LENDING & CREDIT | Staff Reporter, Thailand

Thai banks urged to rein in mortgages amidst eager market takeup

Some banks have been reportedly offering loans with steeper loan-to-value ratios.

The central bank has urged Thai lenders to retain risk management practices when offering housing loans, following reports of banks doling out loans with higher loan-to-value ratios amidst aggressive market takeup.

"We urged some banks to keep good risk management for both housing loan approvals and debt collection," said Bank of Thailand governor Veerathai Santiprabhob.

"The risk appetite of some banks has increased as they wanted to grab a larger market share in the loan segment,” he added.

Also read: APAC banks grapple with growing property risks: Fitch

The central bank issued an alarm to banks after it found higher LTV levels but it has yet to monitor other factors like debt servicing ratio.

Housing loans grew 5.8% YoY in Q1, from 5.5% in 2017 and 6.9% in the preceding year. Mortgages accounted for 16.8% of total lending extended by commercial banks in Q1. 

Banks in the country have been grappling with sluggish toplines in recent months, after earnings slipped 8% in Q4, prompting them to turn to digital alternatives like blockchain technology to break growth ceilings. 

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