| Central bank says smaller firms struggling for credit |
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| Saturday,June 06,2009 Posted: 22:10 BJT(10 GMT) |
| From:th Article type:Redistributed |
Small businesses continue to face credit constraints associated with poor confidence in the economy, according to a Bank of Thailand survey on lending.
The quarterly survey of senior executives of 21 private and specialised banks showed that lenders expected loan demand from the private sector to remain low and delinquency risks to increase.
The respondents expect corporate loan demand to remain sluggish in line with soft investment trends. Meanwhile, they anticipate rising delinquency risks among hotels and restaurants, following by electronic and electrical goods producers and vehicle and parts makers.
According to the survey, most banks expect the government's plan to borrow heavily in the domestic market to affect liquidity, interest rates and private-sector loan demand slightly.
Banks also expect demand for retail loans to increase slightly in line with improving economic trends and the government's economic stimulus. They said loan standards for households were somewhat tighter because of concerns over creditworthiness.
The survey showed that corporate loan demand decreased in line with lower inventory buildups and lower working capital requirements. Meanwhile, large corporations are opting for more debt issues or financing ventures from cashflow.
Interest rate spreads between high-rated and high-risk customers widened in the first quarter as banks were more cautious in lending to small and medium-sized enterprises.Financial institutions have also become stricter about asset quality demanded for collateral against loans to SMEs when compared with larger companies, reflecting greater risk awareness.
Retail loans declined more than expected in the first quarter to reflect ongoing subdued confidence of consumers and the business sector. But the decline in credit card lending was due to competition from non-bank operators and more cautious credit assessments.
Both loans for homebuyers and developers decreased in line with generally poor confidence in market trends, according to the survey.
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