Growth will be driven by consumer loans.
Maybank Kim Eng previously noted that corporates preferred to raise funds in the debt market rather than bank loans due to lower interest rates. Banks charge around MLR+2-3% (totaling almost 10%), while in the B/E market coupon rate is about 5%, based on our observation.
As a result, 9M16 bank loans to corporates (including SMEs) slowed to only 1.4% YoY growth, while new debt issuance rose 14% YoY in the same period.
However, Maybank Kim Eng notes that B/E default by some corporates signals a liquidity crunch in the market. B/E buyers now face the risk of being unable to rollover their instruments, leading to more B/E defaults. A total of THB220b in B/Es are due by Sep-17.
“A liquidity crunch affecting THB220b is not small so the government may step in by encouraging banks to inject liquidity to those troubled companies. We see the loan growth outlook becoming more positive. Our loan growth projection for 2017F is 6% YoY (vs +3% in 2016F), mostly driven by consumer loans,” the brokerage firm adds.
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