Credit bureau wary of digital loans

The National Credit Bureau (NCB) expects household debt in terms of loan amounts will continue to increase, despite the decline in the household debt-to-GDP ratio.

The bureau estimates digital loans and some new financial features are among the factors contributing to the higher volume of household debt.

According to NCB data, total household debt for its financial institution members tallied 13.1 trillion baht in the third quarter of 2022, up from 12.5 trillion year-on-year, growth of 4.7%.

All four key consumer loan products, comprising credit cards, personal loans, auto loans and mortgages, posted strong growth in the same period, said NCB chief executive Surapol Opasatien.

Credit cards had the highest growth rate among the group at 9.4%, followed by mortgages at 5.1%, auto loans at 4.5% and personal loans at 2.7%.

Mortgages represented the largest loan portfolio at 4.7 trillion baht of total household debt, according to NCB data.

Other household debt categories for NCB's members include overdraft loans, farming loans and other loan products.

As of September 2022, NCB had 125 members, comprising banks, non-banks and specialised financial institutions.

Mr Surapol said the household debt-to-GDP ratio fell to 88.2% in the second quarter of 2022 from 89.2% in the first quarter and 90.1% in the fourth quarter of 2021.

However, the amount of household debt has continued to rise. The amount rose to 14.7 trillion baht in the first quarter of 2022 from 14.6 trillion in the fourth quarter of 2021.

He said the lower ratio is mainly the result of GDP expansion, as the volume of household debt has continued to increase.

Rising household debt is attributed to higher loan demand. Digital lending platforms and new financial features such as "buy now, pay later" have increased use of loans, said Mr Surapol.

Household non-performing loans stood at 8.4% in the third quarter this year, declining from 8.6% in the previous quarter, partly attributed to the Bank of Thailand's debt relief measures.

As of September this year, NCB members performed 35.1 million credit checks of their borrowers for new loan approval, rising from 24.4 million over the same period last year.

The increase was attributed to new digital loan applications.

For the first nine months this year, financial institution members performed 53.3 million credit reviews of existing customers from NCB data, up from 45.6 million year-on-year, mainly because members wanted to update customers' credit records following the impact of Covid-19, Mr Surapol said.