Thai banks' loans seen growing at slower 3-4% rate this year: central bank

[BANGKOK] Thailand's central bank expects commercial bank lending to grow at a lower rate of 3-4 per cent this year after rising 4.3 per cent last year, as demand for credit remains weak because of the slow economic recovery, a senior official said on Thursday.

Southeast Asia's second-largest economy has struggled to expand since the military took power in May 2014 to end months of political unrest. Pivotal exports and domestic demand remain stubbornly sluggish amid high household debt levels.

Bank lending expanded 3.3 per cent in the first half from a year earlier, the slowest pace in several years, Don Nakornthab, senior director of the Bank of Thailand (BOT), told reporters.

Don said loans should increase in the second half as economic conditions improve, helped by government spending and tourism. "But they may not grow much as banks are still cautious about lending," he said, as bad loans are on the rise.

In the second quarter, non-performing loans rose to 2.72 per cent of total lending from 2.64 per cent in the first, with sour debt in both corporate and consumer loans increasing.

Liquidity is ample but demand for loans is sluggish and that's one reason why the central bank has not cut its policy interest rate since April 2015, despite greater downside risks to the economy. "The growth constraints are not related so much to monetary conditions," BOT Governor Veerathai Santiprabhob told Reuters. "Liquidity is not a concern in a macro sense."

REUTERS