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26 Mar 2018

Financial Institutions

February Net Loan Growth boosted by Business Loans High Liquidity Overall (Business Brief No.3735)

          Net loans in February 2018 rose THB67 billion over January to USD11.05 trillion, thus rising 0.61 percent MoM and 4.36 percent YoY. Most increases were seen in large business loans, including working capital and term loans, while retail loan growth was mainly driven by auto financing on new and used cars as well as auto refinancing loans. SME loans had recovered gradually to marginal growth, while credit card loans slowed on loan repayments that continued to be brisk from the previous month. During the 2M18 period, loan growth had decelerated versus the end of 2017, but is        
           expected to return to growth again by the end of 1Q18, buoyed by large corporate loan demand for use in their expansion of production capacities in line with the apparent international business recovery.  Retail loans will likely perform better after subsiding somewhat on recent credit card paybacks and strong growth in auto loans. Meanwhile, competition in retail loan products presented via mobile banking apps by various banks will no doubt attract many customers soon enough, too.

         Deposits fell slightly from January by THB14 billion, equivalent to a 0.12 percent drop MoM to THB12.18 trillion, but had increased 5.92 percent YoY over February 2017, and 0.69 percent over the 2017 yearend. The decrease was mostly seen at small and medium banks, consistent with outflows of temporary, short-term deposits and in part due in part to maturity of special deposit accounts. Although various new deposit products were launched in the month, they were aimed mostly at accommodating owners of maturing accounts and did not involve pricing competition with other special deposit programs. This strategic change is allowing many banks to better manage their financial costs, since they are able to mobilize deposits and manage their liquidity at more appropriate levels to support future lending.

        ​However, the impact of the Fed's higher key policy rate as well as their signals toward general interest rate direction along with US economic progress and their trend in trade protectionism that may affect bond yields in both the US and Thailand should be closely followed. That factor, plus lending trends in the commercial banking system here, could influence the pricing trend toward deposits in the future. 

Financial Institutions