High household debt not a concern, says FPO head
THE CURRENT level of household debt is not a barrier to the government’s economic stimulus efforts, Fiscal Policy Office director-general Krisda Chinavicharana suggested yesterday.
He acknowledged there were concerns that people’s spending under the stimulus schemes might add to the high level of household debt, and could also affect their repayment ability.
However, data for household debt in the third quarter of last year showed an 11 consecutive quarter of slowdown to Bt10.84 trillion, or 80.8 per cent of gross domestic product, he said.
While mortgage, credit-card lending and non-bank personal loans in the period showed year-on-year growth of 9.2 per cent, 6.5 per cent and 3.8 per cent, respectively, auto loans fell 4.5 per cent.
The high level of household debt built up in the past mainly as a result of the massive flooding in late 2011, when people had to borrow from the banks fix their homes, and from the first-car scheme of 2012, he said.
These factors caused household debt to climb to Bt9.85 trillion, representing 76.3 per cent of GDP, up from Bt7.48 trillion – or 66.2 per cent of GDP – in 2011.
However, most debt is secured lending and low risk, Krisda said, and should be compared to the levels of debt in countries such as Malaysia and Singapore, whose debt-to-GDP positions stand at 88 per cent and 75 per cent, respectively.
Nuntawat Chotvijit, director of Aeon Thana Sinsap (Thailand), said that amidst the economic slowdown and gloomy export outlook, Aeon was closely monitoring non-performing loans for both personal loans and credit cards.
It is determined to cap NPLs for both forms of lending at 2.3 per cent, he said.
The company is more cautious about lending to employees of companies in industries that have exposure to exports, because the export slowdown has impacted on the overtime revenue of such workers.
Factory employees account for 20-30 per cent of Aeon’s personal-loan portfolio of Bt40 billion.
The company will focus more on expanding its credit-card customer base, especially among those with monthly income of at least Bt30,000, as the economic slowdown has not affected this segment as much as people with monthly income of Bt15,000, he explained.
“We plan to drive our credit-card customer base among people with monthly income of Bt30,000 to reach 15-20 per cent this year, from 10 per cent currently… Aeon will join hands with business partners who also capture this segment,” he added.
