The head of a Thailand Bank says he is concerned about risky lending practices amidst slowing economic growth in Southeast Asia.
Tisco Financial Group (TFG)'s focus on asset quality means it may fail to achieve its 2019 loan growth target of 5 percent as intense competition in the car credit sector and central bank mortgage curbs throw up challenges to lenders amidst slowing regional growth.
«Asset size and loan growth is not our priority. We’re trying to prevent risky lending that could cause major problems,» said TFG's CEO Suthas Ruangmanamongkol who was quoted in «Bloomberg».
Risky Lending
The Bank of Thailand has raised concerns a few times about financial stability following an extended period of low borrowing costs. Lenders will likely tighten standards as the challenging outlook puts the spotlight on asset quality, according to a report from the monetary authority.
«The competition in retail lending is unreasonable and risky, with firms offering zero down-payment and low-rate loans,» noted Ruangmanamongkol.
Struggle With Targets
«Thai banks are likely to struggle to achieve even tapered-down loan growth targets for the year unless they bring down their credit underwriting standards,» said Diksha Gera, a senior industry analyst at Bloomberg Intelligence.
Southeast Asia’s second-largest economy expanded at the slowest pace since 2014 in the first quarter as exports, tourism, and investment moderated. TFG's total return of about 32 percent in the past six months is one of the best in Asia among the region’s larger banks, according to Bloomberg data.
