Thailand's six largest banks booked marginal loan growth of 0.71% in the first nine months of 2023 year-on-year as loan expansion was slow among small and medium-sized enterprises (SMEs) and household debt swelled.
Bangkok Bank (BBL), Kasikornbank (KBank), Krungthai Bank (KTB), Siam Commercial Bank (SCB), Bank of Ayudhya (Krungsri) and TMBThanachart Bank (ttb) booked consolidated loans of 13.6 trillion baht from January to September, up 0.71% from same period in 2022.
Among the six banks, SCB X, a holding company of SCB, booked the highest loan growth of 4.4% over the period, while KBank and ttb saw their numbers contract by 2.29% and 0.98%, respectively.
According to its filing to the Stock Exchange of Thailand (SET), Krungsri said the bank's loans rose 67.4 billion baht in the first nine months, driven mainly by SME and retail loans from overseas subsidiaries in the second quarter. The bank's SME loans expanded by 10% over the period.
BBL, the country's largest lender by total assets, informed the SET its nine-month loan growth was mainly driven by an increase in corporate loans and loans made through the bank's international networks.
KTB posted 1.4% loan growth over the period as government loans increased by 5.5%, while SME loans declined by 7.4%. KBank reported its loans contracted because of more stringent lending underwriting criteria and proactive asset quality management amid the global economic slowdown.
According to the Bank of Thailand's financial stability assessment report for the third quarter of 2023, the financial conditions of SMEs were largely fragile after a number of them had to repay a significant amount of borrowing from the peak of the pandemic. SMEs in the trade and manufacturing sectors were under pressure from the global economic slowdown and sluggish demand from international trading partners, noted the report.
The central bank has monitored debt payments among households, especially the vulnerable segment, which largely borrows from specialised financial institutions and non-banks, said the regulator.
Thanyalak Vacharachaisurapol, deputy managing director at Kasikorn Research Center, said the centre trimmed its loan growth forecast for this year to 2% from 4-5% after marginal gains for the first nine months.
SME loan growth has remained sluggish this year because of vulnerable financial conditions in the business sector amid an uneven Thai economic recovery, said the think tank. The banking sector should be able to keep non-performing loans under control in the fourth quarter thanks to strong risk management, said Ms Thanyalak.