Credit growth, NPLs stable: assures central bank
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The Bank of Thailand insists that credit growth and the non-performing loans of commercial banks are at a normal level even though third-quarter results showed a cooling off in lending.
Loans at nine banks expanded by only 1.8 per cent compared to 3.3 per cent in the second quarter and 2 per cent in the first quarter. The averages do not include Krungthai Bank and CIMB Thai Bank.
NPLs rose in medium and small banks due mainly to defaults on used car loans.
Krirk Vanikkul, deputy governor for financial Institutions stability, said yesterday that loan growth was running in tandem with the target. Most of the loan growth was in the first half, so even if lending is likely to slow down in the second half, overall loan growth of the industry was reasonable.
NPLs did not increase alarmingly, as they reflect the actual economic situation, he said.
The picture of loan growth and NPLs for the next few months is not getting clearer because the figures must be based on the economic situation. Loan demand is expected to pick up sharply at year-end, but with their strong financial fundamentals, banks can handle the growth.
The sufficiency of bank liquidity is difficult to discern because it depends on economic conditions, but banks seem to be in good shape.
The market had expressed concern over the liquidity of banks next year in the face of loan demand driven by public spending and the expected outflows from the tapering of the US’ quantitative easing, he added.
Parisun Chantanahom, senior director of the international department, said foreign fund flows have always moved ahead of Fed meetings without waiting for QE tapering.
Foreign withdrawals have impacted Thailand in terms of cost of funds, but all markets have to confront rising financial costs, so preparation is essential to deal with the situation.
The ebbing of capital may seriously affect some countries that have weakened fundamentals.
The central bank will release economic figures on Friday. That will be an indicator of whether the fundamentals of Thailand will remain strong or weaken, he said.
CIMB Thai yesterday reported that its third-quarter net profit plunged to Bt416.88 million from Bt851.78 million a year ago. That pressed the bank’s nine-month net profit down to Bt960.58 million from Bt1.18 billion in the same quarter last year.
In the first nine months, its loans swelled 17.2 per cent on robust retail demand, but its net interest margin shrank slightly to 3.2 per cent from 3.21 per cent year a year ago due mainly to the intense competition in the deposit market.
