# Thai Banking Sector Quarterly Brief (Q3 2023)

- Link: https://www.thailand-business-news.com/banking/113191-thai-banking-sector-quarterly-brief-q3-2023
- Published: 2023-11-23T08:34:00+07:00
- Author: SiamNews PR

* The Thai banking system remains resilient with robust levels of capital, loan
   loss provisions, and liquidity.
 * The banking system’s profitability in the third quarter of 2023 improved from
   the previous year.
 * However, there remains a need to monitor the debt serviceability of SMEs and 
   some vulnerable households with slow income recovery.

The Thai banking system remains resilient with robust levels of capital, loan loss
provisions, and liquidity. In the third quarter of 2023, the banking system’s loans
slightly contracted for 0.9% YoY[1] due to the gradual repayment of business loans,
following the accommodative growth in liquidity facilities during the COVID-19 period,
particularly from SMEs, export-related large corporates, and the government, combined
with the banks’ portfolio management. Nevertheless, banks’ lending continued to 
expand in some sectors, mainly in holding businesses and construction. Consumer 
loans continued to grow at a slower pace across most portfolios.

Loan quality slightly deteriorated, particularly from consumer loans, while banks
continued with their loan portfolio management and assisted debtors through debt
restructuring. As a result, the banking system’s gross non-performing loans (NPL
or stage 3) slightly increased to 494.6 billion Baht, equivalent to the NPL ratio
of 2.70%. Meanwhile, the ratio of loans with significant increase in credit risk(
SICR or stage 2) stood at 5.84%, decreased from 6.08% in the previous quarter.

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The banking system’s profitability in the third quarter of 2023 improved from
the
previous year mainly driven by the higher net interest income, despite higher costs
of funds from rising deposit rate and FIDF fee normalization together with the increased
operational costs and provisioning expenses. However, compared to the previous quarter,
net profit declined primarily due to a reduction in seasonal dividend income and
a decline in FVTPL profit resulting from losses in the sale of derivatives.

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However, there remains a need to monitor the debt serviceability of SMEs and some
vulnerable households with slow income recovery. The household debt to GDP ratio
in the second quarter of 2023 remained unchanged from the previous quarter, while
the corporate debt to GDP ratio slightly increased. Overall corporate profitability
was stable, with a slight improvement in the chemical manufacturing sector in contrast
to the performance of other manufacturing sectors. However, the profitability of
tourism-related sectors experienced a negative impact from the low season.

**Source** : [https://www.bot.or.th/en/news-and-media/news/news-20231120.html](https://www.bot.or.th/en/news-and-media/news/news-20231120.html?rand=113190)