Positive corporate loan growth, an indicator of private investment, propelled large and mid-sized banks' lending last year, and securities analyst Asia Plus Securities is bullish that the momentum will continue into 2018.
Bank of Ayudhya (BAY) showed the highest loan growth among local large and mid-sized lenders at 7% in 2017, followed by Kasikornbank at 6.2%, Siam Commercial Bank (SCB) at 4.9% and Bangkok Bank (BBL) at 3.2%.
SCB knocked BBL off its decades-long perch as the country's largest lender by assets after its loans outstanding surged to 2.03 trillion baht at the end of last year from 1.93 trillion the previous year.
The bank's 4.9% loan growth was in line with its 2017 growth target of 4-6%.
Corporate loans rose by 6.8% to 761 billion baht, representing 37.4% of the bank's total loans at the end of 2017.
Corporate loan growth drove BBL's total loan portfolio to around 2 trillion baht at the end of last year from 1.94 trillion a year earlier. Utilities, services, real estate and construction were the main sectors that boosted the bank's lending growth, while international networks also supported BBL's positive loan expansion.
BAY, the country's fifth-biggest bank, delivered a 7% increase in loans outstanding to 1.55 trillion baht at the end of last year.
Retail loans were the biggest contributor to the bank's loan growth. The bank saw 12.8% growth in retail loans, thanks to a broad-based expansion in auto hire-purchase, mortgages, credit cards and personal loans. Corporate and small and medium-sized enterprise (SME) loans grew by 2.3% and 2.4%, respectively.
The bank's wholesale loan growth contributed to a 1.7% increase in Thai corporate loans. Such corporate loan growth reflects both improved loan demand and synergy with BAY's parent, Mitsubishi UFJ Financial Group, while a 4.6% rise in international corporate loans mirrored the improving global economy.
BAY said last week in a statement to the Stock Exchange of Thailand that it aims for loan growth of 6-8% this year under a new medium-term business plan for 2018-20.
The strong loan-growth estimate was also based on an assumption that the country's economic growth will hit 4% this year.
Usanee Liurut, vice-president at Asia Plus Securities, said large local banks managed to deliver strong loan expansion for 2017, led by corporate loans, and the positive momentum is expected to continue this year on state infrastructure investments such as the Eastern Economic Corridor.
