The Bank of Thailand announced a series of measures aimed at tightening personal unsecured lending, including credit limits for credit card holders with monthly incomes of less than THB50,000 ($1,497) and reducing the maximum credit card interest rate to 18% from 20%.
These new measures take effect on 1 September. The new credit limits (see Exhibit 1) are credit positive for Thai banks because they strengthen underwriting standards and will moderate growth in the personal-loan segment, which has contributed to a high level of household debt and an increase in nonperforming loans (NPLs).
According to the Bank of Thailand’s 2016 Financial Stability Report, household debt was 79% of GDP as of first-quarter 2017. Debt growth was slower in 2016 than in 2015, but still outpaced income growth, especially for low-income, agricultural households and households operating small and midsize businesses.
The new limits will discourage further leverage among these borrowers, and ease their debtservicing burden. The banks we rate that would most benefit from the new regulations are CIMB Thai Bank Public Company Limited (Baa2 stable, ba22 ) and Bangkok Bank Public Company Limited (Baa1 stable, baa2), which had the highest growth rates in personal and credit card loans in 2016. CIMB Thai in particular will benefit because it has the highest share of these loans in its portfolio.
The new income-based credit caps will limit banks’ exposure to these higher-risk loans (see Exhibit 2).
Daphne Cheng, Vice President – Analyst, Financial Institutions Group, excerpt taken from an article from “Moody’s Credit Outlook”, 31 July 2017 issue.
Can the Subscription Economy Save Financial Services?
Going back to the pre-Covid “normal” is not an option for financial services. Fortunately, the rise of the subscription economy points towards frontiers of untapped growth for the sector.
As the world waits for mass vaccination to revive economic activity, general malaise has overtaken the financial services industry (FSI). And things will probably worsen before they get better: US banks are expected to suffer US$318 billion in net loan losses by the end of 2022, according to Deloitte.(more…)
Asia Pacific Banks shrug off commercial property risks for now
APAC commercial property prices were down around 3% on average in 2020, after a 1% rise in 2019. But the coronavirus-induced decline has been modest compared to past downturns, suggesting that the impact on banks’ commercial real estate loans will generally be much smaller this time.(more…)
Thai banks net profit stood at 146.2 billion baht in 2020
The Thai banking system remained resilient with high levels of capital fund, loan loss provision and liquidity to support economic recovery from the COVID-19 pandemic. according to latest Bot assessment.
Ms. Suwannee Jatsadasak, Senior Director, Bank of Thailand, reported on the Thai banking system’s performance in 2020 that the Thai banking system remained resilient with high levels of capital fund, loan loss provision and liquidity to support economic recovery from the COVID-19 pandemic.(more…)
SET News :Thailand tops the world’s sustainability ranking by number with 11 firms selected as ‘Gold-Class’ by S&P Global
SET News 9/2021 February 10, 2021 Thailand tops the world’s sustainability ranking by number with 11 firms selected as ‘Gold-Class’...
How much do you need to retire in Thailand?
The lowest in Southeast Asia is Indonesia at USD290,599, followed by Malaysia at USD321,614. Vietnam is competitive at USD353,906. Cambodia...
ASEAN builds up minerals cooperation
The two-day workshop discussed the initial findings and recommendations from the drafts of the DPAMC Study and the AMDIS Scoping...
Traveloka to launch financial services in Vietnam and Thailand
Traveloka, which says it has 40 million active monthly users, is developing “buy now, pay later” services for Vietnam and...
Singapore’s Resilience Package: Support for Businesses and Jobs in 2021
The maximum loan quantum for domestic projects is S$30 million (US$22.7 million) and the government’s risk-share of loans is up...
US pledges to enhance cooperation with Mekong subregion’s countries
The US will bolster support for countries in the Mekong subregion through the Mekong-US partnership, US Principal Deputy Assistant Secretary...