GH Bank falling 30% short of loan target
LTV limits curb lower-income clientele
GH Bank is set to miss its loan growth target by 30% this year, restrained by the Bank of Thailand's new loan-to-value (LTV) policy, says president Chatchai Sirilai.
That shortfall would be 60 billion baht short of the bank's full-year loan target of 203 billion, said Mr Chatchai.
In 2019, GH Bank's loan target was determined from an average of mortgages during the past three years, he said.
Last week, GH Bank and the Government Savings Bank consulted with the Finance Ministry and the central bank for resolutions on the LTV measure's impact.
Loan growth for the two state-owned financial institutions will miss their targets this year if the loan criteria of both banks remains constrained by such measures, said Mr Chatchai.
Starting on April 1, homebuyers were required to make a minimum down payment for third and subsequent mortgages of 30% of the home price, with second mortgages set at 10-20%, depending on how long a borrower had made payments on the first one.
The move is an attempt to curb rising mortgage non-performing loans (NPLs) by the central bank.
The LTV ratio of 90-100% remains unchanged for those who apply for a first mortgage to buy a home priced below 10 million baht, but the ratio is lowered to 80% when the borrower buys a residence valued at 10 million baht or higher.
Mr Chatchai said housing loan customers of state-owned banks are comprised of different groups than mortgage borrowers of commercial banks.
The core group of mortgage borrowers for state-owned banks are low-income people who need full loans to purchase houses, with an extended period for repayment, he said.
The stricter LTV measure has had an impact on these individuals, said Mr Chatchai.
"At the meeting with the Finance Ministry and the Bank of Thailand, we proposed a method and loan conditions to help support low-income people who need mortgages from state-owned banks," he said.
"Hopefully, the policymakers will lend support to [low-income people]."
GH Bank's total loan value was 53.5 billion baht for the first four months this year.
Loan value is expected to reach 100 billion baht at the end of the second quarter thanks to the government's latest tax perks on housing transfer and mortgage fees, as well as greater efficiency from the GHB System, a new service for loan approval, said Mr Chatchai.
Regarding the progress of the One Million Houses project, there have been 7,300 applicants for loans as of May, for a total amount of 5.2 billion baht.
The bank has approved more than 6,300 applicants with total loans worth 4.3 billion baht.
For the first quarter, the bank recorded new loans worth at 44 billion baht, with total outstanding loans valued at 1.13 trillion.
Net profit was logged at 2.87 billion baht.
NPLs stood at 49.3 billion baht, making up 4.37% of total outstanding loans.
The bank will continue its five main objectives for this year, including the GH Bank lottery, reverse mortgage loans totalling 1 billion baht, the second phase of the One Million Houses project, public sales of the bank's NPLs, second-hand housing property and the state-owned non-performing assets project.