Connect with us
CGIF-10th-Year-Anniversary

Banking

Bank of Thailand keeps policy rate at 0.50 percent

The Committee voted unanimously to maintain the policy rate at 0.50 percent to support economic recovery while placing emphasis on more targeted measures.

Avatar

Published

on

The Monetary Policy Committee (MPC) assessed that despite the recent better-than-expected outturn, the Thai economy would recover slowly and need support from the continued low policy rate.

Nonetheless, the economic recovery would remain fragile and highly uncertain. The Committee thus voted to maintain the policy rate at this meeting and to preserve the limited policy space in order to act at the appropriate and most effective timing.

 The Thai economy in the third quarter of 2020 improved more than expected. However, the recovery would remain slow and vary significantly among economic sectors.

Overall economic activities were projected to take approximately two years before returning to the pre-pandemic level.

Consequently, the labor market would remain fragile, especially as labor incomes remained low. This would in turn weigh on private consumption, particularly among low-income households, following a phase-out of temporary supporting factors.

Public expenditure was expected to be lower than previously assessed. The financial system remained sound, despite increasing vulnerabilities given the economic outlook and risks to the financial positions of businesses and households.

Meanwhile, headline inflation would be less negative in line with increasing energy prices and would stay close to the lower bound of the target range in 2021. Medium-term inflation expectations remained anchored within the target.

Despite ample liquidity in the financial system and low financing costs, some businesses, especially SMEs, and households in need of liquidity have not gained access to credits. The baht appreciated rapidly against the US dollar owing to risk-on sentiment following the US presidential election outcome and the progress of COVID-19 vaccine development.

The Committee expressed concerns over the rapid appreciation of the baht as this affected the fragile economic recovery. Therefore, the Committee would closely monitor developments in foreign exchange markets and capital flows as well as consider the necessity of implementing additional appropriate measures.

Download​​ Press  PDF

Comments

Banking

Bank of Thailand steps in to curb recent baht strength

Bank of Thailand accelerates measures to advance the development of the new Thai FX Ecosystem and to limit excessive currency volatilities

Olivier Languepin

Published

on

In a press release published on the 20th of November, the central bank’s Monetary Policy Committee (MPC) has expressed concerns over the rapid appreciation of the baht as this affects the fragile economic recovery.

(more…)

Continue Reading

Banking

Standard and Poor’s maintain Thailand’s credit rating at BBB+

The agency is confident in Thailand’s finances, in spite of measures needed to respond to COVID-19, resulting in a deficit for 2020-2021 and hiking state debt.

National News Bureau of Thailand

Published

on

BANGKOK (NNT) – Standard and Poor’s credit rating agency has kept its level of confidence in Thailand at BBB+, in spite of COVID-19 turmoil and political unrest, but has noted it is monitoring the situation.

(more…)

Continue Reading

Banking

Thai banks remain resilient in Q3 2020 but profits declined

Avatar

Published

on

Ms. Suwannee Jatsadasak, Senior Director, Bank of Thailand, reported on the Thai banking system’s performance in the third quarter of 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. 

Debt relief measures, coupled with revisions to rules on loan classification and provisioning facilitated bank loan expansion and alleviated the deterioration of bank loan quality. Meanwhile, banking system’s profitability declined as banks continued to set aside loan loss provision at a high level as a cushion against a potential adverse impact of COVID-19 on loan quality.

Details are as follows:

Capital Fund of the Thai banking system was at 2,959 billion baht, equivalent to capital adequacy ratio (BIS ratio) of 19.8%.

Loan loss provision remained high with NPL coverage ratio of 149.7%

Loan loss provision remained high at 782.5 billion baht with NPL coverage ratio of 149.7%. Liquidity coverage ratio (LCR) registered at 184.9%.

 In the third quarter of 2020, banks’ overall loan growth stood at 4.6% year-on-year, a slight decline from last quarter at 5.0%. Details on bank loan are as follows:

Corporate loan (64.6% of total loan) expanded at 4.5% year-on-year, but contracted quarter-on-quarter as some large corporates switched their funding source from bank loan to bond and equity issuance. SME loan1 contracted at a lower rate, attributed to the soft loan scheme and a gradual economic recovery.

Consumer loan grew at 4.8% year-on-year

Consumer loan (35.4% of total loan) grew at 4.8% year-on-year, and increased quarter-on-quarter following the relaxation of lockdown measures. In particular, mortgage lending expanded, consistent with an increase in demand for low-rise residential properties from last quarter.

​Ms. Suwannee Jatsadasak, Senior Director, Bank of Thailand, reported on the Thai banking system’s performance in the third quarter of 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. 

Debt relief measures, coupled with revisions to rules on loan classification and provisioning facilitated bank loan expansion and alleviated the deterioration of bank loan quality. Meanwhile, banking system’s profitability declined as banks continued to set aside loan loss provision at a high level as a cushion against a potential adverse impact of COVID-19 on loan quality.

Details are as follows:

Capital Fund of the Thai banking system was at 2,959 billion baht, equivalent to capital adequacy ratio (BIS ratio) of 19.8%.

Loan loss provision remained high with NPL coverage ratio of 149.7%

Loan loss provision remained high at 782.5 billion baht with NPL coverage ratio of 149.7%. Liquidity coverage ratio (LCR) registered at 184.9%.

Loan loss provision remained high with NPL coverage ratio of 149.7%

 In the third quarter of 2020, banks’ overall loan growth stood at 4.6% year-on-year, a slight decline from last quarter at 5.0%. Details on bank loan are as follows:

Corporate loan (64.6% of total loan) expanded at 4.5% year-on-year, but contracted quarter-on-quarter as some large corporates switched their funding source from bank loan to bond and equity issuance. SME loan1 contracted at a lower rate, attributed to the soft loan scheme and a gradual economic recovery.

Consumer loan grew at 4.8% year-on-year

Consumer loan (35.4% of total loan) grew at 4.8% year-on-year, and increased quarter-on-quarter following the relaxation of lockdown measures. In particular, mortgage lending expanded, consistent with an increase in demand for low-rise residential properties from last quarter.

 Debt relief measures, together with revisions to rules on loan classification and provisioning, have continued to alleviate banks’ loan quality deterioration in the third quarter of 2020. The gross non-performing loan (NPL or stage 3) outstanding was at 513.9 billion baht, equivalent to 3.14% of total loan, slightly edging up from 3.09% in the previous quarter.

Meanwhile, the ratio of loans with significant increase in credit risk (SICR or stage 2) to total loans was at 7.03%, down from 7.49% in the last quarter.

The banking system recorded net profit of 28.0 billion baht in the third quarter and 130.4 billion baht for the first 9 months of 2020, a decline from last year due to continued high level of provisioning expenses to cushion against potential loan quality deterioration going forward.

As a result, the ratio of return on asset (ROA) declined to 0.52% from 0.60% in the last quarter. The ratio of net interest income to average interest-earning assets (Net Interest Margin: NIM) declined from 2.60% to 2.55%, largely due to a decline in interest income on loan.

(1) Corporates with a maximum credit line of 500 million baht with a bank.

>>​Download​​ Press   PDF 

Continue Reading

Cart

Latest

Most Viewed

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 13,191 other subscribers

Trending