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Bangkok Post Local bank loans shrink the most in 15 years

This is the lowest level of loan contraction since 2009.

The Banking Industry’s Performance in 2024

The banking industry experienced a significant contraction in loan growth in 2024, with a 0.4% year-on-year decline in total loans.

Slowing Growth in the Personal Loan Market Due to Increased Competition and Decreased Consumer Confidence.

Consumer loans experienced a 2.1% increase in 2024.

The State of Personal Loans in 2024

A Year of Slowing Growth

The personal loan market experienced a slowdown in growth in 2024, with a year-on-year increase of 1.3%. This represents a significant decline from the 3.7% growth seen in the previous year. The slowdown can be attributed to various factors, including increased competition from other financial products and a decrease in consumer confidence.

Key Drivers of the Slowdown

  • Increased competition: The rise of alternative financial products, such as peer-to-peer lending and buy-now-pay-later services, has led to increased competition in the personal loan market.

    This leaves 562,000 borrowers who are still waiting for their applications to be processed.

    The Programme’s Goals and Objectives

    The “You Fight, We Help” debt relief initiative aims to provide financial assistance to borrowers who are struggling to repay their debts. The programme’s primary goal is to reduce the number of bad debts and improve the overall financial health of the country’s economy.

    Key Objectives

  • Reduce the number of bad debts by 30% within the next 12 months
  • Increase the number of borrowers who are able to repay their debts by 20% within the same timeframe
  • Improve the overall financial health of the country’s economy by reducing the burden of debt on individuals and businesses

    • The Eligibility Criteria

    To be eligible for the “You Fight, We Help” programme, borrowers must meet certain criteria. These criteria include:

  • Having a debt-to-income ratio of less than 50%
  • Having a stable income and employment history
  • Having a good credit history
  • Being a resident of the country
  • Having a minimum income of $20,000 per year

    • The Application Process

    The application process for the “You Fight, We Help” programme is relatively straightforward. Borrowers can apply online or through a mobile app.

    The initiative aims to reduce the number of NPLs by 50% over the next two years.

    The Impact of the Initiative on Home Loan Borrowers

    The initiative’s focus on reducing Non-Performing Loans (NPLs) has significant implications for home loan borrowers. As NPLs continue to decline, lenders are expected to become more cautious in their lending practices, which could lead to stricter lending standards and higher interest rates. Key benefits for borrowers: + Improved access to credit + Increased competition among lenders + Potential for lower interest rates

  • Potential drawbacks for borrowers:

    • + Stricter lending standards + Higher interest rates + Reduced access to credit

    The Benefits of Reduced NPLs for Home Loan Borrowers

    Reducing NPLs has several benefits for home loan borrowers.

    “The bank will take industry concerns into account along with other economic data before making any policy decisions.”

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