Lenders likely to be conservative on consumer loans: BOT
Consumer loans will expand slowly this quarter, as lenders grow more worried about swelling household debt and the dimming economic outlook, according to the Bank of Thailand.
The central bank’s “Senior Loan Officer Survey” conducted last quarter showed that banks and non-banks plan to tighten up requirements for consumer loans.
This quarter, credit-card and other consumer loans would come under stricter scrutiny, the report said.
Household debt has climbed to nearly 80 per cent of gross domestic product from 77.5 per cent in March and 45 per cent a decade ago. The ratio is among the highest in Asia.
Household loan demand will not taper off, which indicates declining private consumption while business loan demand would rise slightly.
Against growth of 10.1 per cent in business loans and 14.9 per cent in small and medium enterprise (SME) loans, consumer loans, which accounted for 30.1 per cent of the total, expanded at 19.5 per cent in the second quarter.
Although consumer loans grew at a slower pace due to the end of deliveries of vehicles under the government’s first-car programme, the rate was well above the 12.8-per-cent average growth rate for loans in the quarter.
Personal and credit-card loans continued rising on greater consumer spending and stiff competition among commercial banks for loan extensions.
The survey covered 26 banks and 22 non-banks, which control 98.9 per cent of the consumption loan segment.
Consumer loan demand is expected to stabilise as private spending cools down, while business loans could increase slightly due mainly to liquidity requirements from domestically oriented industries like auto parts, property and construction, logistics, construction materials and food and beverages.
Financial institutions also plan to impose stricter rules on loans to SMEs, but their corporate lending policy will remain intact. They will also be more cautious about lending to certain industries such as furniture, property and agriculture.
