Thailand Safe From Property Bubble, Says Banker

[terryp]

LOL ...a Banker telling the truth , that will be a first...going to sell all my assets fast

Edited May 8, 2013 by terryp

[jimbeam1]

Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said.

A 10% rise in individual NPL, time to cancel those weekday tee-offs, old boy.

That is a really bad indicator - 11% higher than last year, so what was last year 10%??? They are making bad loans on overpriced property people can't afford.... Ummm that is the beginning of a bubble...

These are personal loans. Although what they are secured on, who knows, cars, chanotes????

I think that you will find the answer is Chanotes. My girlfriends mother just took out a loan on a house they are building in Udon. Secured on the strength of Chanotes she holds on land. Loan given by local government bank.

jb1

[NeverSure]

From above:

"Important to note for foreign investors is that the Real Estate market is showing signs of price bubbles. Since 2009 real estate prices have surged 36% – ahead of a cumulative inflation rate of 15% over the same period. The middle classes and low income families will have a more difficult time owning homes if land and real estate prices continue this trend."

This is EXACTLY what happened in the US before the crash. Speculators drove the price of housing beyond the ability of the real homeowners to purchase. When there was no last fool able to buy, it collapsed.

If the average Thai can't buy, it bursts. And it will.

[TroyT]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

Naam you are as blind as a bat while pompously leading people astray. Who appointed you the guru of finances for the financial forums, when you know nothing of macroeconomics?

Just LOOK at your posts. They are smart ass remarks, not real information backed by facts. You think you are the master of the one-liner, but you actually say nothing beyond attempting to make yourself sound important.

You are also dead wrong. You should go hide somewhere before you cost some poor blokes their life savings.

How about some facts instead of pompous one-liners?

Link March 9, 2013 Emphasis mine.

"...Thai state controlled banks are in trouble. The SME Bank and IslamBank have combined bad debt of nearly Bt80 billion. If privately owned they would already be bust! Krung Thai Bank’s lending portfolio has high exposure to government-related projects, The government Housing Bank is lending to subprime homeowners, similar to the US subprime home market.

But the real story is the Bank for Agriculture and Agricultural Cooperatives (BAAC). The debt incurred by the rice and other crop intervention schemes now stands at a whopping Bt601,072 billion – and that’s not a typing error. Equal to 0.5% of Thailand’s GDP!

In the end the government will have to fiscalise the debt of the state-owned banks. Fresh figures indicate Bt700 billion already.

Unfortunately the monetary policy is focusing on boosting growth rather than safeguarding price stability. Incredibly, the government sees little risk in asset price bubbles?

In the “Keeping an eye on Excesses” report (27.02.12) asset prices in Thailand are growing to create financial imbalances. The BOT still keeps the interst rate below inflation, yielding a negative rate of 0.85%. Between 2005 and present the BOT has maintained, on average, a negative interest rate of 0.35%. This reflects the governments pro-growth policy and has forced money into speculative investments.The Thai rate is already one of the lowest in the region and asset price bubbles are forming, yet FInance Minister Kittiratt Na Ranong still favours further rate cuts.

The Stock Exchange of Thailand (SET) has twice doubled since 2009, rising from 400 in 2009 at the height of the US financial crisis, to 800 in mid-2011. Now it has almost doubled itself again by passing the 1,500 mark. Jarumporn Chotkiasathira has come out to warn of at least 120 stocks whose prices and valuations indicate a ‘bubble’.

Banking authorities are ignoring this and doing nothing to stem inflows into the market.

Important to note for foreign investors is that the Real Estate market is showing signs of price bubbles. Since 2009 real estate prices have surged 36% – ahead of a cumulative inflation rate of 15% over the same period. The middle classes and low income families will have a more difficult time owning homes if land and real estate prices continue this trend.

Bank loans to individuals have been jumping sharply from 15% in 2005 to almost 25% presently. As a result, Thai household debt is rising at an alarming rate. The National Economic and Social Development Board has come up with an outstanding household debt figure of Bt2.9 trillion:

21% Car loans

33% Motorcycle loans

29% Personal loans

The asset price bubbles and financial imbalances in the private and public sectors are worrying signs that should be dealt with early. Global economic recovery is slim, as evidenced by negative growth rates in the US, EU and Japan int he last quarter of 2012.

The Thai government should cut its populist and mega-project spending. The BOT must take the punch bowl away instead of waiting for the party to be over.

These inflated prices cannot be maintained. Better investment value can be found easily in other parts of Asia."

A post based on facts and realities ... or as near as such a thing exists.

Do you know? Indeed does anyone really know? The total inventory that the banks still have on their books [written at totally unrealistic 'values'] from the '97 problem? I haven't been to an auction since the first farce I attended a couple of years back. Out of 315 lots only 10 sold. The reason only ten sold was predominantly due to shills from the banks concerned who 'bid' against genuine buyers or simply waved lots through; preventing anyone from bidding. If they sell then their 'assets' have to be written down in their books to their true value - ouch!.

[AnotherOneAmerican]

Do you know? Indeed does anyone really know? The total inventory that the banks still have on their books [written at totally unrealistic 'values'] from the '97 problem? I haven't been to an auction since the first farce I attended a couple of years back. Out of 315 lots only 10 sold. The reason only ten sold was predominantly due to shills from the banks concerned who 'bid' against genuine buyers or simply waved lots through; preventing anyone from bidding. If they sell then their 'assets' have to be written down in their books to their true value - ouch!.

Banks in Thailand aren't allowed (by law) to sell repossessions for less than the outstanding loan.

This is not a 'shill', they are just pointing out the outstanding loan amount which gives the minimum sale price for the property.

[thailand49]

This song was sung before! Thai official confirm sometime ago that it is o.k. to tell a lie for the good so don't panic while they move their assets to protect themselves. If they tell you it is safe that means it isn't? I myself am waiting for the whole thing to burst so the Baht falls and falls again and again.

[Thai at Heart]

Do you know? Indeed does anyone really know? The total inventory that the banks still have on their books [written at totally unrealistic 'values'] from the '97 problem? I haven't been to an auction since the first farce I attended a couple of years back. Out of 315 lots only 10 sold. The reason only ten sold was predominantly due to shills from the banks concerned who 'bid' against genuine buyers or simply waved lots through; preventing anyone from bidding. If they sell then their 'assets' have to be written down in their books to their true value - ouch!.

Banks in Thailand aren't allowed (by law) to sell repossessions for less than the outstanding loan.

This is not a 'shill', they are just pointing out the outstanding loan amount which gives the minimum sale price for the property.

Weren't thousands of said properties transferred out of the banks to the asset management corp?

[axact]

Not surprising, with over three Quarters of the population in the poor house, there is only basically one section of the population able to buy, I have plenty of units ,houses in the estate around me, most are vacant, since being built seven years ago, some are now getting that Adams family haunted look about them.

But thats because there's an expat living in the area

If he says there is no going to be a problem & him being a big wbanker then their is no problem. OK

I'm off to the Kashikorn to borrow on a few houses

[Tatsujin]

Any moment now there's another banker who's going to wade in with his version of reality.

You spelt that wrong, it's "banker" with a "w" . . .

[ratcatcher]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

This isn't Thai bashing but banker bashing, which given their piss poor record and the damage they've caused most of us over the past few years is perfectly justified.

Only one letter makes the difference between banker and <deleted>. But that's only regarding the spelling.

Tatsujin beat me to it

Edited May 8, 2013 by ratcatcher

[Tatsujin]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

Naam you are as blind as a bat while pompously leading people astray. Who appointed you the guru of finances for the financial forums, when you know nothing of macroeconomics?

Just LOOK at your posts. They are smart ass remarks, not real information backed by facts. You think you are the master of the one-liner, but you actually say nothing beyond attempting to make yourself sound important.

You are also dead wrong. You should go hide somewhere before you cost some poor blokes their life savings.

How about some facts instead of pompous one-liners?

Link March 9, 2013 Emphasis mine.

"...Thai state controlled banks are in trouble. The SME Bank and IslamBank have combined bad debt of nearly Bt80 billion. If privately owned they would already be bust! Krung Thai Bank’s lending portfolio has high exposure to government-related projects, The government Housing Bank is lending to subprime homeowners, similar to the US subprime home market.

But the real story is the Bank for Agriculture and Agricultural Cooperatives (BAAC). The debt incurred by the rice and other crop intervention schemes now stands at a whopping Bt601,072 billion – and that’s not a typing error. Equal to 0.5% of Thailand’s GDP!

In the end the government will have to fiscalise the debt of the state-owned banks. Fresh figures indicate Bt700 billion already.

Unfortunately the monetary policy is focusing on boosting growth rather than safeguarding price stability. Incredibly, the government sees little risk in asset price bubbles?

In the “Keeping an eye on Excesses” report (27.02.12) asset prices in Thailand are growing to create financial imbalances. The BOT still keeps the interst rate below inflation, yielding a negative rate of 0.85%. Between 2005 and present the BOT has maintained, on average, a negative interest rate of 0.35%. This reflects the governments pro-growth policy and has forced money into speculative investments.The Thai rate is already one of the lowest in the region and asset price bubbles are forming, yet FInance Minister Kittiratt Na Ranong still favours further rate cuts.

The Stock Exchange of Thailand (SET) has twice doubled since 2009, rising from 400 in 2009 at the height of the US financial crisis, to 800 in mid-2011. Now it has almost doubled itself again by passing the 1,500 mark. Jarumporn Chotkiasathira has come out to warn of at least 120 stocks whose prices and valuations indicate a ‘bubble’.

Banking authorities are ignoring this and doing nothing to stem inflows into the market.

Important to note for foreign investors is that the Real Estate market is showing signs of price bubbles. Since 2009 real estate prices have surged 36% – ahead of a cumulative inflation rate of 15% over the same period. The middle classes and low income families will have a more difficult time owning homes if land and real estate prices continue this trend.

Bank loans to individuals have been jumping sharply from 15% in 2005 to almost 25% presently. As a result, Thai household debt is rising at an alarming rate. The National Economic and Social Development Board has come up with an outstanding household debt figure of Bt2.9 trillion:

21% Car loans

33% Motorcycle loans

29% Personal loans

The asset price bubbles and financial imbalances in the private and public sectors are worrying signs that should be dealt with early. Global economic recovery is slim, as evidenced by negative growth rates in the US, EU and Japan int he last quarter of 2012.

The Thai government should cut its populist and mega-project spending. The BOT must take the punch bowl away instead of waiting for the party to be over.

These inflated prices cannot be maintained. Better investment value can be found easily in other parts of Asia."

Finally, someone who makes sense! Thanks NeverSure!

[Tatsujin]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

This isn't Thai bashing but banker bashing, which given their piss poor record and the damage they've caused most of us over the past few years is perfectly justified.

Only one letter makes the difference between banker and <deleted>. But that's only regarding the spelling.

Tatsujin beat me to it

Yeah, sorry . . . I like my sarcastic little one-liners . . .

[NeverSure]

"Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said. (MCOT online

news)"

Just to head this one off at the pass: NPL's increase in accordance with the growth in lending and since personal loans grew year on year, the forecast NPL figure is trending downwards, as is the reported property NPL figure.

As usual, you missed the point. The POINT is the overwhelming amount of loans being made, many of which are putting Thai households under water.

Of COURSE there are more loans and that is the problem. Easy lending will bring the house down.

Why don't you just sit back and learn?

[Naam]

Bank loans to individuals have been jumping sharply from 15% in 2005 to almost 25% presently. As a result, Thai household debt is rising at an alarming rate. The National Economic and Social Development Board has come up with an outstanding household debt figure of Bt2.9 trillion:

21% Car loans

33% Motorcycle loans

29% Personal loans

yada yada yakety-yak

-car loans = property bubble?

-motor cycle loans = property bubble?

-personal loans = property bubble?

-household debt = property bubble?

-Stock Exchange of Thailand (SET) = property bubble?

-mega-project spending = property bubble?

-rice price intervention = property bubble?

title of thread: Thailand Safe From Property Bubble, Says Banker

[chiang mai]

"Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said. (MCOT online

news)"

Just to head this one off at the pass: NPL's increase in accordance with the growth in lending and since personal loans grew year on year, the forecast NPL figure is trending downwards, as is the reported property NPL figure.

As usual, you missed the point. The POINT is the overwhelming amount of loans being made, many of which are putting Thai households under water.

Of COURSE there are more loans and that is the problem. Easy lending will bring the house down.

Why don't you just sit back and learn?

I've nothing to learn from you NS other than how to rant aimlessly and relentlessly on the same subject, without any supporting evidence of my claims and I don't wish to go there.

[Thai at Heart]

The problem is simple to solve.

Instead of worrying about peoples ability to pay for what has already been built, I would rather they stopped building so the existing stock can be sold.

People defaulting on 30k GBP loans is a drop on the ocean versus mortgage lending in the west. The issue is developers holding potentially billions of baht of unwanted property.

[NeverSure]

"Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said. (MCOT online

news)"

Just to head this one off at the pass: NPL's increase in accordance with the growth in lending and since personal loans grew year on year, the forecast NPL figure is trending downwards, as is the reported property NPL figure.

As usual, you missed the point. The POINT is the overwhelming amount of loans being made, many of which are putting Thai households under water.

Of COURSE there are more loans and that is the problem. Easy lending will bring the house down.

Why don't you just sit back and learn?

I've nothing to learn from you NS other than how to rant aimlessly and relentlessly on the same subject, without any supporting evidence of my claims and I don't wish to go there.

I'm the one that's posting links and backing up my statements. You are content to post ignorance.

You are adamant in your ignorance.

How can posting links, and putting the number out there be "ranting aimlessly" when that's all you're actually doing?

I'm working hard to back up my statements.

You need to just sit back and learn.

[chiang mai]

You post links to obscure and little known periodicals whose writers are unknowns, and you use articles from the Bangkok Post/Nation and claim such things are living proof that your theories are correct, absurd that you think anyone would be convinced by such things, stop wasting your time and ours..

[AnotherOneAmerican]

Gotta say, Naam never really says anything one way or the other, just disses everyone else that dares venture an opinion.

In my opinion, he would get more respect if he did make the occasional judgement on the subject and not the poster.

Edited May 8, 2013 by AnotherOneAmerican

[Naam]

let's keep up the good job:

-bar fines up = property bubble!

-11.8% more ladyboys in Pattaya's Walking Street = property bubble!

-production of Mekong stopped = property bubble!

-foreigners called foreigners (farang) = property bubble!

-too many Russians in Phuket and Pattaya = property bubble!

-baht bus fares +5Baht = property bubble!

best of all:

"Since 2009 real estate prices have surged 36%" = (source National Enquirer?)

[HUAHIN62]

Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said.

A 10% rise in individual NPL, time to cancel those weekday tee-offs, old boy.

Bangkok post today: "Non-performing personal loans are expected to rise this

quarter due largely to a summer spending spree ahead of the start of the school

term.

However, the percentage will be maintained at the current level of 3% of

overall outstanding credit of 252 billion baht because of personal loan

growth.........

KBank, the country's fourth-largest lender by assets, aims to expand its

outstanding personal loans from 13-15 billion baht this year, while it plans

aggressive growth of 43% in credit lines from 2.8 billion to 4 billion baht.

It aims to keep bad personal loans static at 1.9% and will focus on customers

earning at least 15,000 baht per month."

How much can you lend someone living on 15k per month?

Thai at heart I was giving the facts. A 11% (Payboys 10%) increase to 1,9% NPL's at K bank is still acceptable. Many of the personal loans are for small amounts and short term, then B15k is enough.

Thailand banks still have many properties kept over from the previous dip, much the same as in the US. Everyone is talking about a housing recovery in the US but there are +-1,5 mil homes on the banks books which they cant sell untill the prices increase (was underwater and the banks will make a loss on them if sold now). So now the media and banks are trying to create the impression there is a property boom to talk up the prices, if these houses are put onto the market there would be an over supply and prices would go down. So they are doing the same as what the Thai banks did after 1997.

[PoodMaiDai]

Yea, lets believe a Thai banker.

[Thai at Heart]

However, anyone ever bothered to calculate the break even value for a developer in say bangna on a 5 men baht house?

[movsrus]

This sounds a lot like the talk that was prevalent in 1997 just as the Thai economy blew up. The increase in household debt, the government sponsored first time car buying spree of last year and the increasing use of credit for everyday expenses for tell a dangerous time.

When the bubble bursts- and all bubbles will eventually- things are going to be tough in Thailand.

[Thai at Heart]

This sounds a lot like the talk that was prevalent in 1997 just as the Thai economy blew up. The increase in household debt, the government sponsored first time car buying spree of last year and the increasing use of credit for everyday expenses for tell a dangerous time.

When the bubble bursts- and all bubbles will eventually- things are going to be tough in Thailand.

It may or may not happen, the issue is when is enough new construction enough. The problem is a construction company isn't on the business of not constructing.

It's what they do.

[TroyT]

Do you know? Indeed does anyone really know? The total inventory that the banks still have on their books [written at totally unrealistic 'values'] from the '97 problem? I haven't been to an auction since the first farce I attended a couple of years back. Out of 315 lots only 10 sold. The reason only ten sold was predominantly due to shills from the banks concerned who 'bid' against genuine buyers or simply waved lots through; preventing anyone from bidding. If they sell then their 'assets' have to be written down in their books to their true value - ouch!.

Banks in Thailand aren't allowed (by law) to sell repossessions for less than the outstanding loan.

This is not a 'shill', they are just pointing out the outstanding loan amount which gives the minimum sale price for the property.

Do you know? Indeed does anyone really know? The total inventory that the banks still have on their books [written at totally unrealistic 'values'] from the '97 problem? I haven't been to an auction since the first farce I attended a couple of years back. Out of 315 lots only 10 sold. The reason only ten sold was predominantly due to shills from the banks concerned who 'bid' against genuine buyers or simply waved lots through; preventing anyone from bidding. If they sell then their 'assets' have to be written down in their books to their true value - ouch!.

Banks in Thailand aren't allowed (by law) to sell repossessions for less than the outstanding loan.

This is not a 'shill', they are just pointing out the outstanding loan amount which gives the minimum sale price for the property.

"Banks in Thailand aren't allowed (by law) to sell repossessions for less than the outstanding loan."

Correct - but to my knowledge Thai banks never handed out 100[+?]% [true market value] loans; prior or post 1997. Not to the peons anyway!

"This is not a 'shill'"

Not being there and being party to the facts how could you possibly know?

[AnotherOneAmerican]

I can only answer

The sales office at the end of my road currently has a sign outside offering 110% home loans on new houses.

I'll take a photo and post it, if it's out next time I drive by.

A friend of mine is currently buying a second-hand property for 1.5Mbht, the bank official suggested he upped his loan application to 1.8Mbht to give him a little extra to spend on refurbishing. This was last week.

Edited May 8, 2013 by AnotherOneAmerican

[metisdead]

Inflammatory baiting posts have been removed.

[Thai at Heart]

I can only answer

The sales office at the end of my road currently has a sign outside offering 110% home loans on new houses.

I'll take a photo and post it, if it's out next time I drive by.

A friend of mine is currently buying a second-hand property for 1.5Mbht, the bank official suggested he upped his loan application to 1.8Mbht to give him a little extra to spend on refurbishing. This was last week.

Well, as mortgages go, that REALLY is a big problem.

[kotsak]

I can only answer

The sales office at the end of my road currently has a sign outside offering 110% home loans on new houses.

I'll take a photo and post it, if it's out next time I drive by.

A friend of mine is currently buying a second-hand property for 1.5Mbht, the bank official suggested he upped his loan application to 1.8Mbht to give him a little extra to spend on refurbishing. This was last week.

While browsing at a condo sales office along the Chao Phraya river in Bangkok, my wife and I were approached by a bank sales agent offering us a 104% loan..