23 Aug 2024
Financial Institutions
... Read more
FileSize KB
13 Aug 2024
21 Feb 2024
30 Jan 2024
18 Oct 2023
16 Nov 2022
Thailand’s financial access rate is higher than most other APEC member economies, but there are challenges ahead ... Read more
3 Oct 2022
Outstanding debt of Thai households rose to THB 14.76 trillion in 2Q22. However, when compared to economic value, the household debt to GDP ratio in 2Q22 dropped to 88.2 percent, against the 89.2 percent recorded for 1Q22. Additionally, when compared to the same period of last year, the household debt grew only 3.5 percent YoY, hitting an 18-year low, and slowing from the 3.7 percent YoY increase in 1Q22. In terms of structure, home loans and loans for own business still accounted for the majority of household debt (a combined portion of 53 percent of overall household debt).... Read more
13 Sep 2022
KResearch views that digital personal loan market, according to the Bank of Thailand’s guidelines on the use of alternative data for credit analysis in loan approval process, is likely to see “gradual growth” for 2022. As evidenced, digital personal loan outstanding is at approximately THB 7.92-8.5 billion, representing only 1 percent of total outstanding retail loans in the system.... Read more
27 Jul 2022
Impacts on the Thai banking system if banks defer interest rate increase ... Read more
24 Mar 2022
Auto title loan saw high growth amid the COVID-19 crisis. The number of loan accounts increased by around 50 percent to 4.20 million accounts, with total outstanding loan rising 45 percent to a total of THB181 billion at the end of 2021, compared to the end of 2019. Meanwhile, non-performing loans (NPLs) shot up by nearly 100 percent over the same period, amounting to THB2.93 billion. However, NPL ratio remains relatively low at 1.62 percent since the credit base has expanded significantly. ... Read more
22 Oct 2021
On October 21, 2021, the Bank of Thailand (BOT) announced the relaxation of rules for home loan and top-up loan by temporarily lifting the loan-to-value (LTV) ratio to 100 percent, from now until the end of 2022. KResearch views that this relaxation of LTV regulations will help to increase homebuyers’ purchasing power and serve as a marketing tool for real estate developers to boost sales. Nevertheless, home sales will still depend on two principal elements: consumer confidence towards an economic recovery and potential buyers’ readiness. Meanwhile, the residential market and financial institutions’ home loan approval rate will continue to face multiple challenges for the rest of 2021 and going into 2022.... Read more
29 Jul 2021
According to summary statements of assets and liabilities (C.B. 1.1), net loans to customers and accrued interest receivables at 19 domestically registered commercial banks increased approximately THB78.4 billion MoM as of the end of June 2021. Given this, KResearch assesses that loans in the Thai commercial banking system may have grown 4.4 percent YoY at the end of 2Q21, against the 4.6 percent YoY pace reported for 1Q21. Although the 2Q21 loan growth may have begun to decline, it would be at a slower rate, supported chiefly by increased corporate loans, plus home loans, especially from customers who still can afford residential units. ... Read more
25 Sep 2020
Changing economic conditions as a result of the coronavirus (COVID-19) pandemic present a number of challenges to personal loan (PLoan) service providers, both commercial banks and non-bank financial institutions. Key challenges include how to adjust strategies to reach targeted customers faster than rivals in order to bolster new loans while also accelerating their efforts to assist PLoan borrowers. As a result, 7M20 outstanding PLoans contracted 3.5 percent, compared to the year-end 2019, and unsecured PLoans shrank at a faster pace of 7.5 percent, compared to the year-end 2019. ... Read more
22 Sep 2020
The digital personal loan regulations promulgated in the most recent announcement of the Bank of Thailand encourage service providers to use alternative data that does not concern personal income data to assess the willingness and ability of borrowers’ debt payment. This arrangement reflects two positive objectives: 1) To increase accessibility to loan for consumers in particular among borrowers of informal credit and individuals who previously could not access personal loan; and, 2) To reduce cost for borrowers of digital personal loan. Nonetheless, KResearch has identified certain issues regarding the terms and conditions for digital personal loan operations, which will likely prompt digital lenders to become more alert and plan to adjust their businesses to the BOT regulations – a process which could present multiple challenges for the service providers. For example, they must prove the validity of the alternative data, while also facing difficulty of finding new borrowers amid economic uncertainty and retaining existing customers, as well as the rise in outstanding short-term loans with low credit limits.... Read more
23 Jul 2020
KResearch assesses that, as of 2020, digital lending service in Thailand is still in its infancy and modest in scale as digital lenders lack sufficient customer data for risk profile assessment. Therefore, digital lending service during this initial period is seen mainly as an alternative for existing borrowers. Digital credit providers tend to grant short-term loans (1-3 months on average) with small credit lines and at high interest rates. These loans are suitable for general customers seeking emergency cash for consumption, or micro enterprises that need emergency funding as working capital for their businesses. ... Read more
22 Jan 2020
The reduction in home ownership transfer fee in early 2020 and the Bank of Thailand’s decision to relax its loan-to-value (LTV) regulations for first-and second-time home buyers on January 20, 2020, with the aim of promoting home ownership and increasing consumer house-buying power, will likely give a boost to the residential market. In addition, such measures may be used by real estate developers as marketing tools to bolster and close their home sales in the future. Details of the new LTV regulations are as follows: ... Read more
15 Jan 2020
The Bank of Thailand recently revealed details on the improvements of calculation methods for interests and service charges, with the aim of protecting consumers in three areas. These include: 1) prepayment penalties for SME and personal loans; 2) default interests that must be based on outstanding installment of the principal only; and 3) debit and ATM card fees, wherein banks must repay such fees back to cardholders if their cards have been cancelled. ... Read more
25 Dec 2019
According to the statements of assets and liability (C.B. 1.1) of 14 Thai commercial banks as of the end of November 2019, net loans increased only slightly despite the loan drawdown season. The marginal rise in net loans was due to the negative factors stemming from loan repayment by the business sector and the fact that SME loans have not recovered.... Read more
25 Oct 2019
Net loans of commercial banks in September 2019 expanded within a limited range, due to lackluster signs of overall economic activity. Moreover, some big commercial banks have exercised a cautious approach in approving loans to ensure the quality of loans. Meanwhile, the growth of small and medium sized enterprises (SMEs) business loans remained unchanged. Hence, an expansion of retail loans continued to play a prominent role in driving the overall loan expansion. ... Read more
17 Oct 2019
Although 3Q19 earnings of Thai commercial banks show that the Thai commercial banking system overall has been able to maintain profitability from extraordinary items, cut expenses from setting aside reserves and undertake efficient cost management, KResearch has assessed that the sluggish Thai economy will continue to pressure growth of their core business income, in particular net interest income. We expect that net interest income will increase slightly by approximately 0.7 percent YoY in 3Q19, pressured by decelerated loan growth, declines in MRR and MOR, plus interest expenses after many commercial banks raised interest rates for fixed deposits and some savings deposits during 1H19. ... Read more
26 Sep 2019
Net loans of commercial banks (14 banks) in August 2019 increased only 3.84 percent YoY, the same growth as the rate registered in July 2019, which is the lowest rate in 21 months. Loan outstandings continue to slow in alignment with the overall economic sentiment. In particular, business loans are under pressure from debt repayment, while newly-approved loans expanded within a limited range. Moreover, the bond yield of the Thai market has steadily declined. Hence, the issuance of corporate bonds is an option for medium and large companies to raise funds with low cost. Even though retail loans sustain their growth, the housing loans and auto hire purchase loans decelerated due to a high base effect in the previous year. Additionally, buyers’ demands in the property and auto markets were mostly absorbed earlier. ... Read more
16 Aug 2019
New reports over the past one month may represent signals confirming that the Bank of Thailand (BOT) is in the process of carrying out two important matters to cope with hefty household debt. These include: 1) determining lending guidelines for low-income earners; and 2) preparation to set common lending standards, based on the debt service ratio (DSR). Such details will likely be announced by the BOT soon.... Read more
25 Jul 2019
Commercial loans and many types of retail loans grew at a slow pace while SME loans did not recovered in June. This caused June net loans overall to increase only THB10.7 billion or 0.09 percent MoM. When compared to the same period of last year, June net loans expanded at the sluggish pace in almost one year and a half of just 3.88 percent YoY. However, when compared to the end of 2018, net loans leaned towards 1.0 percent growth YTD. ... Read more
25 Jun 2019
Bridge loans and working capital loans for corporate accelerated in May while retail loans in almost every category, especially auto loans as well as secured and unsecured personal loans, continued to increase. Hence, the net loans of 14 Thai commercial banks as of the end of May 2019 rose by almost THB90 billion versus the previous month. Overall, the net loans increased 4.77 percent YoY and 0.89 percent YTD from the end of 2018. Nonetheless, the growth rate of housing loans, which have the biggest weight in the retail loan category, shows signs of slowing down, as well as the SME loans and long-term corporate loans, which were rebounding within a narrow range in line with the country’s economic activities. ... Read more
20 Jun 2019
KResearch expects Thailand’s Monetary Policy Committee (MPC) to keep the policy rates unchanged at 1.75 percent during its fourth meeting of 2019. The MPC is likely to weigh risk factors to financial stability in its monetary policy. In particular, household debts further accelerated in the first quarter of 2019, speeding up for three consecutive quarters, while the quality of debt begins to show deteriorating signs. These are the factors prompting the MPC to take a cautionary approach in monetary policy implementation and closely monitor the developments of such risks, whereas easing monetary policy may exacerbate the economic fragility. KResearch views that the MPC will likely follow the results of macro and micro prudential measures such as the limits imposed on loan-to-value ratio and the tightening of credit underwriting standards, and determine whether these measures can effectively oversee the Thai economic health. ... Read more
25 Apr 2019
Net loans in March 2019 expanded from the previous month but the increase fails to lift the overall loans in 1Q19 back to positive territory. Net loans declined by 0.11 percent compared to the outstanding loans at the end of 2018, attributable chiefly to a steady drop of corporate and SME loans of some large commercial banks, including commercial manufacturing industry, utilities and services, as well as real estate businesses. There are factors propping up retail loans through the entire quarter, especially housing loans because customers have hastily transferred the property ownership before the Bank of Thailand’s loan-to-value measures take effect from April 1, 2019. Moreover, the auto hire purchase loans increased in accordance with new car sales. Consumer loans also rose due to aggressive marketing campaigns by service providers via digital channels and others to penetrate each individual customer. These factors have cushioned the fall during the season of credit card loan repayment period.... Read more
12 Apr 2019
The Bank of Thailand recently sent a warning about increasing risks associated with auto loans due to competitive tactics by some banks in collaboration with some auto companies and car dealers to approve loan amount beyond the collateral value. For example, they did not deduct the discount the customers received from the car price and/or set up higher sale price than the one marked by car companies to enable customers to underpay the down payment. In some cases, the customers are not required to pay down payment at all or they can even receive a cash-back when purchasing a car. These tactics have inflated the demands for cars beyond the fundamental factors, particularly the financial capacity of some customer groups. In 2018, the total car sales rose to 1.04 million units with outstanding hire purchase loans in financial institutions (excluding captive finance) increasing 12.6 percent to THB1.07 trillion, the highest growth rate in six years.... Read more
26 Mar 2019
Net loans accelerated in February, supported by key retail loans, i.e. home and auto hire-purchase loans, in line with growing loan demand as a result of short-term factors. These include higher number of home ownership transfers before the enforcement of a new home loan measure on April 1, 2019 and continuing growth seen in car sales since late 2018. Meanwhile, unsecured loans overall continued to be inhibited by debt payments. As a result, February net loans increased THB30 billion or 0.26 percent over the previous month while corporate and SME loans grew slightly at several banks. However, February net loans declined THB30 billion when compared to that reported at the end of 2018, partly because of the business sector’s direct fund mobilization via debenture issuance of over THB100 billion during the first two months of 2019. Of that total, some debentures were issued to replace maturing debentures while over THB25 billion worth of debentures were issued for debt payments to financial institutions and business expansion. ... Read more
29 Jan 2019
In December 2018, net loans overall grew over the previous month by THB118 billion, or 1.03 percent MoM. As a result, net loans for 2018 increased 5.17 percent YoY, with net outstanding loans outstanding at THB11.63 trillion. Growth was seen in all types of loans, led by retail loans. Meanwhile, outstanding deposits rose over the previous month by THB136 billion, or 1.09 percent MoM to THB12.58 trillion. Deposits overall in 2018 grew 3.96 percent over that reported at the end of 2017, led by savings deposits at large banks. ... Read more
26 Dec 2018
The credit card business is likely to end the year with satisfactory growth, similar to other types of retail loans. Toward the year-end, competition of the credit card business is characterized by active campaigns and special promotions presented by commercial banks and non-bank operators to boost people’s spending during the festive season. ... Read more
9 Nov 2018
The Bank of Thailand has announced the criteria to supervise housing loans by adjusting certain details in the Consultation Paper and postponed the effective date to April 1, next year (from the initial schedule of January 2019). The new requirement will not cover purchase and sale contracts or down payments made prior to October 15, 2018, to provide some time for all parties to adjust to the new measures. The exemption should ease the pressure on the property market and housing loans approved by financial institutions and cushion any effects on prospective buyers or those who have already made down payments.... Read more
26 Oct 2018
In September, net loans in the Thai commercial banking system rose THB3.76 billion or 0.03 percent over the previous month, reaching THB11.345 trillion. The increase, which was supported by growth in all types of retail loans, resulted in the rise in net outstanding loans by 5.78 percent as compared to September 2017 in spite of the seasonal slowdown of loan growth in the third quarter of the year and lower business loans in line with debt repayment and fund raising via bond issuance to lock financial costs before interest rate hikes. As for SME loans, they slightly increased.... Read more
10 Oct 2018
Government policy to expand the supervision of the providers of auto-for-cash loans to be approved by the Bank of Thailand and Ministry of Finance is an important step toward more extensive supervisory scope with respect to financial service providers. With a well-defined, transparent business framework and a justifiable interest rate structure, this direction will tighten the protection of retail service users, low-income earners and self-employed persons who do not have proper access to financial institutions in the system... Read more
4 Oct 2018
The Bank of Thailand has planned to issue macro-prudential measures to control speculation in the property market, where the measures are expected to set the loan-to-value (LTV) for the second home or other specific requirements to ensure debt servicing ability of the borrowers. KResearch views that the measures will impact the property developers’ business planning in terms of their marketing and will prompt them to take a more cautious approach for their product launch, especially when the property market is now facing an oversupply of unsold property projects and a challenge from the anticipated higher financial costs amid the cyclical uptrend of Thai interest rates.... Read more
26 Sep 2018
Net loans in the Thai commercial banking system (14 commercial banks) grew THB26.4 billion to THB11.34 trillion in August, rising 0.23 percent MoM or 5.85 percent YoY. The increase was supported by all types of retail loan while SME loans began to recover somewhat. However, because there were still business loan settlements, net loans rose only marginally in August. Meanwhile, deposits contracted from the previous month by THB25.3 billion or 0.21 percent MoM to THB12.27 trillion, led by CASA deposits. As a result, deposit growth slipped to 4.73 percent YoY and 1.43 percent YTD. Liquidity in the commercial banking system also tightened as evidenced by the ratio of net loan to deposit, plus issued debt and borrowing (LTD+Borrowing Ratio) that edged up to 87.63 percent, over 87.23 percent reported for July.... Read more
25 Jul 2018
Net loans overall for June increased over the previous month by THB106 billion to THB11.31 trillion, or 0.95 percent MoM, the highest level in 1H18. When compared to the same period of 2017 and at the end of 2017, June net loans grew 5.02 percent YoY, or 2.23 percent YTD, chiefly at large banks in line with increases in corporate and retail loans while SME loans continued to decline at several banks. ... Read more
26 Jun 2018
Around 4-5 financial technology start-ups have begun providing Peer-to-Peer Lending (P2P Lending) in Thailand by focusing on retail borrowers, especially SME entrepreneurs. The online lending platform should provide these borrowers with an increased access to finance with a cheaper interest rate because the costs associated with certain lending procedures will be lower when the operation is run by a digital system. Additionally, some platforms are designed to add another layer of price competition mechanism for investors through the online auction process. At the same time, the conditions to request for loans via online platform have also been eased in terms of both collateral and duration of business operations (compared with application for unsecured loans at financial institutions).... Read more
25 Jun 2018
Net loans for May increased to almost the same level as that in April by THB65.9 billion, or 0.59 percent MoM to THB11.20 trillion. When compared to the same period of 2017 and at the end of 2017, May net loans grew 4.99 percent YoY, or 1.27 percent YTD due to the low base of last year. The increase was seen almost across all banks in line with growth in business loans, in particular for large and small businesses. Retail loans were supported by auto hire purchase and home loans.... Read more
26 Apr 2018
Net loans in March 2018 grew at a slower pace MoM, up by THB19 billion from February or 0.17 percent to THB11.07 trillion. Nonetheless, the overall lending in 1Q18 continued to expand well YoY, even though the beginning of the quarter was the period when borrowers had to repay their debts from credit card and personal loans incurred during the year-end spending spree season. An increase in lending this quarter was mainly attributed to a rise in corporate, housing and auto loans, while SME loans saw a slight increase.... Read more
26 Mar 2018
Net loans in February 2018 rose THB67 billion over January to USD11.05 trillion, thus rising 0.61 percent MoM and 4.36 percent YoY. Most increases were seen in large business loans, including working capital and term loans, while retail loan growth was mainly driven by auto financing on new and used cars as well as auto refinancing loans. SME loans had recovered gradually to marginal growth, while credit card loans slowed on loan repayments that continued to be brisk from the previous month. During the 2M18 period, loan growth had decelerated versus the end of 2017, but is expected to return to growth again by the end of 1Q18, buoyed by large corporate loan demand for use in their expansion of production capacities in line with the apparent international business recovery. Retail loans will likely perform better after subsiding somewhat on recent credit card paybacks and strong growth in auto loans. Meanwhile, competition in retail loan products presented via mobile banking apps by various banks will no doubt attract many customers soon enough, too.... Read more