Thai commercial banks aim for average 7pc growth in 2015 loans

BANGKOK: Thailand's commercial banks expect average loan growth of 7 percent this year, up from about 5 percent in 2014, the central bank said on Thursday, in line with expectations for an economic recovery after a coup in May ended months of political unrest.

Prolonged political turmoil in Thailand has hurt economic activity, consumption and demand for credit. The junta is banking on infrastructure projects to revive the economy, given weak exports and subdued domestic consumption.

"The loan growth of large-size banks would be 5-9 percent, with mid- and small-size banks to average 10 percent," boosted by loans to construction, property and infrastructure, Deputy Bank of Thailand Governor Tongurai Limpiti told reporters.

Southeast Asia's second largest-economy grew only 0.2 percent in the first nine months of 2014 after unrest hurt the economy in the first half and the military government struggled to restore growth after the coup.

The central bank predicts full-2014 growth of just 0.8 percent, the weakest since devastating floods in 2011.

For 2015, it projects higher economic growth of 4 percent.

Loan growth in 2014 was less than half the rate of 11 percent in 2013, Tongurai said. In 2012, loan growth was 13.7 percent.

Overall non-performing loans (NPLs) stood at 2.34 percent of total lending by September 2014, from 2.15 percent at end-2013.

Sectors badly hit by unrest, such as tourism, are picking up slowly. Consumption, which accounts for half of the economy, has been curbed by record-high household debt levels and shaky consumer confidence.

Tongurai said growth in consumer loans slowed to 7.5 percent in January-November 2014 from a year earlier. That compares with a rise of 12.9 percent in 2013 and 21.6 percent in 2012, when a state car subsidy sharply pushed up household debt.

Kasikorn Research Centre said in a report it expected household debt levels to grow further and reach 88-89 percent of gross domestic product (GDP) this year, from 85.5 percent expected for the end of 2014.

High debt is one reason why the central bank has left its policy interest rate unchanged since March last year, when there was a 25-basis point cut to help business cope with the unrest.