Net loans in October 2019 decreased from the previous month by 87.7 billion Baht amid the pressure on loans at almost all banks, especially from debt repayment by the corporate sector, SME business operators and the government. Nonetheless, retail loans, namely, personal loan and other unsecured loans without collateral, continued to increase due to seasonal factors. Auto hire purchase loan and mortgage loan rose from the previous month, albeit at a slower pace. Consequently, outstanding net loans in October 2019 slowed to 11.702 trillion Baht, an increase of only 2.40 percent YoY – the lowest rate in over two years – and decelerating from 3.92 percent growth YoY in September 2019. The trend is a reflection of poor economic performance, which restrains the recovery of borrowers' demands to withdraw funds from their loan facility.
Total deposits in October 2019 increased from the previous month by over 136 billion Baht, in contrast to the drop in loans. The rise in deposits has eased financial liquidity in the commercial banking system. Loan to deposit ratio dropped to 95.1 percent, after remaining at 96.8 percent for the prior three months. When compared to the same period last year, total outstanding deposits in October rose 4.02 percent YoY to 13.006 trillion Baht, driven by an increase in deposits at some large commercial banks, especially government deposits in current and savings accounts as well as special short-term fixed deposits. Nonetheless, it is noted that the outstanding deposits of other commercial banks fell in line with the reduced number of deposit campaigns that commercial banks launched in October 2019. Most such deposit campaigns cover a period of no more than 12 months.
Regarding the outlook for the final two months of 2019, in spite of the drawdown of loan facility due to seasonal factors, overall loan growth in 2019 may be lower than 4 percent as earlier predicted by KResearch. Credit card loan and personal loans are expected to ramp up during the final months of the year, while some businesses may gradually withdraw funds from their short-term loan facility for use as working capital. However, since loans during the past 10 months grew at a much lower rate than initially expected, without explicit hints at any supportive factors next year, demand for corporate loans and SME business loans this year is likely to expand at a rate less than the initial projection. Overall loan growth in 2019 may be lower than KResearch's projection of 4.0 percent, in alignment with the decelerated growth of Thailand's GDP when compared to the previous year.