COMMERCIAL-BANK loans inched up 0.9 per cent in May, the first month-on-month rise in five months, led by Kiatnakin Bank, Kasikornbank and Bangkok Bank.
The upturn is a positive indicator for loan demand in the second half of this year, according to securities houses.
The industry slid sideways for four months because of seasonal loan repayment, while credit demand could not gain much momentum even though the industry lowered interest rates for loans, because of the economic uncertainty and high household debt.
Kiatnakin Bank reported the fastest loan growth of 2.4 per cent last month, followed by KBank with 2 per cent and BBL at 1.2 per cent.
Year to date, Bank of Ayudhya recorded the highest growth of 2.7 per cent, followed by KBank with 2.3 per cent, TMB Bank with 1.7 per cent and BBL with 1.6 per cent.
KBank is in loan-growth mode this month, after it recently granted a capacity-expansion credit facility to Latex System Co, the country's largest manufacturer of natural-rubber bedding.
Finansia Syrus Securities said in a research note that May's figure was a good sign of loan growth in the year's remaining months.
Thanachart Securities said the net interest margin of banks was also a positive factor because the banking industry has toned down deposit mobilisation to ease their worries over NIM, while the excess liquidity in the banking system is supporting the banks' desire to refrain from chasing deposits.
Deposits dropped 1.2 per cent in May from April, leaving total deposits for the first five months up by only 0.4 per cent. The loan-to-deposit ratio was 95.6 per cent.
Maybank Kim Eng Securities (Thailand) said the profitability of the banking industry would be challenged by PromptPay, an e-payment system, as the fee income of major banks will be more affected than small banks.
However, the profit impact on the banking industry should become more visible next year because PromptPay is going into effect in November.
It did not see any significant impact on the profit of the banking industry this year.
The second-quarter reporting season has arrived and loan quality is the issue that the market should pay attention to, not the impact of PromptPay.
The non-performing loans of the banking industry in the second quarter are in an upcycle, especially from small and medium-sized enterprises, in line with the fragile economy.