Net loans of commercial banks in September 2019 expanded within a limited range, due to lackluster signs of overall economic activity. Moreover, some big commercial banks have exercised a cautious approach in approving loans to ensure the quality of loans. Meanwhile, the growth of small and medium sized enterprises (SMEs) business loans remained unchanged. Hence, an expansion of retail loans continued to play a prominent role in driving the overall loan expansion.
Due to the weak signs of corporate loan drawdown, the outstanding net loans at the end of September 2019 increased from the previous month by 13.2 billion Baht to 11.79 trillion Baht, which is lower than the increase of 26.9 billion Baht in August 2019. Nonetheless, because of the low base effect in September last year, the growth rate of loans in September this year rose 3.92 percent YoY (up from the growth of 3.84 percent YoY in August 2019), and up 1.35 percent YTD when compared to the end of 2018.
Total deposits in September 2019 continued to increase from the previous month at a rate aligned with the loan growth. Nonetheless, there are some noteworthy trends. For example, the growth of long-term fixed deposits/special fixed deposits of some big commercial banks accelerated. Also, there are some banks that saw a drastic drop in deposits. The trend is in line with an increase in long-term financing of some commercial banks. When compared to the same period last year, the total outstanding deposits in September rose 4.84 percent YoY, the highest level in 11 months.
KResearch expects that the Thai commercial banks will be able to sustain the growth within range of 4.0 percent in 4Q19. Although the loan growth is conditional upon the overall economic environment, it is likely driven by seasonal factors during the final months of the year (which is the festive spending and business planning season). Therefore, the amount of loan drawdown - for both corporate and retail loans - is expected to increase significantly during the final months of the year.