Commercial banks target 7% loan growth
Commercial banks have set their combined loan-growth target at 7 per cent this year, riding on lending to construction, property and utility groups, according to the Bank of Thailand.
BOT Deputy Governor Tongurai Limpiti said small commercial banks were expected to see average loan growth of 10 per cent, while large ones would likely see 5-9 per cent. Loan growth last year averaged 5 per cent.
Commercial banks this year will continue to concentrate on digital banking services to lower costs and increase fee-based income from more transactions.
"This year, loan extension could focus more on construction, property and infrastructure groups, and small and medium-sized enterprises. Borrowings by large businesses may be for working capital only, and they may raise funds mainly through the issue of debentures," Tongurai said.
She said commercial banks had been hit by the country’s economic slowdown, which led to loans expanding only 5 per cent by the end of November.
Non-performing loans inched up from 2.15 per cent of total lending in 2013 to 2.34 per cent in the third quarter of 2014. The proportion of bad consumer loans rose from 2.20 per cent to 2.65 per cent.
However, according to the BOT requirement, commercial banks set aside greater provisions for NPLs, at 1.35 times.
"The BOT is concerned about the quality of loans to retail customers and consumption-related businesses, which could be impaired until the economy recovers. There are also concerns over volatility in capital movement given the fragility of the global economic recovery and the likely divergence in major countries’ monetary policies," Tongurai said.
Based on the BOT’s stress tests, commercial banks have sufficient capital to cope with any crisis that may arise if the Thai economy does not grow for two consecutive years. Gross domestic product is expected to expand by 4 per cent this year.
Commercial banks have an average capital-to-risk ratio of 14.8 per cent.
