Finance minister: Growth in Thai household debt slows down

[webfact]

Finance minister: Growth in Thai household debt slows down

BANGKOK, 11 May 2015 (NNT) - Finance Minister Sommai Phasi has remarked that a continuous slowdown in household debt is a positive sign suggesting that the Thai economy is on its way to recovery.

Government Spokesman Yongyut Mayalarp said Minister of Finance Sommai Phasi had confirmed Thailand’s household debt growth had started to slow down significantly since mid 2014. The current household debt growth was around 5%, compared to 18% in 2012, and it was lower than some countries such as Malaysia.

The lower growth showed that people were able to repay some of their debt partly due to the government’s economic stimulus measures, said the spokesman.

The government’s recent assistance for indebted people includes permission to provide nano finance as well as easing of loan rules.

The government was confident that household debt would gradually decrease when the economy recovered, the spokesman added.

The Thai economy has been forecast to grow by 3.7% this year, significantly higher than last year’s growth of 0.7%.

-- NNT 2015-05-11

[BSJ]

I think it's a bit early to breakout the champagne! A lot of low skill Thai workers virtually live in debt most of their lives.

[ExPratt]

They've done very well over 2 days

Edited May 10, 2015 by ExPratt

[NongKhaiKid]

I think it's a bit early to breakout the champagne! A lot of low skill Thai workers virtually live in debt most of their lives.

I still regularly see the ' gentlemen ' with the very dark visors on their m/cycle helmets around my area which is a mix of income levels but in the main above average I would say.

[SoilSpoil]

The lower growth showed that people were able to repay some of their debt partly due to the government’s economic stimulus measures, said the spokesman.

This the part I don't understand. If debts are still growing, how can it be that people are more able repaying them. Shouldn't the total debt shrink to draw such a conclusion? And what stimulus measures is he talking about?

[trogers]

The lower growth showed that people were able to repay some of their debt partly due to the governments economic stimulus measures, said the spokesman.

This the part I don't understand. If debts are still growing, how can it be that people are more able repaying them. Shouldn't the total debt shrink to draw such a conclusion? And what stimulus measures is he talking about?

Developers are not dancing at this news. Their inventories of unsold units must be facing very slow sales. Banks must be really tightening credit growth.

[davehowden]

How is the economy recovering if people are buying (borrowing) less I wonder.

[Orac]

How is the economy recovering if people are buying (borrowing) less I wonder.

They aren't borrowing less. The rate of growth is reducing but is still positive.

[konying]

Was it not same minister who said debt was growing just few days ago?

May be it slow down because of the long weekend, banks were closed

Edited May 11, 2015 by konying

[davehowden]

How is the economy recovering if people are buying (borrowing) less I wonder.

They aren't borrowing less. The rate of growth is reducing but is still positive.

If the rate of growth is slowing then they are borrowing less (less than they were when it was not slowing), get it!

[Orac]

How is the economy recovering if people are buying (borrowing) less I wonder.

They aren't borrowing less. The rate of growth is reducing but is still positive.

If the rate of growth is slowing then they are borrowing less (less than they were when it was not slowing), get it!

No - they are still borrowing 5% more this year than they did last year.

[Strangebrew]

One day debt is moving up next day it is slowing down I guess it depends on which lie you like. At least you get to choose the lie you like "Ahhh Thainess" got to love it.

[uli65]

just another smoke grenade of faulty information. I do not believe any financial information. Not in thailand or somewhere else.

[ExPratt]

This is quite and achievement I cant wait for Wednesdays figures

[lujanit]

This reduction in household debt is entirely true. We made our last car instalment the other day. Since we were the reason Thailand's household debt was so high it follows that a significant reduction has now been achieved. Minister of Finance Sommai Phasi is a is a legend in his own lunchtime.

[chilli42]

It had to slow down they are already past the ceiling of other countries Everyone is up to their eyeballs in official debt not to mention all the other sorts of unofficial borrowing.

[clockman]

As there is no transparency, in Thailand! Figures are just figures. They do not mean anything.

[trainman34014]

More Bullshit from another brainless wonder. If these people had another brain cell they would be plant life !

[Thai at Heart]

Not sure how he infers the fact that it's dropping proves that people are repaying. Since this gives no inference about NPLs which were reportedly falling.

So total indebtedness is falling a bit, but those unable to repay maybe rising.

[hlj]

I agree one day the economy and household debit are up and the next day they are down. Thailand is in a lot of trouble with reporting like this level.

[elgordo38]

I think it's a bit early to breakout the champagne! A lot of low skill Thai workers virtually live in debt most of their lives.

They better hope household debt increases drastically as people must take out bank loans and buy things to boost the economy. The economy not debt is the only thing that matters. Government figures are always a play on numbers. Its like asking a woman what her age and weight is. As Mr. Spock used to say "Make it so"

[elgordo38]

The lower growth showed that people were able to repay some of their debt partly due to the government’s economic stimulus measures, said the spokesman.

This the part I don't understand. If debts are still growing, how can it be that people are more able repaying them. Shouldn't the total debt shrink to draw such a conclusion? And what stimulus measures is he talking about?

Stimulus is lower interest rates at banks. Its like flypaper once your stuck that's it. Debt here is like a treadmill that never stops. Eventually you just collapse.

[trogers]

I think it's a bit early to breakout the champagne! A lot of low skill Thai workers virtually live in debt most of their lives.

They better hope household debt increases drastically as people must take out bank loans and buy things to boost the economy. The economy not debt is the only thing that matters. Government figures are always a play on numbers. Its like asking a woman what her age and weight is. As Mr. Spock used to say "Make it so"

The prime importance of GDP growth over taking on debts is what leads to the QE we are seeing. The populace is being lied to by their elected leaders.

[ExPratt]

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I think it's a bit early to breakout the champagne! A lot of low skill Thai workers virtually live in debt most of their lives.

They better hope household debt increases drastically as people must take out bank loans and buy things to boost the economy. The economy not debt is the only thing that matters. Government figures are always a play on numbers. Its like asking a woman what her age and weight is. As Mr. Spock used to say "Make it so"

The prime importance of GDP growth over taking on debts is what leads to the QE we are seeing. The populace is being lied to by their elected leaders.

Elected ?

[Srikcir]

Does Sommai have an evil twin or just two independent brains?

The Nation 2015-03-04

"The country’s household debt soars to 80 per cent in seven years, a highest increase in the world, Finance Minister Sommai Phasee said."

[trogers]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

I think it's a bit early to breakout the champagne! A lot of low skill Thai workers virtually live in debt most of their lives.

They better hope household debt increases drastically as people must take out bank loans and buy things to boost the economy. The economy not debt is the only thing that matters. Government figures are always a play on numbers. Its like asking a woman what her age and weight is. As Mr. Spock used to say "Make it so"

The prime importance of GDP growth over taking on debts is what leads to the QE we are seeing. The populace is being lied to by their elected leaders.

Elected ?

Sorry, appointed leaders of USA, Japan, UK and EU.

[Cake Monster]

Late last week, Krungthai Bank reported that NPL,s had increased, but were now slowing. and " under control ", especially for house purchase loans.

I guess that if your house has been reposessed, then that is no longer a debt, so are not included in the statistics.

[ExPratt]

Amid monetary loosening, Thai bank tightens personal loan screening

YUKAKO ONO, Nikkei staff writer

BANGKOK - With household debt rising, Kasikornbank, Thailand's fourth largest bank by assets, has reduced its personal loan growth target to between 4 and 5% this year from 6 to 7%.

Executive Vice President Thawee Teerasoontornwong, the head of Kasikornbank’s retail business division, is keen to ensure his customers don’t overextend themselves.

The bank has tightened screening and will suspend campaigns connected to personal loans, including gifts and special interest rate offers, for the second half of the year.

"We cannot lend to people whose debts are already over their capacity to pay back," Executive Vice President Thawee Teerasoontornwong told the Nikkei Asian Review in a recent interview. He said that the bank's non-performing loans, which stood at 2.26% of total loans at the end of March, had particularly risen in the personal sector.

In April, the Bank of Thailand lowered its benchmark interest rate to 1.5%, the lowest level in nearly five years -- the second rate cut in two straight months.

A weaker baht is expected to help exports, but some analysts worry that lower interest rates will trigger further borrowing among consumers who have already become overextended in recent years.

As head of Kasikornbank's retail division, Thawee sees the world differently. The bank has lowered its minimum lending rate for corporate customers twice since the central bank's rate cut on March 11, but raised the minimum retail rate to 8.12% from 8.1% in mid-April.

"Even if we reduce the interest rate, it doesn't mean that we can lend a lot of money," he said. "It is not good for Thai people."

Thailand's household debt ratio to gross domestic product reached 85% at the end of 2014, the highest in Southeast Asia. Thawee attributes this to lax lending.

"Banks and non-banks have approached consumers with low interest rates and higher credit limits because competition in the country's retail market is very, very intense," he said. He notes that some consumers have as many as 10 credit cards.

Kasikornbank is currently rejecting 60% of retail loan applications through stricter screening. The minimum salary requirement has been increased to 20,000 baht ($612) from 15,000 baht two years ago.

"The rise of NPLs is significant among people with monthly income of below 20,000 baht," said Thawee. In practice, the bank now only lends to those earning over 30,000 baht a month.

Other banks are in the same boat. At this year's Money Expo in Bangkok over the weekend, which is known for competitive rates, few banks were still offering 0% grace periods for housing loans.

"I think every bank is scared of NPLs," said Thawee.

As it puts the brakes on lending, Kasikornbank has increased fee income and is targeting robust 20-23% growth this year. Fee income is earned from selling insurance, operating credit card payment systems for retailers and transactional banking for money transfers, bill payments and so forth.

To promote this lucrative line of business, the bank has increased the number of automated teller machines to nearly 10,000, the largest network in the country. It is also expanding mobile banking services. "We want customers of other banks to use our channel so we can collect the fees," Thawee said.

Cross-border money transfers are an emerging market that is expected to benefit from the advent of the Asean Economic Community at the end of this year. Kasikornbank is partnering with Wing Cambodia, a Cambodian mobile payment service provider, so that Cambodian workers can repatriate money. The bank is looking for similar partnerships in the region.

At present, almost half of Kasikornbank's retail banking income comes from transaction fees compared to around 40% five years ago.

"We are moving towards fee-based income that will not be impacted by interest rate cuts," said Thawee.

http://asia.nikkei.com/Business/AC/Amid-monetary-loosening-Thai-bank-tightens-personal-loan-screening