Co-operative (co-op) and nano-finance loans grew significantly in the second quarter of 2024, driven by retail borrowers seeking additional liquidity to cover expenses as access to bank loans became more challenging.
As of the second quarter of 2024, the co-op loan portfolio reached 57.9 billion baht, marking a 32.4% increase, while the nano-finance loan portfolio grew by 26.8% to 24.2 billion baht.
In contrast, total consumer loans outstanding based on the National Credit Bureau's (NCB) records tallied 13.6 trillion baht, a marginal year-on-year rise of 1.3%.
For the period, housing loans outstanding increased by 3.5% year-on-year to 5.04 trillion baht, while credit card loans outstanding grew by 2.2% to 554 billion baht. Personal loans outstanding rose by 2.5% to 2.62 trillion baht.
However, the auto loan portfolio contracted by 3.2% to 2.53 trillion baht.
Surapol Opasatien, chief executive of NCB, said the strong growth in co-op and nano-finance loans was partly attributed to people's need for additional liquidity to support regular spending amid a slowing economy.
He said accessing bank loans became more difficult for certain borrower groups as banks selectively managed loan growth to control asset quality.
"Co-op loans recorded by NCB represent only a small portion compared with total co-op loans nationwide, which amount to about 2.3 trillion baht," said Mr Surapol.
"Nano-finance borrowers are typically riskier segments compared with traditional bank loan customers."
The NCB reported a significant surge in non-performing loans (NPLs) for both co-op and nano-finance loans, corresponding with the growth of these loan portfolios.
In the second quarter, co-op NPLs amounted to 2.44 billion baht, a 54.7% year-on-year increase, while nano-finance NPLs rose by 22% to 8.88 billion baht.
According to NCB data, consumer loan NPLs tallied 1.15 trillion baht for the period, reflecting a 12.2% year-on-year increase.
Housing NPLs grew by 23.2% to 219 billion baht, auto NPLs surged by 29.7% to 254 billion baht, credit card NPLs increased by 21.5% to 68.1 billion, and personal loan NPLs rose by 7.6% to 275 billion.
Mr Surapol said NPLs are expected to increase to 1.2 trillion baht in the third quarter of 2024, in line with economic conditions.
He said the rise in bad debt will depend on the flow of special mention loans, which are defined as late payments for loans from 30-90 days.
Despite these challenges, Mr Surapol said preemptive debt restructuring by banks, under the Bank of Thailand's regulations, could help slow the increase in NPLs within the banking sector.
Total troubled debt restructuring (TDR) was 1.06 trillion baht in the second quarter, a slight decline from 1.07 trillion in the first quarter.
However, TDR rose last year, starting at 800 billion baht in the first quarter, increasing to 980 billion in the second, 990 billion in the third quarter, finishing at 1.04 trillion in the fourth quarter, according to NCB data.