RETAIL BANKING | Cesar Tordesillas, Thailand

Thai banks compete for deposits

Thailand's commercial banks are fiercely competing for deposits as lending expanded 14.2 percent in the second quarter against 10.1 percent year-on-year growth of deposits.

Massive loan demand sparked needs for deposits. Banks launched special programmes to draw deposits and issue bills of exchange. In the second quarter, commercial banks' ratio of loans to deposits/bills of exchange rose to 92.4 percent, compared with 90.2 per cent in the first quarter.

In the second quarter, banks' lending expanded by 14.2 per cent over the same period last year and 3.8 percent from the previous quarter. However, their deposit and B/E base expanded by only 10.1 per cent year on year and 1.5 percent quarter on quarter.

In the second quarter, consumer loans expanded by 16.9 per cent year on year, while business lending grew by 13.1 percent.

"What we witnessed in the second quarter was fiercer competition, and mostly they are competing in terms of deposits," Navaporn said.

She asserted that it was possible that loan growth in the second half would slow in light of a worsening global economic outlook.

So far, Thai banks have been financially strong. Despite higher loan extension, their aggregate non-performing loans dropped by Bt7.2 billion to Bt260 billion at the end of the second quarter. While gross NPLs accounted for 2.5 percent of outstanding loans, net NPLs were at 1.2 per cent.

Delinquent loans also dropped to 1.9 per cent, against 2 per cent in the first quarter, showing the absence of negative impacts on Thai businesses from the euro crisis.

In the second quarter, commercial banks showed combined net profit of Bt49.1 billion, up 20.7 percent from the previous quarter.

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