Lending down 30 per cent in first half, banks in North say
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BANKS in the North have witnessed a serious drop in loans and deposits, as commercial and individual customers have been hit by the economic slowdown, according to the Chiang Mai Bankers Club.
The real estate sector, which depends on borrowing, has been affected a lot, Anan Boonmahathanakron, the club chairman said last week.
The club, which has 16 bank members with 273 branches, said the number of customers coming to make transactions had dropped by 30 per cent in the first half of this year compared to the same period last year. This was more than anticipated and lending was down by about a third also.
Several banks in Chiang Mai have cut their lending target by half, as they believe the economy in the rest of the year will get worse, he said.
Savings products also lack appeal, so deposits have plunged. Indeed, about 20 per cent of business borrowers in Chiang Mai have also entered debt restructuring.
Banks have to adjust their ways from chasing deposits to developing alternative investment products, said Unchan Lekdee, head of CIMB Thai Bank’s Northern Zone.
“We have adjusted the bank’s role to be a wealth adviser to help customers keep their capital amid the economic uncertainty and lower return from deposits,” she said.
The bank’s branch staff must hold a single licence, which allows them to sell life insurance, non-life insurance and mutual funds to customers.
Assets under management in the bank’s northern zone amount to Bt5 billion to Bt6 billion.
The bank will focus on wealth management more than lending growth. With the glum economic situation in the region, this is not the time for extending credit, as that might increase the risk of non-performing loans.
“We have to adjust the loan-to-value for self-employed customers to 70 per cent from 80-90 per cent,” she said.
