Thai bank assets under threat amidst weak consumer lending

It could shrink for the first time post-Asian financial crisis.

Thailand's banking sector assets are on the verge of a contraction amid a reversal in the consumer lending boom seen over recent years, which has been particularly concentrated in auto loans, said BMI Research.

The research house also said that non-performing loans are already rising and look set to increase further, particularly as property prices face downside risks, which is likely to weigh on banking sector profitability.

Here's more from BMI Research:

Thailand's total banking sector assets are on the verge of shrinking for the first time since the aftermath of the Asian Financial Crisis.

Total asset growth came in at just 1.4% y-o-y in September, while total loan growth came in at 2.5% y-o-y. Although loan growth contracted following the Global Financial Crisis, total assets continue to grow modestly, but this time around, an outright temporary contraction in assets looks highly likely.

For the whole of 2016, we are forecasting both loans and assets to grow at 3.0%, before falling to 1.0% in 2017. This marks a revision from previous forecasts of 4.0% for both years.

As a share of GDP, we now see total banking sector assets declining gradually over the coming years, from 127.9% at the end of 2015 to 118.2% by end-2020.