Financial markets/Financial institutions : Bank Loans

Overview

• Loans are the most important asset in the Thai banking system, accounting for over 70 percent of all assets. Interest on loans, in turn, is the most important source of revenue, producing 60 percent of the total.

• The banking system's main competitors in the loan market are specialized financial institutions (SFIs) and other non-bank lenders. These lenders emphasize SMEs and customers in the low- to middle-income brackets, but they have lately been seeking a wider market. In order to reduce risks, particularly in times of a sluggish economy, SFIs and non-bank lenders are targeting the higher-income customers, the same group targeted by commercial banks.

• Major impacts on loan extension include economic conditions, interest rates, competition among banks and other lenders, fund mobilization in the debt and stock markets, and the lending policies of commercial banks.