The data from the banks and commentary back up the statement of the Bank of Thailand boss this month who said that despite the economic challenges and problems, the Thai economy is not facing a crisis and that its banking system is well managed.

There were strong earnings reports from some of Thailand’s leading banks this week pointing to the resilience of the underlying Thai economy and the strength of its financial sector where banks continue to move forward with canny management and an emphasis on prudent lending to more profitable sectors.

thailand-banks-profits-3rd-quarter-economy-loans-income-krungsri-siam-commercial-bank
(Right) President of the bank and CEO Seiichiro Akita which reported healthy growth in loans and an over a 40% jump in net profits for both the 3rd quarter and the year to the 30th September. Siam Commercial Bank also reported a bumper rise in earnings due to a focus on higher-quality loans and the sale of its life insurance division. (Left) Chief Executive of Siam Commercial Bank Arthid Nanthawithaya said that the bank had strengthened its reserves to guard against domestic uncertainty and the current challenging environment globally.

Some of Thailand’s leading commercial banks produced strong financial reports for the third quarter of the year showing that in spite of economic deceleration and in line with the determination of global agencies, Thailand’s economy is still resilient and its financial sector well managed.

Thai banks are shoring up their reserves to comply with stronger accounting rules just introduced

Many of the banks also announced new reserves to provide against economic shocks or doubtful loans in a new regulatory regime or standard introduced by Thailand’s central bank.

The bulletins also support the assertion by Bank of Thailand boss Veerathai Santiprabhob who while he has repeatedly warned of the high level of household debt in Thailand and its upward trajectory, has also emphasised that the country’s economy is not in crisis while the financial sector is well managed and stable

Krungsri reported a remarkable 40% rise in profits

Krungsri Bank with ฿2.27 billion in assets reported a remarkable 40% increase in profits from the same period last year with a gain of ฿10.2 billion for the period to bring its profit for the 9 months to the end of September to over ฿26 billion. ‘Despite a deceleration in the Thai economy, Krungsri delivered solid performance for the first nine months of 2019, with a robust net profit of ฿26.3 billion, representing a 40.7% increase over the same period of 2018. The solid earnings were attributed to the bank’s ability to optimise our loan portfolio mix, thus resulting in steady growth in net interest income and non-interest income,’ said the President of the bank and CEO Seiichiro Akita.

Bank is also known as Bank of Ayudhya 

The bank highlighted its impressive increase in loan interest income of 40% coming in at ฿10.2 billion and recorded a 6.4% rise in loans for the period. Its deposit base also grew by 4.8% or ฿68.7 billion capping off what is an impressive performance by the bank which is formally known as the Bank of Ayudhya Public Company Limited.

Wide spectrum of banking activities including auto loans but also a business lender

The figures released by the bank are also significant as it is a key player in Thailand’s auto loan sector which has been the subject of lending curbs by the Bank of Thailand. However, the bank, Thailand’s 5th largest has a complete spectrum of banking activities including consumer finance, asset management and business banking to the small and medium business sector as well as Thailand’s leading companies.

Thai economic growth has decelerated in 2019

The CEO acknowledged the deceleration in the Thai economy and predicted a growth rate for the year of 2.9%. ‘Given the decelerating economy, driven mainly by a global slowdown affecting domestic demand, Krungsri anticipates the Thai economy to expand at a slower rate than previously forecasted and has revised down GDP growth projection to 2.9 % from 3.2 %,’ he revealed.

Still room for loan growth in the last quarter

Nevertheless, the banker said that he still feels that Krungsri will continue its impressive loan growth rate into the last quarter of the year and predicted a figure of between 6 and 8%.

Siam Commercial Bank also posts bumper figures

This was followed in the week by Siam Commercial Bank which also recorded an increase in net profits of over 40% from last year. Part of this was due to the sale by the bank of its SCB Life Insurance division which resulted in a ฿11.6 billion gain. The bank also reported an increase in interest income for the period of 7.4%. This was attributed to intensive risk management and a focus on loan sectors with higher yields.

Siam Commercial reported a 74.1% rise in income

Siam altogether reported a 74.1% rise in income for the period to ฿60.4 billion. Its expenses and overhead for the period were contained resulting in an impressive cost to income ratio of just over 29%.

The bank reported a slight increase in non-performing loans from 2.77% at the end of June to 3.01% at the end of September. This compared negatively to Krungsri Bank which saw its non-performing loan provision drop back to 2.01% from a figure of 2.08% at the end of December 2018.

Uptick in bad loans due to the challenging economy

At Siam Commercial Bank, the uptick in the bad loan provision was attributed to a more challenging economic environment but the bank highlighted its moves also to shore up its reserves and provisions. ‘In this quarter, the bank recorded a gain from the sale of SCB Life. In light of domestic economic uncertainty and global economic volatility, we foresee the need to strengthen ourselves. Thus, the bank set aside additional provisions against potential problem loans,’ said the Chief Executive of Siam Commercial Bank Arthid Nanthawithaya

Bangkok Bank reports strong profits marginally up on last year but loans are down

Bangkok Bank also chimed in with increased profits but at a more marginal rate. Its third-quarter profits of ฿9.438 billion were up 4.5% on last year. 

The bank’s interest income dropped marginally as it recorded a 1.7% contraction in loans and the net interest margin on lending was a modest 2.35%.

The bank said its focus was on prudent management of its loan portfolio and risk assessment while also providing for bad loans.

Further reading:

Central bank boss plans to loosen capital controls and decide on broader lending curbs by year’s end

Thai economy remains sound says Fitch the ratings agency as the baht’s surge may be over for now

Bank of Thailand governor warns about growing debt levels, calls for sufficiency economic thinking

Thai households struggling with a growing debt burden with ฿13 trillion in debt owed to banks

Thailand’s small businesses and farmers are facing a crisis. The bankers are the ones that know

Leading banks report steady profits as Thanachart Bank reaches out to show the Thai way forward

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