The banking sector is expected to post marginal loan growth in the first quarter this year, attributed to sluggish demand caused by the global economic slowdown and Thailand's uneven economic recovery.
Data from the Stock Exchange of Thailand (SET) revealed that as of February, the 10 SET-listed banks reported combined loans outstanding of 12.9 trillion baht, down by 0.04% from the end of last year.
Of the 10 banks, five recorded tiny loan growth, while the other five reported a small contraction.
Siam Commercial Bank (SCB), the country's fourth-largest lender by total assets, reported the highest loan expansion at 2.98%, while Land and Houses Bank had the biggest contraction rate at 2.64%.
Kasikorn Research Center (K-Research) forecasts the banking industry will experience low loan growth in the first quarter this year, roughly 1.9-2.3% year-on-year.
For 2023, K-Research predicts total loan growth in the range of 3.5-4.7%, in line with the country's GDP growth forecast of 3.7%. The research house made its assessment based on 17 registered commercial banks in the Thai market.
Thanyalak Vacharachaisurapol, deputy manager of K-Research, said loan demand in the first quarter this year would be lower than previously forecast, mainly attributed to the uneven economic recovery.
The tourism sector rebounded and is fuelling economic growth, but she said exports dipped for the fifth consecutive month in February by 4.7% year-on-year because of the global slowdown, which also dampened loan demand.
Ms Thanyalak said business operators would wait for a clearer economic situation, both globally and locally, before deciding on expansion or new investment.
While the 10 listed banks reported flat loan growth for the first two months this year, they posted combined deposit growth of 3.53%.
Total deposits outstanding of the 10 banks tallied 14.7 trillion baht as of February, increasing by 503 billion from December last year.
Bangkok Bank, the country's largest bank by assets, reported strong deposit growth of 23.9% in the first two months this year compared with the end of last year, though some banks booked marginal deposit growth or a contraction.
She said deposit expansion depends on a bank's business strategy and customer base.
Given the upward trend in interest rates as the central bank hikes its policy rate, higher deposit rates have attracted depositors, said Ms Thanyalak.
Investors are shifting their assets from mutual funds or bonds to bank deposits for safety amid volatility in money and capital markets worldwide, she said.