FRIDAY, March 29, 2024
nationthailand

BOT predicts lending growth above 4.3%

BOT predicts lending growth above 4.3%

THE ISSUANCE of fourth-generation telecom licences and the government’s investments in infrastructure projects will help boost loan growth in the commercial banking industry to a higher level than last year, according to the Bank of Thailand.

The commercial banks in 2015 recorded loan growth of 4.3 per cent, compared with 5 per cent in 2014. The dip was blamed on the economic slowdown.
Don Nakornthab, the central bank’s senior director of the Financial Institutions Strategy Department, said lending growth should be higher than last year based on the BOT’s prediction of economic growth of 3.5 per cent this year.
Don said the telecom companies that won 4G licences late last year would require lending to support their network investments this year, and if the government infrastructure investments went as scheduled, the BOT believed the prospect of loan growth in the banking sector would be better than last year.
Commercial loans accounted for 68.4 per cent of total outstanding loans last year, a 3.1-per-ent year-on-year increase linked to corporate customers raising funds from the equity market and corporates repaying debt.
Loans to small and medium-sized enterprises grew 5.6 per cent last year compared with 3.4 per cent in 2014, while consumer loans expanded 7.1 per cent last year compared with 7.4 per cent in 2014. All consumer loans with the exception of auto loans had a growth drop in 2015.
Non-performing loans (NPLs) climbed to 2.55 per cent from 2.15 per cent in 2014, and special-mention loans improved to 2.38 per cent from 2.61 per cent in 2014.
Despite the forecast loan growth this year, Don said the banking industry was more cautious about giving loans amid the economic uncertainty.
The BOT has requested that banks submit their stress tests based on two scenarios – gross domestic product this year experiencing a worst-case scenario and dropping by 4.5 per cent before dropping 2.5 per cent next year, and GDP this year expanding by only 2 per cent, which would mark five consecutive years of that figure.
Based on those scenarios, Don said the stress tests would detail the predicted outcome on banks’ operations in terms of NPLs, lending growth and liquidity. The tests will be submitted to the central bank next month.
Each bank has to submit an annual stress test.
Although the banks witnessed slower loan growth last year, their overall capital and coverage ratios stayed at high levels, and operating profits were healthy even though the combined net profit was lower than in 2014 because of high loan-loss provisions.
Commercial banks last year reported combined net profit of Bt192.3 billion, down from Bt205 billion in 2014.
 

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