The state-owned Government Savings Bank (GSB) trimmed its loan growth target this year to 7% from 7.5%.
Woravit: Loan quality to tame NPLs
Woravit Chailimpamontri, the president and chief executive, said the move is aimed at tightening loan scrutiny and averting a bad-loan problem now that the country's economic growth has lost momentum.
The focus has moved away from lending growth and towards loan quality as a way of keeping down non-performing loans (NPLs), he said.
Its net new-loan growth this year is expected to be halved to 100 billion baht from the level of recent years, he said.
The bank's NPLs now stand at 1.3% of outstanding credit of 1.7 trillion baht at present, up from 1.1% early this year.
Thailand's economy expanded at a slower pace in the first and second quarters, by 5.3% and 2.8% year-on-year, respectively.
Quarter-on-quarter, growth contracted by a revised 1.7% in the first three months and 0.3% in the second quarter.
The disappointing data has prompted the National Economic and Social Development Board, a government think tank, to lower its full-year gross domestic product (GDP) growth forecast to between 3.8% and 4.3% from 4.2% to 5.2% projected in May.
The GSB is confident its measures will keep its retail loans healthy amid the Bank of Thailand's concerns over swelling household debt.
Civil servants account for half the loan portfolio, and their default risks are minimal since the GSB is eligible to receive their instalment payments through payroll deductions, he said.
The GSB's NPL rate among these customers is a mere 0.3% of the loans extended to this group.
The central bank has ramped up its warning against the country's rising household debt, particularly among the low end of the income scale, on concerns they are vulnerable to the interest rate hike cycle.
Household debt at the end of the first quarter stood at 8.97 trillion baht or 77.5% of GDP.
Mr Woravit said the GSB is keeping this year's growth target of 8% for deposits, now amounting to 1.8 trillion baht.