Bt10-bn mortgage growth forecast
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CIMB Thai Bank expects the value of its outstanding mortgages to grow by Bt10 billion this year, despite an anticipated first-quarter industry slowdown due to last year's floods, followed by a projected recovery kicking off in the second quarter.
Dusanee Klewpatinoncha, CIMB’s executive vice president for retail banking, said the bank expected to add Bt10 billion to its current outstanding mortgage total of Bt27 billion.
The banking industry’s overall mortgage growth will be flat this year, particularly in the first quarter, she said, citing potential home-buyers’ concerns after last year’s floods. The industry’s outstanding housing loans total Bt200 billion.
People want to see a clearer water-management plan from the government before making decisions on house purchases, Dusanee said.
However, recovery in the overall mortgage market is likely in the second quarter on expected lower interest rates. The Bank of Thailand’s Monetary Policy Committee is expected to cut its policy rate by 25 basis points in the second quarter to 2.75 per cent to help support the flood-hit economy.
The likely rate cut may play as a leading indicator for the market, but commercial banks’ decision to lower their interest rates depends on the effects of the Deposit Protection Agency’s reduced deposit guarantee, which will be limited to Bt1 million per depositor per financial institution from August 11.
The lower deposit protection may prompt commercial banks to make loans and deposit management their priority, Dusanee said.
With the 0.47-per-cent fee to be collected from commercial banks to help repay the interest burden on the Bt1.14-trillion debt of the Financial Institutions Development Fund, CIMB expects its costs to rise by 0.1 per cent.
This year, banks may opt not to compete on rates for deposits and loans, and make managing costs their top priority instead. Dusanee said banks would likely use any methods to manage their loan portfolios to maintain net interest margins and seek more fee-based and other income.
In the short term, collection of the new fee may not directly impact banks and their customers, she said. But in the longer term, particularly when the Asean Economic Community materialises in 2015, competition among banks in the region could increase as Thai banks contribute higher fees than those in other Asean countries, she said.
