Thailand: Personal loans soar amid economic woes

  • The commercial banking sector showed strong growth in the personal loan category during 1Q22 because of greater household demand for liquidity to support daily spending needs amid the economic doldrums.
  • According to the BoT, the commercial banking industry’s personal loan growth in the 1Q22 stood at 6.6% y/y, the largest expansion among all loan products, although it was a decrease from the 7.8% growth recorded in 4Q21.
  • Personal loans continued to grow because households needed the cash for daily expenses, said senior director Suwannee Jatsadasak
  • Given the uneven economic recovery, individual borrowers with lower incomes needed higher liquidity for daily spending, she said.
  • The Thai banking sector’s total lending expanded by 6.9% in 1Q22, rising from 6.5% in 4Q21.
  • The overall loan growth rate is quite high within the region, compared with 6.3% in Indonesia, 5.7% in the Philippines, 4.7% in Malaysia and 2.8% in Singapore, said the BoT.
  • Ms Suwannee said total lending expansion in the local banking sector mainly came from corporate loan growth of 8.8%, edging up from 7.9% IN 4Q21.
  • Large corporate loans expanded in almost all business sectors, reflecting the financing needs of businesses in line with an improving economic recovery.
  • Small and medium-sized enterprise (SME) loans grew 1.3%, mainly based on the credit rehabilitation scheme, according to the central bank. As of 9 May 22, loan approvals under the central bank’s recovery lending scheme stood at THB171bn, which were largely granted to SMEs. However, excluding rehabilitation credit, SME loans contracted 1%.
  • Consumer loans grew by 3.3%, a slower pace from 4% in 4Q21, as the spread of the Covid-19 Omicron variant affected consumer confidence. Mortgage loan growth was 3.4%, slowing down in line with the decline in housing demand.
  • Auto loans remained stable with a 0.1% growth rate, while growth in domestic car sales became more evident. Credit card loans expanded by 2.3% in tandem with increasing credit card usage, said the central bank.
  • Banks’ overall loan quality in the 1Q22 remained stable from 4Q21, primarily because of debt restructuring and financial assistance measures.
  • Gross non-performing loans (NPL) increased marginally to THB532bn, equivalent to an NPL ratio of 2.93%.
  • Meanwhile, the ratio of loans with a significant increase in credit risk to total loans stood at 6.09%, falling from 6.39% in 4Q21, Ms Suwannee said.
  • The banking sector’s overall loan-loss provisions in 1Q22 were THB41bn, declining from THB51bn in 1Q21.

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