According to the statements of assets and liability (C.B. 1.1) of 14 Thai commercial banks as of the end of November 2019, net loans increased only slightly despite the loan drawdown season. The marginal rise in net loans was due to the negative factors stemming from loan repayment by the business sector and the fact that SME loans have not recovered. In addition, the only retail loans that performed well were credit card and unsecured personal loans while key retail loans, namely home and car loans, grew slightly because of the LTV measure and sluggish new car sales.
Outstanding net loans increased over the previous month by THB22.2 billion or 0.19 percent MoM to THB11.72 trillion. As a result, loans grew at a slower pace of 1.82 percent YoY or 0.78 percent YTD, down from the 4.1 percent YTD pace reported for 11M18. Meanwhile, outstanding deposits fell from the previous month by THB17.4 billion, or 0.13 percent MoM to THB12.99 trillion, primarily seen in fixed deposit accounts at large-and medium-sized banks and partially in the government's current account.
Given this, we at KResearch have assessed that loans in the Thai commercial banking system will grow at less than our prior estimate of 3.5 percent in 2019 due chiefly to the slower-than-expected growth foreseen in commercial loans amid murky economic and political conditions at home and abroad. Although the economy is projected to improve in 2020, which may help accelerate the drawdown of commercial loans compared to that seen in 2019, close attention must be paid to risks stemming from retail and SME loans as they may affect the overall loan growth in the Thai commercial banking system and our loan growth projection band of 3.0-3.8 percent for 2020.