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.
Deposits in May 2019 dropped over THB30 billion or a contraction of 0.25 percent after a surge in the previous month. Consequently, the total deposits in the system were up only 3.23 percent YoY and 2.45 percent YTD, respectively. The drop in deposits in May over-month was attributed to the fact that a large number of fixed deposit accounts of a major bank reached maturity. Moreover, current accounts and savings accounts at 3-4 commercial banks saw funds outflows during the same period.
The uptick of loans against the downward trend of deposits caused loan to deposit ratio + borrowing (L/D+BE) as of May 2019 to climb to 92.36 percent from 91.59 percent in April 2019 (still lower than the figure recorded late last year at 92.71 percent). Nonetheless, it is expected that commercial banks will be able to well manage their financial liquidity to ensure sufficient availability of funds to match the timing of their loan approvals.
For the outlook of loan approval in the remainder of this year, KResearch is revising our projections on loan growth of commercial banks (from our current projections of 5.0 percent) in accordance with Thailand's mild economic recovery in the second half of this year, which will likely impact the borrowing potential of some customer segments, especially the borrowers of SME business loans and retail loans with long-term obligations such as housing loans. In the meantime, close attention should be paid to the disbursement of corporate loans, which depends on the overall investment sentiment and the progress of the government's mega project investments.
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