Household debts rise, as consumers default on loans: NESDC

[snoop1130]

Household debts rise, as consumers default on loans: NESDC

By THE NATION

 

 

In the first quarter of this year, household debt nationwide stood at Bt13 trillion, rising by 6.3 per cent and accounting for 78.7 per cent of the total GDP – the highest since the first quarter of 2017, the latest report on Thailand’s Social Situation and Outlook in the second quarter of 2019 from the National Economic and Social Development Council (NESDC) showed.

 

 The report was released on September 2. 

 

The state think-tank warned that household debt has been rising continuously since mid-2017, and in the second quarter of this year, it is likely to continue rising, as commercial banks have granted 9.2 per cent more personal loans.

 

The outstanding balance of personal loans granted by commercial banks has expanded by 11.3 per cent, the highest since the fourth quarter of 2015. Outstanding loans for homes and automobiles rose by 7.8 and 10.2 per cent respectively, decelerating from 9.1 and 11.4 per cent in the previous quarter.

 

Non-performing loans (NPLs) to individuals in the second quarter rose 10 per cent from the same period last year with an outstanding balance of Bt127.4 billion. This accounts for 2.74 per cent of total loans and 2.75 per cent of total NPLs. Outstanding non-performing loans for cars and credit cards accelerated at the rate of 32.3 and 12.5 per cent respectively, while personal loans under watch are still at a high level and credit cards with an outstanding balance of more than three months and over has started expanding. 

 

Judging from the trend of household debt in the second half of 2019, housing loans are expected to slow from the first half because the demand for new homes is expected to slow down from the first half as demand for homes is likely to drop and financial institutions are likely to impose restrictions. However, the quality of credit will possibly drop because the government and the central bank have taken measures to give low-income people easier access to loans. 

 

In a move to supervise credit expansion, the Bank of Thailand has revised several regulations for household debts, such as introducing a loan-to-value ratio for home, credit-card and car loans and is also driving the concept of sustainable business finance through the emphasis on corporate governance at an organisational level and in the broader sense. 

 

The authorities have also created opportunities for people or small entrepreneurs who cannot get loans from commercial banks by using mechanisms from state-owned specialised financial institutions, such as promoting Krung Thai Bank to provide more informal loans under the concepts of pico and nano finance as well as launching the People Financial Institution Act, NESDC said.

 

Source: https://www.nationthailand.com/business/30375728

 

-- © Copyright The Nation Thailand 2019-09-02

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[mommysboy]

People are borrowing just to pay the bills!

 

These figures are significant because household debt makes up 78.7% of total national debt.  If a telling percentage of this debt goes belly up, and it very easily could, then we are in credit crunch territory.

 

The report seems to offer the solution of making debt more widely available to those who can not currently access it; if they can't obtain a loan it's likely because they do not meet lending criteria!

Edited September 2, 2019 by mommysboy

[ExpatOilWorker]

There are two way to overcome this debt problem; through inflation and/or growth.

Unfortunately neither are in the debt holders favor at the moment and with a lot of that debt at 6-7% annual interest rate the debt burden will grow for most.

[cmsally]

Well there is already an article telling us how banks are getting around the LTV ratio!

 

Banks using "house for cash" to evade LTV

[Nobbie49]

People are borrowing just to pay the bills!
 
These figures are significant because household debt makes up 78.7% of total national debt.  If a telling percentage of this debt goes belly up, and it very easily could, then we are in credit crunch territory.
 
The report seems to offer the solution of making debt more widely available to those who can not currently access it; if they can't obtain a loan it's likely because they do not meet lending criteria!

Sorry but your data confuses national with private debt: household debt is PRIVATE debt not national debt, the latter stands at 40% of GDP, private debt at 78%. Both are healthy percentages given that debt is a relatively static figure whereas GDP is what the country produces each and every year.


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[mommysboy]

47 minutes ago, Nobbie49 said:

Sorry but your data confuses national with private debt: household debt is PRIVATE debt not national debt, the latter stands at 40% of GDP, private debt at 78%. Both are healthy percentages given that debt is a relatively static figure whereas GDP is what the country produces each and every year.


Sent from my iPhone using Thailand Forum - Thaivisa mobile app

Sorry- I meant private debt is 78% of GDP.  And it is significant that the rise in private debt is both increasing quickly, and outstripping rises in GDP.  Further, NPL's are on the up, particularly for cars and credit cards.  It's not a pretty picture.

 

It just fits in with what I am experiencing within my extended family, and on a local level.  It seems to me people are earning less, and so spending less.  I personally believe that GDP never accurately reflects the lot of the common man, and his daily needs.

 

 

Edited September 2, 2019 by mommysboy

[Bangkokazy]

(It's a saying, which goes back today in many homes)
It is better to live like a king for a few days, than to pay back what you have borrowed.

[RichardColeman]

3 hours ago, snoop1130 said:

In the first quarter of this year, household debt nationwide stood at Bt13 trillion, rising by 6.3 per cent

In all honesty, isn't this exactly what the 'new' government wanted ? The common Thai person helping out with the national economy crisis of lack of exports and tourists ?

[NCC1701A]

i think the person who made this chart also picked the tile in the house i am renting.

Edited September 2, 2019 by NCC1701A

[30la]

12 hours ago, snoop1130 said:

The state think-tank warned that household debt has been rising continuously since mid-2017, and in the second quarter of this year, it is likely to continue rising, as commercial banks have granted 9.2 per cent more personal loans.

Why? The banks will always be the winners of this unequal race!
I'll give you 100 Baht, you give me a guarantee of 1,000 Baht, whatever happens I remain the winner!

The time will come for this bubble to explode, the damage to the poor will be invaluable!

[ExpatOilWorker]

11 hours ago, mommysboy said:

Sorry- I meant private debt is 78% of GDP.  And it is significant that the rise in private debt is both increasing quickly, and outstripping rises in GDP.  Further, NPL's are on the up, particularly for cars and credit cards.  It's not a pretty picture.

 

It just fits in with what I am experiencing within my extended family, and on a local level.  It seems to me people are earning less, and so spending less.  I personally believe that GDP never accurately reflects the lot of the common man, and his daily needs.

 

 

On top of that, the demographics is working against Thailand. 

 

Those numbers mean that more than a quarter of Thailand’s people will be over 60 by 2030—and most will be poor. The International Monetary Fund says a shrinking labor force will hold back economic growth by as much as a full percentage point every year for the next two decades.

 

https://www.bloomberg.com/graphics/2019-thailand-baby-bust

 

[bronzedude]

This is good news or something for the newly formed "fake news" government committee to look into. 

[Srikcir]

16 hours ago, snoop1130 said:

However, the quality of credit will possibly drop because the government and the central bank have taken measures to give low-income people easier access to loans. 

That policy sounds like it will result in further NPL's (nonperforming loans) which will require the government to provide for more personal borrowing - not a sustainable economic policy!

[MartiniMan]

19 hours ago, mommysboy said:

People are borrowing just to pay the bills!

 

These figures are significant because household debt makes up 78.7% of total national debt.  If a telling percentage of this debt goes belly up, and it very easily could, then we are in credit crunch territory.

 

The report seems to offer the solution of making debt more widely available to those who can not currently access it; if they can't obtain a loan it's likely because they do not meet lending criteria!

Yes they are incompetent and never been schooled properly so do not have a adequate education

For years it has totally confused me why thais get all this credit but a foreigner cannot access it

Every day I see new cars - red plates - parked outside of their business investments that go sour after the first day of opening

By sour i mean never ever having a customer

But hey in a 'me too' economy where you just copy your neighbour and everyone fights over crumbs what could possibly go wrong

No planning permission

No business ettiqute

No common sense

No limits on credit because they are from this country

Its just bonkers! Every now and again I go to a ATM and the receipt is left - I have never seen a balance over 2000 baht and the withdraw is always what I imagine was everything (say 4000 baht or so)

Basically they live hand to mouth and have no idea how to run a business just copy a guy next door

If you wanted to screw a whole area over you can just set aside funds to setup dummy stores - let them all copy you and put all their cash in then change the sign and bring your real business out

To be fair its the only way dog eat dog so if you dont want to be copied first setup your decoy let them all copy you then flip the script works a charm everytime they lose everything but hey its ok can always get another loan cant you buddy

[bkk6060]

Was in CM recently they had a car show at the convention center.

I was very surprised by the number of Thais buying new cars.

The Toyota set up had 4 desks with sales people and there was a waiting line.

Just about every make of car had buyers going on.

1 million to 1.5 million b cars flying out the door.

 

Edited September 3, 2019 by bkk6060

[Cadbury]

20 hours ago, snoop1130 said:

Household debts rise, as consumers default on loans

The recent government stimulus package included easy access loans to workers, small business and farmers. It so happened to coincide with decline in new car sales.

Someone behind the scenes seems to be pulling the levers to help the car dealers and drive the household debt higher.

 

[Fred white]

4 hours ago, Srikcir said:

That policy sounds like it will result in further NPL's (nonperforming loans) which will require the government to provide for more personal borrowing - not a sustainable economic policy!

That's part of what caused the housing bubble in the US