A decline in consumer loans, particularly for cars, slowed overall lending growth in the January-March period to 9.8% from 11.3% in the prior quarter, while special-mention loans rose by 2.4%.
Salinee: Bad loans in holding pattern
The already lacklustre economy and the political stalemate apparently dampened demand for some types of loans during the first three months of 2014, said Bank of Thailand assistant governor Salinee Wangtal.
Car loans grew by a mere 2.5%, compared with 38% in recent years. Personal loans rose by 7% after posting 20% growth at the end of 2013.
"Overall loans grew at a slower pace in line with the economic environment, but this growth was considered not too bad," Mrs Salinee said.
"Corporate loans in the first quarter expanded by 6.98% compared with 6.68% at the end of December, as operators continued to pursue business expansion in neighbouring countries."
Retail loan growth fell to 10.7% at the end of March from 12.09% at the end of December, while small and medium-sized enterprise (SME) loans grew by 11.7% versus 14.66%.
Prudent consumer spending and tighter loan approvals have slowed the pace of loan growth, with many banks cutting their full-year loan growth targets.
Mrs Salinee said loan quality was not a concern, as seen by the fact that special-mention loans — those overdue for repayment by 30-90 days — edged higher to 2.4% of loans outstanding at the end of March from 2.3% at the end of December. Non-performing loans fell to 2.15% from 2.3%.
Nonetheless, bad loans are rising by 2-3 billion baht a month.
"SME late payments have increased somewhat, but it is not worrisome because some operators periodically face liquidity shortage problems," Mrs Salinee said.
She said the central bank has spoken to the Office of Small and Medium Enterprises Promotion about whether Osmep will absorb costs incurred from credit guarantees extended by the Thai Credit Guarantee Corporation to SMEs, as it did from 2008-09.
The credit guarantee fee set at 1.75% of lending is an obstacle to attracting SMEs to take advantage of the service.