Connect with us

Banking

Thai banking system remained resilient amid new wave of COVID-19

Thai banking system remained resilient with high levels of capital fund, loan loss provision and liquidity to accommodate loan demand and weather increasing economic uncertainties arising from the new wave of COVID-19, says Bank of Thailand

Published

on

According to Ms. Suwannee Jatsadasak, Senior Director, Bank of Thailand, reported on the Thai banking system’s performance in the first quarter of 2021 that the Thai banking system remained resilient with high levels of capital fund, loan loss provision and liquidity to accommodate loan demand and weather increasing economic uncertainties arising from the new wave of COVID-19.

Credit assistance measures, coupled with revisions to rules on loan classification and provisioning helped alleviate the deterioration of bank loan quality. Meanwhile, banking system’s profitability declined from the same period last year as a result of lower interest income from loans.

Details are as follows:

Capital Fund of the Thai banking system was at 3,017.2 billion baht, equivalent to capital adequacy ratio (BIS ratio) of 20.0%. Loan loss provision remained high at 823.4 billion baht with NPL coverage ratio of 149.7%. Liquidity coverage ratio (LCR) registered at 186.5%.

In the first quarter of 2021, banks’ overall loan growth was 3.8% year-on-year, decreasing from 5.1% in the previous quarter.

Details on bank loan are as follows:

Corporate loan (64.3% of total loan) expanded at 3.0% year-on-year. Large corporate loan growth moderated following an acceleration in loan usage last year due to liquidity need and funding switch from corporate bond. SME loan1 expanded quarter-on-quarter, resulting in a smaller year-on-year contraction – even excluding the contribution from soft loan scheme.

Consumer loan (35.7% of total loan) grew at 5.3% year-on-year, higher than an expansion of 4.4% in the previous quarter. This was mainly driven by mortgage lending, consistent with an increasing demand especially for low-rise residential properties, together with, promotional campaigns from developers and a reduction in government fees.

Meanwhile, auto loan grew marginally in line with a contraction in domestic car sales from the previous year.

Credit card loan expanded compared to the first quarter of last year, when consumer spending was affected by the early stage of COVID-19 pandemic.

Personal loan expanded at a higher rate due to households’ liquidity need, partly reflected in an increase in unsecured loan through online platform and cash card.

Bank loan quality in the first quarter of 2021 continued to be supported by financial assistance as well as revisions to rules on loan classification. As a result, the gross non-performing loan (NPL or stage 3) outstanding slightly increased to 537.1 billion baht, equivalent to NPL ratio of 3.10%. Meanwhile, the ratio of loans with significant increase in credit risk (SICR or stage 2) to total loans stood at 6.41%, declining from 6.62% in the previous quarter.

The banking system recorded net profit of 43.8 billion baht in the first quarter of 2021, decreasing from the same quarter last year by 12.0%2. This was mainly attributed to a decline in interest income from loans. However, net profit rose from the previous quarter due to a decline in operating cost and provisioning expenses as banks had already set aside an elevated level of provision in 2020. Consequently, the ratio of return on asset (ROA) went up to 0.80% from 0.32% in the previous quarter. While, the ratio of net interest income to average interest-earning assets (Net Interest Margin: NIM) decreased from 2.52% to 2.43%.

Bank of Thailand

Banking

Fitch Affirms Thailand’s rating at ‘BBB+’ with a Stable Outlook

Fitch forecasts Thailand’s tourism-dependent economy will recover only modestly, by 1.8% in 2021 after a sharp 6.1% contraction in 2020.

Published

on

Don Mueang Bangkok domestic airport
Empty seats tagged with social distancing await passengers in Don Mueang Bangkok domestic airport

Fitch Ratings has affirmed Thailand’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB+’ with a Stable Outlook.

(more…)
Continue Reading

Economics

China’s new three-child policy highlights risks of aging across emerging Asia

Thailand’s (Baa1 stable) total dependency ratio is set to jump nine percentage points to 51% by 2030 – a faster increase than China’s – which will pressure public and private savings through higher taxes and social spending, reducing innovation and productivity gains.

Published

on

Street vendor in Bangkok

Population aging in China (A1 stable) and other emerging markets in Asia will hurt economic growth, competitiveness and fiscal revenue, unless productivity gains accelerate, according to a new report by Moody’s Investors Service.

(more…)
Continue Reading
Wise

Most Viewed

Subscribe via Email

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

Join 14,106 other subscribers

Recent