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Performance of the Thai Banking System in the Third Quarter of 2017

15 November 2017 (Readers 507)

Bank loan growth in the third quarter of 2017 remained steady, at 3.3 percent year-on-year, with corporate loan growth concentrated in certain industries, while consumer loan continued to expand.
 In its report on the Thai banking systems performance in the third quarter of 2017, the Bank of Thailand stated that consumer loan growth increased in all loan types. Combined financing through bank loans and debt securities grew at 4.5% year-on-year.
Corporate loan (67 percent of total loans) growth was at 2.2 percent year-on-year, slightly declined from 2.7 percent in the last quarter in both loans to large corporate and SME. Loans to large corporate (excluding financial business) decelerated to 4.2 percent, as a result of loan repayments of large corporates.
However, loans still expanded in energy, transportation, and some businesses in manufacturing and commerce sectors. Loans to SME (excluding financial business) grew at 2.4 percent year-on-year, especially in energy, real estate, and export-related industries.
Consumer loan (33 percent of total loans) exhibited higher growth to 5.6 percent year-on-year, mainly from an increase in housing loan growth to 5.6 percent in line with real estate market recovery. In addition, auto loan growth accelerated to 7.0 percent consistent with continued expansion in commercial and passenger car sales, coupled with the low base effect of last years auto loans. Moreover, personal and credit card loans expanded at 4.5 percent and 3.1 percent, respectively.
The overall ratio of gross non-performing loans (NPLs) to total loan has stabilized at 2.97 percent, close to 2.95 percent in the last quarter, with gross NPL outstanding at 428 billion baht. However, the quality of SME and housing loans continued to deteriorate. Special mention loans (SMs: loans overdue above 1 month but not more than 3 months) to total loan ratio rose to 2.72 percent.
Nevertheless, banks accumulated higher loan loss provision to cushion for loan quality deterioration, resulting in continued increase in the banking systems total provision to 584 billion baht and the ratio of actual to regulatory loan loss provision at 166.2 percent.
In the third quarter of 2017, the banking system recorded net profit of 46.7 billion baht, decreased from the same period last year as a consequence of increased provisioning expense to cushion for further loan quality deterioration. Thus, return on asset (ROA) declined to 1.04 percent from 1.09 percent in the last quarter while the ratio of net interest income to average interest-earning assets (Net Interest Margin: NIM) remained stable at 2.78 percent.
Capital fund of the banking system remained high, with total of 2,447 billion baht. The rise in capital was from both appropriation of earnings and capital increase. Hence, capital adequacy ratio (BIS ratio) and common equity Tier-1 ratio (CET1 ratio) were high at 18.4 percent and 15.8 percent, respectively.
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