Commercial bank loans grew moderately last year in line with the slow economic recovery, but a higher pace is expected this year with the planned acceleration of public investment, says the Bank of Thailand.
"[Bank] loans expanded by 4.3% [year-on-year], a consecutive decline in growth over four years as corporate loans mainly contributed to the reduction,” said Don Nakornthab, senior director for financial institutions strategy.
He said fourth-quarter loan value expanded by an estimated 240 billion baht.
Small and medium-sized enterprise (SME) loans recorded a greater expansion rate, while consumer loans ebbed slightly.
The outstanding value of last year’s 4.3% loan growth was registered at 11.7 billion baht.
In 2014 bank loans grew by 5% year-on-year, with 11.2 billion baht recorded as outstanding value.
Last year, corporate loans edged up 0.1%, valued at 3.51 billion baht, down from a 4.8% increase recorded a year earlier, valued at 3.5 billion.
SME loans grew by 5.6% with a value of 4.5 billion baht, up from 3.4% registered in 2014, valued at 4.24 billion.
Consumer loans rose by 7.1% last year, valued at 3.7 billion baht, down from a 7.4% increase a year earlier, valued at 3.5 billion.
Loan growth this year is forecast to increase, propelled by public expenditure on infrastructure projects, improved economic conditions and loans associated with 4G licences, Mr Don said without specifying a growth figure.
“But we expect asset [loan] quality will continue being pressured by the economy not fully recovering and [the recovery momentum] not dispersing to every segment,” he said.
“Non-performing loans could rise further this year, but commercial banks estimate NPLs will peak this year and could decline in later periods, assuming the economic recovery is on track.”
Bad loans associated with SMEs, especially small companies, consumer loans and the agricultural sector, are projected to climb due to the tepid economic recovery, Mr Don said.
Financial institutions are expected to remain cautious about lending to SMEs and consumers.
Gross NPLs rose to 2.55% last year, with an outstanding value of 338 billion baht, up from 2.15% recorded in 2014, valued at 277 billion.
The reasons for the fourth-quarter decline in bad loans (to 2.55%) compared with the third quarter (when they reached 2.78%) were Sahaviriya Steel Industries Plc’s debt write-off and debt-restructuring schemes introduced by commercial banks.
Special-mention loans, classified as 30-90 days overdue, fell to 2.38% with a value of 314 billion baht from 2.61% in 2014, valued at 336 billion.
Thailand’s commercial banks have invested 8 billion baht or 0.05% of total bank assets in European financial institutions, Mr Don said.
He said the value of derivative transactions by Thai banks with European counterparts is assessed at 100 billion baht.
If Deutsche Bank collapses, the damage to Thai banks will be about 20 billion baht or 3% of banks’ annual revenue last year, Mr Don said.