According to Bank of Thailand data on household borrowing in 1Q18, the ratio of household debt to GDP dropped from 78.0 percent in 4Q17 to 77.6 percent (while the seasonally adjusted figure stood at 77.7 percent). However, the outstanding household debt in 1Q18 stepped up to THB12.17 billion, or 5.2 percent higher than the same period of 2017, compared to the 4.6-percent growth recorded in 4Q17. The surge of outstanding household debt was consistent with the high growth seen in retail lending of commercial banks and private consumption, especially spending for durable goods, namely homes and automobiles.
Auto hire purchase loans in the commercial banking system reported double-digit growth, while home loans of commercial banks and specialized financial institutions were both in the uptrend. This trend may suggest that about one half of the rising household debt was incurred from ownership in properties such as homes and automobiles and from business expansion. Meanwhile, clean loans remained a small portion of the overall outstanding household debt.
For the entire year, KResearch expects the ratio of household debt to GDP may fall to somewhere between 76.5-77.5 percent (median rate – 77.0 percent), against the 78.0-percent ratio recorded in 2017, mainly due to the higher growth of nominal GDP than the growth of the outstanding household debt. However, Thai household debt is considered at high levels and KResearch holds the view that that outstanding debt may grow at a similar or slightly higher pace than the 2017 figure of 4.6 percent. Therefore, this situation commands close monitoring of debt repayment capabilities of certain household segments, especially when the interest costs may gradually increase going forward although the overall economy and revenues of many household groups have sent positive signals.