Thai banks cautious on loan growth as economy slows

Thai banks cautious on loan growth as economy slows

BANGKOK - Thailand's big banks are feeling the impact of the country's economic slowdown and are tightening loan procedures amid a rise in bad debts, falling exports and lower-than-expected consumption.

Top lender Bangkok Bank, which reported a better-than-expected 18 per cent rise in quarterly net profit on Thursday, saw non-performing loans (NPL) up slightly to 2.4 per cent of total loans from 2.3 per cent at the end of 2012.

The rise in bad debt is in line with the industry. Leading car loan lender Tisco Bank said its NPLs rose to 1.45 per cent at the end of the second quarter from 1.2 per cent at the end of 2012, mainly due to bad debt in the used car market.

Siam Commercial Bank (SCB), Thailand's third-largest lender by assets, said this week it had decided against revising up its 2013 loan growth of 13 per cent on signs the Thai economy was slowing.

"We had earlier planned to raise our target because we had a very strong loan growth in the first half. But growth should be slower in the second half," SCB President Kannikar Chalitaporn told reporters, adding rising risks mainly stemmed from the global economy.

SCB, which posted loan growth of 12 per cent in the first half, would be more careful about giving loans to companies in the commodities sector and those which export to China, Kannikar added.

China's growth rate slowed to 7.5 per cent in the second quarter, the ninth quarter in the last 10 that expansion has weakened, in a setback for companies betting on a continued boom in the world's second-biggest economy.

SCB, fourth-ranked Kasikornbank and fifth-ranked Bank of Ayudhya are due to release quarterly earnings on Friday. They are expected to post 15-25 per cent increase in net profit.

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