On February 16, 2019, Mr. Somchai Lertlapwasin, Senior Director of the Financial Institution Strategy Division at the Bank of Thailand (BOT), revealed that commercial bank lending in 2018 grew by 6%, an increase from 4.4% the previous year, in line with the continuously improving economic conditions. For 2019, it is expected that commercial bank lending will grow at a rate of 6-7%, better than in 2018, with growth across all loan categories.

 

          Specifically, business loans grew by 4.4%, with large business loans excluding financial businesses growing by 4.1%, while SME loans grew by 4.5%. Consumer loans expanded by 9.4%, driven by housing loans which grew by 7.8%. Notably, in the fourth quarter of 2018, there was an increase of 57 billion baht from the previous quarter, marking the highest growth in four years, attributed to the clearance of real estate before the implementation of the loan-to-value (LTV) regulations in April 2019. Meanwhile, car loans grew by 12.6%.

 

          Regarding the quality of commercial bank loans in 2018, the ratio of non-performing loans (NPL) stood at 2.93%, up from 2.91% the previous year, with outstanding NPLs amounting to 443 billion baht, an increase of 14 billion baht from the end of the previous year. The BOT is monitoring NPLs in the housing and automotive sectors, which are trending upwards at 3.25% and 1.66%, respectively. Therefore, they advise financial institutions to carefully consider debt burdens when granting loans. The BOT will continue to monitor the situation but has not yet implemented any additional control measures.

 

          In 2018, commercial banks reported a net profit of 207 billion baht, a growth of 10.8% from the previous year, driven by increased interest income from expanding loans and reduced reserve expenses. Banks also maintained a high reserve level of 668 billion baht, an increase of 67 billion baht from the previous year, resulting in a reserve ratio of 193.3%.

 

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