Thai banks remained resilient in Q1 2022 (BoT)

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According to the Bank of Thailand, in the first quarter of 2022, the Thai banking system remained resilient with high levels of capital funds, loan loss provision and liquidity, and is well prepared to meet loan demand and facilitate a sustained economic recovery.

Overall asset quality remained stable compared to the previous quarter, mainly due to debt restructuring and financial relief measures. Meanwhile, the profitability of the banking system improved compared to the same period last year, mainly thanks to the expansion of loans which led to higher interest income. The details are as follows:

The Thai banking system’s capital fund stood at 3,016.4 billion baht, equivalent to a capital adequacy ratio (BIS ratio) of 19.8%. The provision for loan losses remained high at 909.4 billion baht with a bad debt coverage ratio of 165.6%. The liquidity coverage ratio (LCR) stands at 192.5%.

In the first quarter of 2022, overall bank loan growth was 6.9% year-on-year, compared to 6.5% in the previous quarter.

Details of bank loans are as follows:

Business loan growth was 8.8% year-on-year, compared to 7.9% in the previous quarter. Large business loans1 widened in almost all sectors of activity, reflecting the financing needs of companies in connection with the improvement in the economic recovery. Meanwhile, SME loans2 developed mainly thanks to the rehabilitation credit system.

Consumer loans increased by 3.3% over one year

Consumer loans rose 3.3% year-on-year, a slower pace from the previous quarter as the Omicron outbreak affected consumer confidence. Mortgage growth slowed as housing demand fell.

Auto lending remained stable as growth in domestic car sales became more evident. Meanwhile, credit card lending has grown alongside an increase in credit card use. Personal loans continued to grow due to household liquidity needs.

The overall quality of banks’ loans in the first quarter of 2022 remained stable

The overall lending quality of banks in the first quarter of 2022 remained stable compared to the previous quarter, mainly due to debt restructuring and financial relief measures.

Gross non-performing loans (NPL or stage 3) increased slightly to 531.9 billion baht, equivalent to the NPL ratio of 2.93%. At the same time, the ratio of loans with a significant increase in credit risk (SICR or stage 2) to total loans stood at 6.09%, compared to 6.39% in the previous quarter.

The banking system recorded a net profit of 49.4 billion baht in the first quarter of 2022, up 11.8% from the same quarter last year.

This is mainly explained by the expansion of loans which led to an increase in interest income, while non-interest income decreased mainly due to commission income.

Compared to the previous quarter, net income improved thanks to the control of the bank’s operating costs and lower provisioning charges. As a result, the rate of return on assets (ROA) increased to 0.87% from 0.67% in the previous quarter. At the same time, the ratio of net interest income to average interest-earning assets (net interest margin: NIM) remained stable at 2.45%.

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1) Companies with a credit line of more than 500 million baht with a bank in March 2022.
2) Companies with a line of credit not exceeding 500 million baht with a bank in March 2022.

Bank of Thailand
May 17, 2022

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