Thailand's Banking Sector Remains Resilient - BOT

By Kenny Teng Khoon Hock

BANGKOK, Aug 28 (Bernama) -- Thailand’s banking system remains resilient with robust levels of capital, loan loss provisions and liquidity despite the slowdown in loan growth, according to the Bank of Thailand (BOT).

In a statement, the Thailand central bank said in the second quarter of 2024 (2Q 2024), loan growth of the banking system (licensed banks and their subsidiaries) slowed down to 0.3 per cent year-on-year (y-o-y), while the overall business loans remained relatively unchanged.

Small and medium-sized enterprises (SMEs) loans continued to contract, while consumer loans expanded at a slower pace due to rising credit risk. 

“The banking system's gross non-performing loans (NPL) in 2Q 2024 slightly increased to 540.8 billion baht (100 baht=RM12.79), equivalent to the NPL ratio of 2.84 per cent, primarily from consumer loans. 

“Meanwhile, commercial banks continued to manage their loan portfolios and provide assistance to debtors," BOT said. 

It said the banking system’s profitability in 2Q 2024 improved quarter-on-quarter, mainly driven by seasonal dividend income, despite higher provisioning expenses.

However, BOT said it will continue to monitor the debt serviceability of small SMEs and certain businesses whose performances were affected by structural issues and declining competitiveness as well as vulnerable households with slow income recovery.

“These could cause a gradual increase in NPL, nonetheless, it is well-manageable with no immediate risk of an NPL cliff," it said.

The central bank said the household debt-to-gross domestic product (GDP) ratio in 1Q 2024 slightly decreased from the previous quarter due to a slowdown in credit expansion following household debt deleveraging. 

Meanwhile, the corporate debt-to-GDP ratio slightly increased due to a marginal increase in new debt creation, and the overall corporate profitability continued to improve, led by an improvement in manufacturing and tourism-related sectors.

-- BERNAMA