Net loans of commercial banks (14 banks) in August 2019 increased only 3.84 percent YoY, the same growth as the rate registered in July 2019, which is the lowest rate in 21 months. Loan outstandings continue to slow in alignment with the overall economic sentiment. In particular, business loans are under pressure from debt repayment, while newly-approved loans expanded within a limited range. Moreover, the bond yield of the Thai market has steadily declined. Hence, the issuance of corporate bonds is an option for medium and large companies to raise funds with low cost. Even though retail loans sustain their growth, the housing loans and auto hire purchase loans decelerated due to a high base effect in the previous year. Additionally, buyers' demands in the property and auto markets were mostly absorbed earlier.
Total deposits in August 2019 increased 4.72 percent YoY, compared to 4.28 percent YoY in July 2019. The rise is partly attributed to a base effect. Moreover, an increase of outstanding deposits in August was led by deposits of the mid-sized commercial banks, which edged up for the second consecutive month. Meanwhile, deposits of big commercial banks showed signs of decelerating in August after their deposits had risen considerably in the previous month, fuelled by special fixed deposit campaigns launched by some banks in August.
For the outlook in the remainder of 2019, KResearch projects that the overall loan growth of Thai commercial banks in 2019 may move within the range of 4.0-4.5 percent (lower than the previous forecast of 4.5 percent and 5.7 percent in 2018). KResearch maintains our views that the business sector is expected to gradually draw up more loans during the remainder of the year, but business loans are likely to recover at a weaker and slower pace than the initial projections. These loans include short-term loans for domestic working capital, trade finance and loans for long-term investment. This is because the economic growth drivers remain weak due to both domestic and international challenges. Although retail loans may sustain their growth during the remainder of the year, weak purchasing power and higher household debts will limit an expansion of certain loan products and loans of some retail consumer groups.