Banks are tightening their loan growth in the second half of this year because of global economic uncertainty and Thailand's uneven recovery.
Payong Srivanich, president of Krungthai Bank (KTB), said the bank would be more vigilant in expanding loans in the second half of the year in accordance with higher economic uncertainty both domestically and globally.
Global economic slowdown would impact Thai exports and the loan growth of the business segment.
Moreover, government loans are expected to be steady in the second half due to no new investment projects, as a result of delays in the formation of the new government.
Mr Payong said his bank expects to gradually expand loans in the second half of the year in line with the economic circumstances. Loan demand among several business segments remains positive, especially in the tourism sector. Therefore, the bank believes it will book positive loan growth throughout the year.
Nine SET-listed banks reported consolidated outstanding loans of 14.39 trillion baht as of June, a marginal increase of 0.48% from 14.32 trillion baht in December 2022.
KTB, the country's third-largest lender by total assets, reported total outstanding loans of 2.57 trillion baht as of June this year, down 0.56% from December last year. The decline is attributed to the reduction in small and medium-sized enterprise (SME) loans, along with government and state enterprise loans by 6.3% and 2.1%, respectively, according to the bank's statement to the Stock Exchange of Thailand.
Mr Payong said the bank would continue to focus on maintaining asset quality and controlling non-performing loans (NPLs) under the existing debt-aid measures. KTB reduced the ratio of its NPLs to 3.11% in the second quarter of this year from 3.22% in the previous quarter.
Mr Payong, who is also chairman of the Thai Bankers' Association (TBA), said the overall banking sector would continue to provide financial assistance to vulnerable segments under long-term debt restructuring measures in line with the central bank's requirements.
On the other hand, Ronadol Numnonda, the Bank of Thailand's deputy governor, said the banking industry's loan growth is expected to continue in the second half of this year, supported by the manufacturing and tourism sectors. Despite a slower recovery path among some business sectors, this is in line with the uneven recovery of the Thai economy.
"In particular, the household sector has recovered slowly because of uneven economic recovery. Thus, the income of some segments has not returned to normal yet. However, the overall income level has improved from the previous period, driven by the rebounding tourism sector," Mr Ronadol said.
At the same time, the regulator has continuously monitored the NPL situation of the banking industry. Given strong risk management and existing debt relief measures, the NPLs of the banking sector could be controlled and the banks would not have to unnecessarily spend on human and financial resources to tackle prolonged NPL problems, he said.
Siam Commercial Bank, a banking business unit under SCB X Plc, has tightened its underlying criteria on new loan approvals to control asset quality amid higher risks. As a result, the bank is expected to expand loans at low-edge growth rather than middle growth for the whole of 2023 in accordance with the bank's tightening risk management policy, said chief executive Kris Chantanotoke.