KASIKORN Research Center summarizes data on loans, deposits, and liquidity of 14 Thai commercial banks as of the end of July 2017 from the asset and liability summary document (Form B.E. 1.1), with key points as follows:

Net loans in July 2017 decreased from the previous month mainly due to repayments of large loans, while retail loans showed a continuous recovery trend.

          Overall net loans in July 2017 decreased from the previous month by 85 billion baht to 10.68 trillion baht, representing a month-on-month decline of 0.79%, but increased compared to the same period last year and the end of the previous year by 2.51% year-on-year and 0.76% year-to-date. The decline was primarily seen in the top four large commercial banks due to repayments of business loans, government loans, and SME loans.

          Meanwhile, retail loans improved in several products, led by new car loans, housing loans, and credit card/personal loans, although there were still significant impacts from repayments of hire purchase loans from the first car program, which negatively affected the outstanding loans of some commercial banks.

Deposits in July 2017 increased slightly from the previous month due to government deposits and some banks preparing liquidity to support upcoming bond redemptions.

          Overall deposits in July 2017 increased slightly by 15 billion baht or 0.13%, but compared to overall loans, deposits continued to grow more than loans, expanding well at 3.93% year-on-year and 2.70% year-to-date. However, the increase in deposits was accompanied by a restructuring of deposits to manage costs, primarily through increases in current and savings accounts (CASA), while the proportion of fixed deposits continued to decline.

          The increase in deposits this month came from the fundraising efforts of medium and small banks to support upcoming bond redemptions and maintain their liquidity levels, while large banks saw a decrease in deposits despite significant inflows of government deposits. Additionally, all bank groups experienced a total reduction of 28 billion baht in issued debt securities and borrowings, leading to a decrease in total deposits including borrowings by 13 billion baht from the previous month, which aligns with the declining trend in loans.

Liquidity in July 2017 Eased

          Overall liquidity of banks eased from the previous month due to the decline in loans, contrasting with deposits, resulting in the loan-to-deposit ratio including issued debt securities and borrowings (LTD+Borrowing Ratio) in July 2017 decreasing to 90.55% from 91.14% in June, consistent with the liquidity asset ratio to total assets rising to 21.46% from 21.21% in the previous month.

Loan Outlook for the Remainder of the Year: Expected to Increase Due to Seasonal Factors and Government Support

          Although the first month of the second half of the year saw a significant contraction in loans, the economic momentum is expected to recover, driven by accelerated budget disbursement towards the end of the year and more proactive government support for SME loans. Therefore, KASIKORN Research Center anticipates positive signals from business loans, while other retail loans are likely to improve in line with seasonal factors, maintaining the overall loan growth forecast for this year at 4%.

          Regarding deposits, commercial banks are expected to continue focusing on maintaining deposit levels to manage liquidity adequately in line with the pace of loan disbursement while preserving profitability. Thus, intense competition in special deposit products is unlikely to be seen in the near term.

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