Ms. Suwannee Jatsadasak, Senior Director, Bank of Thailand, reported on the Thai banking system’s performance in the second quarter of 2022 that the Thai banking system remained resilient with high levels of capital fund, loan loss provision and liquidity, which served as key mechanism to accommodate loans to support the economic recovery. Banks continued to support borrowers and manage their loan portfolios in order to maintain overall asset quality. Meanwhile, the banking system’s profitability improved from the same period last year driven mainly by higher net interest income from loan expansion as well as lower provisioning expenses. Details are as follows:
The Thai banking system’s capital fund stood at 3,076.6 billion baht, equivalent to capital adequacy ratio (BIS ratio) of 19.6%. Loan loss provision remained high at 909.6 billion baht with NPL coverage ratio of 166.6%. Liquidity coverage ratio (LCR) registered at 185.5%.
Banks’ overall loan growth continued to increase by 6.3% year-on-year in the second quarter of 2022, compared to 6.9% in the previous quarter. Details on bank loans are as follows:
Corporate loan growth increased by 8.0% year-on-year owing primarily to expansion in large corporate loans to support financing needs of businesses, partly to fund inventory build-up in accordance with increasing production costs as well as for exports. Meanwhile, SME loans grew mainly from rehabilitation credit scheme.
Consumer loans expanded by 3.0% year-on-year albeit at a slower pace compared to previous quarter. Mortgage loans continued to grow driven by improving housing demand. Personal loans expanded due to households’ liquidity needs following rising living costs. Meanwhile, credit card loans accelerated in line with improving consumer confidence following the economic recovery. Auto loans remained stable consistent with a slowdown in domestic car sales.
On loan quality, banks continued to support borrowers and manage their loan portfolios in order to maintain overall asset quality. As a result, the gross non-performing loans (NPL or stage 3) in the second quarter of 2022 decreased to 527.9 billion baht, equivalent to the NPL ratio of 2.88%. Meanwhile, the ratio of loans with significant increase in credit risk (SICR or stage 2) to total loans remained stable at 6.09%.
The banking system recorded a net profit of 64.7 billion baht in the second quarter of 2022, increasing by 7.2% from the same quarter last year. This was due mainly to higher net interest income from loan expansion as well as lower provisioning expenses after an elevated level of provision was set aside during COVD-19. Compared to the previous quarter, net profit increased mainly from non-interest income especially dividend income, while net interest income also increased slightly. As a result, the return on asset ratio (ROA) increased to 1.11% from 0.87% in the previous quarter. Meanwhile, the ratio of net interest income to average interest-earning assets (Net Interest Margin: NIM) increased to 2.51% from 2.45% in the previous quarter.
Source: Bank of Thailand