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25 Apr 2019

Financial Institutions

Net loans in March 2019 increase MoM… but 1Q19 sees bearish sentiment which persists from late 2018 due to business loan repayment (Business Brief No.3798)

KResearch has summarized the information about loans, deposits and liquidity of 14 Thai commercial banks as of the end of March 2019 per the Bank of Thailand's Summary Statement of Assets and Liabilities as follows:

  • Net loans in March 2019 expanded from the previous month but the increase fails to lift the overall loans in 1Q19 back to positive territory. Net loans declined by 0.11 percent compared to the outstanding loans at the end of 2018, attributable chiefly to a steady drop of corporate and SME loans of some large commercial banks, including commercial manufacturing industry, utilities and services, as well as real estate businesses. There are factors propping up retail loans through the entire quarter, especially housing loans because customers have hastily transferred the property ownership before the Bank of Thailand's loan-to-value measures take effect from April 1, 2019. Moreover, the auto hire purchase loans increased in accordance with new car sales. Consumer loans also rose due to aggressive marketing campaigns by service providers via digital channels and others to penetrate each individual customer. These factors have cushioned the fall during the season of credit card loan repayment period.

                      Overall, net loans in March 2019 increased by THB16.5 billion or 0.14 percent from the previous month. However, when compared the figures from the corresponding period last year, the growth of net loans in March decelerated to 4.98 percent YoY, versus 5.02 percent YoY in February.  KResearch views that an expansion of net loans in Thailand's commercial bank hinges on a clearer sign of the Thai economic recovery in 2H19. KResearch thus maintains our projected growth rate of net loans in Thailand's commercial bank system this year at 5.0 percent.  Nonetheless, close attention will be paid to the amount of corporate loan drawdown in the future as well as the impacts from the Bank of Thailand's LTV measure, effective from the beginning of April this year, on housing loan which accounts for a half of the retail loan portfolio of commercial bank system.
  • Savings in March 2019 dropped across the board, resulting in the decline of overall savings from the previous month by THB45 billion or 0.36 percent MoM, translating into a deceleration to 3.37 percent growth YoY versus 4.23 percent growth YoY in February 2019.  KResearch attributes the deceleration of outstanding savings to the fact that commercial banks have managed their liquidity to balance it with the demand for loans, which have shown no sign of acceleration from the beginning of 2019. Moreover, many commercial banks have attached importance in maintaining high proportion of savings account in their deposit portfolio because it bears lower interest costs than other types of deposit accounts.
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    Due to the aforesaid loan approval situation in 1Q19, Loan to Deposit+Borrowing (L/D+BE) as of March 2019 was lower to 92.29 percent, easing somewhat from 92.71 percent as of the end of 2018. For the outlook in 1H19, KResearch views that financial liquidity in Thailand's commercial bank system will total between THB3.5-3.8 trillion, or around 21 percent of total assets, which is considered high enough and sufficient for the overall commercial bank operations.​ 



Financial Institutions