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.
February deposits grew faster than loans, but this does not reflect price competition, because only a few banks launched new campaigns for their special savings deposits. This coupled with growing deposits in savings and current accounts caused February deposits overall to increase THB46.6 billion or 0.37 percent over the previous month although deposits at some large banks dropped in line with maturing fixed deposit accounts. Price competition among banks has not emerged in line with the Bank of Thailand's signals to reduce its weight in tightening its monetary policy pending clarity in various economic and political factors.
It is expected that liquidity within the Thai commercial banking system will remain sufficient during 1H19 amid uncertainties surrounding external and internal sectors after the general elections. However, such factors may become clearer towards the end of 2Q19, suggesting that loan demand will likely be static or not increase substantially over the next 2-3 months. In addition, sluggish Thai shipments may cause loans for certain export categories to slow down while the business sector has more alternatives to mobilize funds.