BoT sees household debt dipping

Household debt is expected to continue declining in the third and fourth quarters of this year, driven by economic growth, according to the Bank of Thailand.
The central bank projects a GDP growth rate of 2.6% in 2024, with quarter-on-quarter increases of 1%, 2%, 3% and 4% in the first, second, third and fourth quarters, respectively.
The regulator predicts GDP growth of 3% in 2025.
According to data from the central bank, total household debt tallied 16.3 trillion baht as of the second quarter of 2024, representing 89.8% of GDP.
This marks a decrease from 16.4 trillion baht, or 90.8% of GDP, in the first quarter.
The reduction was primarily driven by auto hire-purchase loans, according to the central bank.
Chayawadee Chai-anant, assistant governor for corporate relations at the central bank, said the decline in the household debt-to-GDP ratio in the second quarter is attributed to GDP growth of 2.3%.
This reduction was supported by a decrease in outstanding household debt, as existing debts were repaid and new loan growth slowed, she said.
In the second quarter, housing loans showed marginal growth, with total outstanding loans rising by 0.57% quarter-on-quarter to 5.57 trillion baht.
According to the regulator, of the total household debt worth 16.3 trillion baht in the quarter, 6.67 trillion was contributed by the commercial banking sector, which is the largest share.
Ms Chayawadee said slower loan growth in the banking industry was influenced by some loan segments, particularly auto hire-purchase loans.
This slowdown is partly attributed to uncertainties in the automotive industry, especially regarding pricing competition, causing consumers to delay car purchases, she said.
However, some loan segments continue to show positive growth, according to central bank data.
Overall loan growth in the banking system, which includes licensed banks and their subsidiaries, slowed to 0.3% year-on-year in the second quarter of 2024 from a 0.7% gain in the first quarter, reported the central bank.
Business loans remained relatively stable, while loans to small and medium-sized enterprises continued to decline. Consumer loans also expanded at a slower pace because of increasing credit risks.