Thai banks in no danger despite damage due to flood and global uncertainties
Strong fundamentals and political stability helped Thai banks to perform well in the first half of 2011, and the same factors will enable the sector to overcome challenges in subsequent quarters. December 07, 2011 | Wong Wei HanThe financial sector in Thailand has been going through a particularly difficult period in the second half of 2011. The massive flooding that has crippled Thailand since July—affecting close to 60 provinces and impacting the lives of more than a fifth of the country’s 64 million population—has slowed whatever momentum the banking sector has built up to recuperate from the political turmoil in previous years and the regional impact of the global economic slowdown. The result is that Thai banks are once again held back in its process of recovery in the second half of the year, a challenge that looks to persist going into 2012. However, Thailand’s banking sector is well-positioned to overcome the current setbacks, relying on the same resilience that has sustained the sector through various hardships in the past decade. Before the monsoon flooding begun to hit Thailand in July, the country’s banking sector had had a reasonably encouraging first half. In the 2011-2012 edition of the Asian Banker 500, and overview on Thai banks highlighted strong numbers put up in the first and second quarter of 2011. Against Thailand’s weak GDP growth in H1 2011, with a 3.2% YoY increase in the first quarter and 2.6% in the second, Thai banks managed to maintain relatively good profitability on the back of strong corporate and SME loan growth, which went up 13.4% YoY in Q1 and 15.1% YoY in Q2. As a result, net profits of major Thai banks were up in the second quarter, and the top seven banks reported aggregate earnings of $1.6 billion for the first half of the year, with a 27% YoY increase. At the same time, there were also improvements on the sustainability front, with regional banks maintaining a 3% reduction rate on NPL levels and 12% Tier 1 capital ratio. Thai banks went into the third quarter with sound fundamentals and sustained demand. The peaceful conclusion of the July election offered more reasons to be optimistic, sweeping away concerns of unres... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Capital & Strategic Issues, Operational Risk, Retail Banking, Risk and Regulation, SME Banking, ThailandCapital & Strategic Issues,Oprisk,retail,Risk and Regulation,SME Banking,Thailand, Capital & Strategic Issues,Operational Risk,Retail Banking,Risk and Regulation,SME Banking,Thailand, Keywords:Business Portfolio, Creditworthiness, Thai Flood, Siam Commercial Bank, Krung Thai Bank, Bangkok, Moody’s Business Portfolio, Creditworthiness, Thai Flood, Siam Commercial Bank, Krung Thai bank, Bangkok, Moody’s
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