BoT expects uptick in demand for lending

BoT expects uptick in demand for lending

Economic rebound seen fuelling trend

Consumers use ATM services at a branch of Siam Commercial Bank. During the Covid-19 pandemic, consumer loans grew by 4.2% in 2020 and 4% in 2021. (Photo: Varuth Hirunyatheb)
Consumers use ATM services at a branch of Siam Commercial Bank. During the Covid-19 pandemic, consumer loans grew by 4.2% in 2020 and 4% in 2021. (Photo: Varuth Hirunyatheb)

The Bank of Thailand (BoT) expects that the picking up trend of the Thai economy will support economic activities and loan demand this year.

Loan demand for 2022 should be in line with economic activity under the economic rebound. Normally the BoT does not forecast loan growth of the banking sector, said the central bank's senior director Suwannee Jatsadasak.

According to the National Economic and Social Development Council, the economy is expected to expand in the range of 3.5-4.5% this year, up from 1.6% last year.

The central bank on Monday unveiled total loan growth of the commercial banking sector in 2021, which expanded 6.5% year-on-year, edging up from 5.6% in the previous year.

The strong loan growth in 2021 was contributed by corporate loan growth of 7.9%, rising from 6.3% the previous year, while consumer loan grew by 4% in 2021, compared with 4.2% in 2020.

Ms Suwannee said the strong loan growth at 6.5% in 2021 was partly supported by the central bank's soft loan scheme, especially offering to small and medium-sized enterprise (SME) business operators, who suffered the significant impact of the Covid-19 outbreak.

For 2021, the banking sector booked SME loan growth of 2.1%. If excluding the central bank's soft loan and rehabilitation loan, the SME loan in the banking industry would contract 0.4%.

Given the soft loan facility, SME loans showed positive growth consecutively for the past three quarters at 1.2% in the second quarter last year, 2.4% in the third and 2.1% in the fourth.

Loans for large corporates with a minimum credit line of 500 million baht for a company showed solid growth at 12.8% in 2021 with loan expansion in almost all sectors, reflecting the financing needs of businesses in line with the economic recovery. Loans to the government also continued to increase.

Consumer loans grew by 4.0% year-on-year, around the same pace as the previous year. Credit card loans rose along with the gradual recovery of economic activities.

Personal loans continued to grow due to households' liquidity needs. Auto loans remained stable consistent with car sales which have not yet recovered.

Meanwhile, mortgage loans increased at a slower rate in line with the decline in housing demand from the previous year.

Ms Suwannee said the overall loan quality in 2021 remained relatively stable from the previous year due primarily to debt restructuring and financial assistance measures.

Gross non-performing loans (NPLs) increased slightly to 530.7 billion baht, equivalent to the NPL ratio of 2.98%.

Meanwhile, the ratio of loans with significant increase in credit risk to total loans stood at 6.39%, down from 6.62% in the previous year.

The banking system recorded a net profit of 181 billion baht in 2021, increasing from the previous year by 23.6%.

This was due mainly to lower provisioning expenses as banks set aside an elevated level of provision in the previous year, together with banks' operating cost control.

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