Thailand’s banks warned against property bubble complacency
August 13, 2010 - Thailand
Bank of Thailand Deputy Governor Krirk Vanikkul on Monday warned commercial banks not to be complacent about the risky property market bubble, saying the problem might occur in the near future.
Although the property sector bubble remains not worrying for now, commercial banks should not be too complacent because the problem can occur anytime in the future, he said.
What the banks should do now is to look after housing loan clients closely to ensure they have no problems repaying debts, and simultaneously oversee non-performing loans to contain any increase in the system.
Krirk conceded some commercial banks are more stringent about lending in the property sector because they might witness something unusual and see a need to adjust themselves.
But in terms of their normal function, the banks must extend loans for their commercial gain. The more they lend, the more profits they earn.
At present, he said, the country's economy continued expanding with a sound loan growth and stable NPLs. What remains of concern now is the global economic uncertainty only because it could affect exports.
He believed the banks' target lending growth of around 9 per cent this year would be reached in tandem with sound economic growth.
The gross domestic product managed to expand 10 per cent in the first half of this year and loans extended in the banking system grew 5 per cent, so it is not difficult to see loan growth by another 4 per cent, he said.
Source: Property Report
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