Siam Commercial Bank (SCB), the country's largest mortgage lender, is confident of achieving its new housing loan target of 100 billion baht this year despite lending for the segment falling 4-5% short of the growth target in the first half.
Seasonal factors in the second half and the bank's promotional campaigns are expected to give a boost to housing loan growth, said Jamaree Ketrakool first executive vice-president and head of mortgage products.
The bank managed to extend new mortgage loans worth around 40 billion baht for the January-to-June period, though property market sales were cooler than a year earlier when the government rolled out a property stimulus.
The government launched a raft of property stimulus measures in late 2015, including cuts in housing transfer and mortgage fees to a single rate of 0.01% from 2% and 1%, respectively, for six months to April 2016.
Ms Jamaree said mortgage loan demand is expected to improve in the second half due to seasonal factors in the property market. However, she warns that competition will be tougher.
SCB uses pricing strategies to attract homebuyers, but she said the lender will compete in a reasonable manner.
The bank, under a collaboration with property developers, is focusing on an exclusive offer for special mortgage packages to specific projects rather than blanket offers. Service quality is its area of focus in order to keep profitability and control asset quality.
"Mortgage non-performing loans (NPLs) are on the rise but it is still manageable. The bank's bad housing loan ratio is at around 2% compared with the industry's 3.4% average," Ms Jamaree said.
SCB, with a mortgage loan portfolio of 609 billion baht, has used several instruments, including debt restructuring and bad-asset sales, to prevent NPLs from rising.
Separately, Kasikorn Research Center has revised down the industry's mortgage loan growth to 5.5% this year from 7% predicted earlier in line with the economic circumstance.
The forecast cut was also in response to the lack of property stimulus measures and banks slowing down housing loan expansions for fear of more soured loans.
Home transfers declined by 11-14% year-to-date, compared with a 6.9% growth during the first four months of 2016, driven by real estate stimulus measures.
SCB shares closed Friday on the Stock Exchange of Thailand at 154.50 baht, up one baht, in heavy trade worth 109 billion baht.