutive year in 2012, thanks to steady demand from businesses and |households, largely for post-flood recovery, Kasikorn Research reported yesterday.
Its research suggested that demand for loans for home or business repairs and renovation, revolving credit to bolster liquidity, and borrowing for flood-prevention infrastructure would increase over the next three to six months.
However, credit to bolster production capacities and to fund investments may grow at a slower pace next year amid many downside risks.
Regarding deposits, it is expected that fund-raising efforts by commercial banks will continue into 2012, driven by favourable loan growth. Competition among banks to mobilise deposits via numerous channels will become quite intense, especially since deposit-protection coverage will be limited to Bt1 million per depositor per financial institution as of next August 11, meaning that unprotected deposit amounts will more than double to Bt3.6 trillion in 2012.
In addition, new regulatory controls on bills of exchange that are intended to protect small investors with a ceiling on the face value of B/Es will pose a challenge for commercial banks vis-a-vis use of those products to mobilise deposits. As a result, banks may have to revise their strategies and offer other savings products, plus more favourable returns and other enticements, to attract money.
KResearch expects that commercial banking liquidity will decline – largely because of a smaller current-account surplus – amid volatility in capital inflows and increased state spending to reinvigorate the economy. In addition, as loans and deposits will continue to grow (albeit at a slower pace than this year), liquidity should remain unchanged, if not decline.
However, it will be necessary to monitor government infrastructure-investment plans, especially the multibillion-baht water-management programme – which is pending further details – because if the funds for the various projects are budgeted concurrently, that would inevitably draw liquidity out of the system, thus forcing banks to become more prudent in their liquidity management, KResearch said.
As of the end of last month, net loans (after allowances for doubtful accounts) at 13 commercial banks in Thailand recorded a total of Bt7.37 trillion, increasing Bt82.3 billion from October.
Meanwhile, deposits totalled Bt7.17 trillion, declining Bt21.0 billion, while total issued bonds (including B/Es) increased by Bt52.3 billion to Bt1.66 trillion, thus causing liquid assets to fall month on month.
