Thailand banks net profits to rebound sharply in 2012
Devastated by the floods in Q3 2011, the Thai economy has bounced back on strong 9.4%YoY reconstruction loans growth, 12%YoY higher fee income and lower tax rates. April 25, 2012 | Doron FooAsia Pacific banks face a turning point in 2012 following three years of stable performance. The high loan growth, moderate credit costs and provisions (high net interest margin) and fee-based activities that the sector enjoyed is not likely to continue, weakening profitability. This is due to a variety of factors including: 1) the unresolved European debt crisis, 2) lower regional economic growth (including a slower growth in China) and 3) contraction in some property markets. Thus, loan quality is likely to deteriorate along with higher credit costs. Despite Asia’s track record of resilience and expectation of respectable GDP growth levels in 2012, the region is not immune to the impact of prolonged uncertainty in the developed markets. In 2011, key macro concerns in Asia were: 1) fears of inflation, 2) asset bubble risk and 3) policy tightening measures. However intra-regional trade and robust domestic demand will provide a buffer against the global slowdown and unlike the West, Asia has the capability to implement stimulus policies in case of a sharper than expected slowdown. China is looking to be more accommodative, Indonesia has aggressively cut its benchmark rates to a historical low (of 6.25%), and Singapore has postured towards loosening with their currency stance. Looking ahead for 2012, the tail risk of a disorderly Greek debt default is expected to decline while an EU break-up is unlikely to occur in 2012. Asia is impacted by Europe via the financial and the economic effects. On financial contagion front is expected to be not significant as the low exposure of Asia Pacific banks and institutions to peripheral sovereign debt in Europe. On the economic front, Europe accounts for about 11% of total demand for Asia Pacific exports, with peripheral Europe only accounts for 4%. Asia Pacific growth is expected to remain relatively resilient as compared with its western peers due to its higher fiscal flexibility to mitigate growth risks. Chin... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Asian Banker 500, Databook, Industry Outlook, ThailandAsian Banker 500,Databook,Industry Outlook,Thailand, Asian Banker 500,Databook,Industry Outlook,Thailand, Keywords:Bangkok Bank, Krung Thai Bank, Siam Commercial Bank, Kasikornbank, Bank Of Ayudhya, Thanachart Bank, TMB Bank, TISCO Bank, NPLs, Net Profit Growth Bangkok Bank, Krung Thai Bank, Siam Commercial Bank, Kasikornbank, Bank of Ayudhya, Thanachart Bank, TMB Bank, TISCO Bank, NPLs, Net Profit Growth
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