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Thai Banks Increased operating profit in Q1 2018

On the loan quality front, the ratio of gross non performing loans (NPLs) to total loan was at 2.92%, close
to 2.91% last quarter.

Bahar Karaman

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Loans by commercial banks continued a growth trend of 4.4 percent last year to 4.7 percent in the first quarter.

The growth was mainly due to an expansion in SMEs to include more business types with loans to large corporations excluding financial institutions contracting slightly as several began repaying their loans and some sought other means of amassing capital.

In the first quarter of 2018, the banking system recorded increased operating profit, compared to the same period last year, which was mainly attributed to gain on sale of investments and commission income from sale of securities.

Nonetheless, net profit decreased from IT, marketing, and provisioning expenses. Return on asset (ROA) increased to 1.07% from 0.9% last quarter, whereas the ratio of net interest income to average interest-earning assets (Net Interest Margin: NIM) dropped from 2.75% to 2.66% due to the decline in interest incomes from loans.

Consumer loans saw expansion across the board, in particular car loans and home loans with credit loans and personal credit lines also seeing significant growth in line with the burgeoning economy.

The non-performing loan rate in the quarter was 2.92 percent, staying close to the rate in the previous quarter of 2.91 percent.

Consumer loan (33.3% of total loans) expanded at 7.1% across all portfolios, driven by an acceleration of auto loan growth at 10.6%.

This was consistent with improved car sales after the five-year lock-in period of the first-car buyer scheme ended, coupled with a large number of new car launches. Housing loan, credit card, and personal loans also expanded at 5.8%, 5.3%, and 6.9%, respectively.

Corporate loan (66.7% of total loans) grew at 3.6% year-on-year, driven by SME loan.

SME loan growth (excluding financial business) expanded at 7.4%, with more broad-based in several sectors, for example energy and food industries.

Large corporate loan (excluding financial business) contracted by 2.6% due to some loan repayments, along with the increasing reliance on debt securities and equity as alternative financing sources of large corporate. Nevertheless, some large corporates, such as food-related businesses, continued to utilise more loans. For real estate sector, loans expanded from both large corporate and SME, in line with financing through debt securities and equity.

Source : https://www.bot.or.th/Thai/PressandSpeeches/Press/News2561/n2961e.pdf

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Corporate debt market in Thailand well positioned for further growth

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Bank of Thailand cuts rate by 0.25% to 1.25 per cent

The latest cut brings the Bot’s policy rate to an historical low, which the bank maintained from April 2009 to July 2010 during the subprime global financial crisis.

Bahar Karaman

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​On 6 November 2019, the MPC voted 5 to 2 to reduce the policy rate by 0.25 percentage point from 1.50 to 1.25 percent, effective immediately. Two members voted to maintain the policy rate at 1.50 percent.

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