People discuss financial deals at a KBank booth at Money Expo 2022, held May 12-15 at Impact Muang Thong Thani. (Photo: Nutthawat Wicheanbut)
The commercial banking sector showed strong growth in the personal loan category during the first quarter of this year due to increased demand for cash from households to meet daily spending needs in the economic slump.
According to the Bank of Thailand, commercial banking personal loan growth in the first quarter was 6.6% year-on-year, the strongest expansion among all loan products, although it was down from the 7.8% growth recorded in the previous quarter, said Suwannee Jatsadasak, senior director of the central bank.
Personal loans continued to grow because households needed cash for day-to-day expenses, Ms Suwannee said.
Given the uneven economic recovery, low-income individual borrowers needed more cash for day-to-day expenses, she said.
Total Thai banking sector loans increased by 6.9% in the first quarter of this year, compared to 6.5% in the previous quarter.
The overall loan growth rate is quite high in the region, compared to 6.3% in Indonesia, 5.7% in the Philippines, 4.7% in Malaysia and 2.8% in Singapore, the Bank of Thailand said.
Ms Suwannee said the total expansion of loans in the local banking sector came mainly from growth in business loans of 8.8%, compared to 7.9% in the previous quarter.
Corporate lending increased across nearly all industries, reflecting corporate financing needs amid an improving economic recovery.
Loans to small and medium-sized enterprises (SMEs) rose 1.3%, mainly due to the credit repair program, according to the central bank. As of May 9, loan approvals under the central bank’s stimulus loan program stood at 171 billion baht, which was largely given to SMEs. However, excluding rehabilitation loans, loans to SMEs contracted by 1%.
Consumer loans rose 3.3%, a slower pace than the previous quarter (4%), as the spread of the Covid-19 Omicron variant affected consumer confidence. Mortgage growth was 3.4%, slowing as housing demand fell.
Auto loans remained stable with a growth rate of 0.1%, while growth in domestic car sales became more evident. Credit card lending rose 2.3% as credit card usage increased, the central bank said.
The overall lending quality of banks in the first quarter of 2022 remained stable compared to the previous quarter, mainly due to debt restructuring and financial relief measures.
Gross non-performing loans (NPLs) increased slightly to 532 billion baht, equivalent to an NPL ratio of 2.93%.
Meanwhile, the ratio of loans with a significant increase in credit risk to total loans was 6.09%, down from 6.39% in the previous quarter, Ms Suwannee said.
Overall loan loss provisions for the banking sector in the first quarter of this year were 41 billion baht, down from 51 billion in the previous quarter.