2Q21 Loans and Deposits Projected to Grow at Slower Pace, Reinforcing Signals of Economic Fragility (Business Brief No.3942)

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 custom​ers who still can afford residential units.

The overall deposits in the Thai commercial banking system fell by THB109 billion MoM at the end of June 2021, the first drop in five months across most commercial banks. As a result, the overall deposits grew only 4.0 percent YoY at the end of 2Q21, versus the 5.0 percent YoY growth reported for 1Q21. The slower growth in 2Q21 deposits was due to a low base for 2Q20 and the fact that deposits were probably used to invest in other options that offered higher returns. Additionally, more deposits may have been withdrawn by business and retail customers of banks to bolster their liquidity and cope with the COVID-19 situation.

Looking into 2H21, KResearch expects that potential customers, who have sufficient income will become more cautious towards applying for loans amid economic uncertainties. As a result, loan growth may approach approximately 4.5 percent at the end of 2021, which would be almost on par with that reported for mid-2021 and lower than the 5.8 percent growth recorded in 2020.