GH Bank veers away from target
The state-owned GH Bank is likely to miss this year’s new mortgage target of 170 billion baht after it managed to lend a mere 50 billion in the first five months as people delay purchasing homes in anticipation of more property stimulus measures from the government.
The bank must revise its lending plan to increase mortgage extension to 17-18 billion a month to meet the target, president Chatchai Sirilai said.
Prospective homebuyers holding off purchases in anticipation of government property stimulus measures could be cause for the bank’s thin mortgage demand, he said, adding that seasonal trends also contributed to the slow growth.
Typically, the first half of the year is the low season for mortgages, with the latter half seeing improvements.
GH Bank, with outstanding loans of 940 billion baht, is among the country’s largest mortgage lenders, with low and middle income earners comprising the majority of the bank’s borrowers. The bank’s weak housing loan demand adds to the signs that purchasing power in low income groups remains tepid and the country’s economic recovery is still uneven.
Mr Chatchai said the bank will roll out a low-rate mortgage package at 3.3% for the first three years, capped at 2 million baht for each homebuyer.
The bank also plans to offer another 10-billion-baht “For Home” mortgage package to those borrowing up to 3 million baht from today. Borrowers will be charged 3.4% on average for the first three years.
The launch of the 10-billion-baht loan is aimed at boosting the state-run housing lender’s loan growth this year.
GH Bank also offers borrowers an option to seek additional loans for repair or other purposes related to residences at interest rates of up to 4% per year.
In another development, Mr Chatchai said that the bank’s non-performing loans (NPLs) increased by 354 million baht in April but the rise was slower than 800-900 million during the same period over the past several years as borrowers normally have higher payment burdens as the new school semester approaches.
GH Bank’s bad loans accounted for 5.3% of its loans outstanding at 940 billion baht at the end of April.
He said that the bank aims to bring the NPL ratio down to 4% this year, mainly by divesting 9.2 billion baht in bad assets and restructuring debt.
GH Bank’s bad loans in May were expected to remain on the rise at around 500 million baht from April, said Mr Chatchai.