Thai banks strong, can weather economic uncertainty - central bank

[snoop1130]

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva

 

BANGKOK (Reuters) - Thailand's banking system remained resilient with high capital buffers and liquidity to cushion economic uncertainty, the central bank said on Monday, as the country deals with a third wave of coronavirus infections.

 

The outbreak, Thailand's biggest so far, has hit consumption and tourism, prompting a growth outlook downgrade by the state planning agency on Monday.

 

In the first quarter, overall loans expanded 3.8% from a year earlier, slowing from a 5.1% rise in the previous quarter, as large corporate loan growth moderated following an acceleration in loan usage last year, Suwannee Jatsadasake, a senior director at the Bank of Thailand (BOT), told a briefing.

 

Corporate loans grew 3% in the March quarter from a year earlier while consumer loans increased at a faster pace of 5.3%.

Loan quality remained stable, helped by credit assistance and revised rules on loan classification, the BOT said.

 

Non-performing loans (NPLs) was little changed at 3.1% of total lending at the end of March from 3.12% at the end of December.

 

"We are not complacent about NPLs that haven't increased because of financial support," she said. "The BOT is monitoring the situation and is ready to induce measures if needed".

 

However, bad loans in the tourism sector and related businesses remained a worry, Suwannee said.

 

Last week, the central bank extended debt relief measures for smaller debtors until the end of the year following a larger financial package to support businesses affected by the outbreak.

 

-- © Copyright Reuters 2021-05-17

 

- Whatever you're going through, the Samaritans are here for you

- Follow Thaivisa on LINE for breaking COVID-19 updates

[ozz1]

i think ive heard this before  its probably better to keep quiet  exports down tourism down covid getting out of control  but the baht resisting change nothing to worry about lol 

[Susco]

Translated in Western language:

 

If you have money in a Thai Bank, Run Forrest Run

Edited May 17, 2021 by Susco

[worgeordie]

Something afoot  ?, why do they need to come out trying

to say don't worry it's all good, that's when people start to worry.

regards worgeordie

[Brierley]

10 minutes ago, ozz1 said:

i think ive heard this before  its probably better to keep quiet  exports down tourism down covid getting out of control  but the baht resisting change nothing to worry about lol 

Exports just had their best ever month, the Baht has weakened against USD from 29.78 in December to 31.47 but yes, you're right tourism is down...one out of three isn't bad!

[Brierley]

11 minutes ago, Susco said:

Translated in Western language:

 

If you have money in a Thai Bank, Run Forrest Run

What nonsense! Tier 2 Capital adequacy levels of Thai banks are some of the highest in the industry and because of the demands made by BOT, far higher than they need to be. NPL's are only slightly higher than trend and the despite a sick global economy, the banks grew their loan books by over 3%...what more do you want for goodness sake.

[itsari]

11 hours ago, Brierley said:

What nonsense! Tier 2 Capital adequacy levels of Thai banks are some of the highest in the industry and because of the demands made by BOT, far higher than they need to be. NPL's are only slightly higher than trend and the despite a sick global economy, the banks grew their loan books by over 3%...what more do you want for goodness sake.

Assuming assets Thai banks hold stay the same . After a year of turmoil with non payment of loans something has to give. I am sure the banks will not give any advance notice of problems.

[Brierley]

Just now, itsari said:

Assuming assets Thai banks hold stay the same . After a year of turmoil with non payment of loans something has to give. I am sure the banks will not give any advance notice of problems.

As said, non-performing loans remain about 3% plus the loan book grew by over 3%. That means 97% of people are repaying their loans and the volume of new business ha grown by 3%.

[itsari]

7 minutes ago, Brierley said:

As said, non-performing loans remain about 3% plus the loan book grew by over 3%. That means 97% of people are repaying their loans and the volume of new business ha grown by 3%.

3 percent of loans not being paid . I find that very hard to believe . Many loans not being paid after an  agreement has been made with the bank. Then the loan is not considered non performing . That then gives the banks time before they must place money in reserve to cover the non performing loan.

[RobMuir]

12 hours ago, Brierley said:

3%...what more do you want for goodness sake.

He wants to Thaibash for goodness sake. 

 

The facts,truth and reality that you posted are irrelevant.

 

[Pravda]

12 hours ago, Brierley said:

What nonsense! Tier 2 Capital adequacy levels of Thai banks are some of the highest in the industry and because of the demands made by BOT, far higher than they need to be. NPL's are only slightly higher than trend and the despite a sick global economy, the banks grew their loan books by over 3%...what more do you want for goodness sake.

 

Things can and do change overnight. 

[Brierley]

22 minutes ago, itsari said:

3 percent of loans not being paid . I find that very hard to believe . Many loans not being paid after an  agreement has been made with the bank. Then the loan is not considered non performing . That then gives the banks time before they must place money in reserve to cover the non performing loan.

You don't understand! NPL's, Non Performing Loans, are consumer loans where the borrower hasn't made payments for less than 90 days. These are not commercial loans, they are consumer loans.

 

There is a second category of non-performing consumer loans which is called special mention loans, these are loans that have the potential to not perform but haven't yet reached that status, that category is much higher. Still, NPL's are NPL's so to compare apples and apples, NPL's are at 3.1%. Check the BOT web site if you don't believe me, the Central Bank watches and reports on such things very closely.

 

 

[Brierley]

25 minutes ago, Pravda said:

 

Things can and do change overnight. 

Indeed. Except for them to change to such an extent that the Thai banks might fail, some of which are remarkably well capitalized, much more so than many Western banks, there would need to be a global Armageddon event and that hasn't happened. Western banks adhere to the Basel III rules for capital adequacy, that's how much money they have in reserve and how liquid it is. Thai banks adhere to Basel II rules, +++%.

 

https://www.investopedia.com/terms/b/basell-iii.asp#:~:text=Basel III is a 2009,of reserve capital on hand.

 

https://www.bot.or.th/English/PressandSpeeches/Press/2021/Pages/n1064.aspx#:~:text=Capital Fund of the Thai,LCR) registered at 179.6%.

Edited May 18, 2021 by Brierley

[mikebell]

12 hours ago, Susco said:

Translated in Western language:

 

If you have money in a Thai Bank, Run Forrest Run

My first thought; then I thought it's a Reuters report not one written by TAT optimists or Cabinet liars.

[bkk6060]

They certainly love having thousand of Expats 800,000 b sitting in their accounts.

[Brierley]

5 minutes ago, bkk6060 said:

They certainly love having thousand of Expats 800,000 b sitting in their accounts.

Peanuts by comparison to the bigger picture, less than 3% of GDP in total.

 

In 2018, Immigration issued 80,000 long stay visa's to people over age 50. Assuming they were all married and all had 800k in the bank, which they didn't, the value equals USD 2.1 bill. https://en.wikipedia.org/wiki/Demographics_of_Thailand

Edited May 18, 2021 by Brierley

[itsari]

2 minutes ago, Brierley said:

Peanuts by comparison to the bigger picture, less than 3% of GDP in total.

3 percent is peanuts . OK . What is the percentage when compared to average savings in Thailand rather than GDP ? 

[itsari]

30 minutes ago, Brierley said:

You don't understand! NPL's, Non Performing Loans, are consumer loans where the borrower hasn't made payments for less than 90 days. These are not commercial loans, they are consumer loans.

 

There is a second category of non-performing consumer loans which is called special mention loans, these are loans that have the potential to not perform but haven't yet reached that status, that category is much higher. Still, NPL's are NPL's so to compare apples and apples, NPL's are at 3.1%. Check the BOT web site if you don't believe me, the Central Bank watches and reports on such things very closely.

 

 

Mr Brierly , you seem educated and knowledgeable on the banking system in Thailand . You seem as though you are a paid up member of save the banks society .

I however am but a uneducated sceptic. I do not believe Thailand has just 3 percent of loans in trouble . 

 

 

[Brierley]

3 minutes ago, itsari said:

3 percent is peanuts . OK . What is the percentage when compared to average savings in Thailand rather than GDP ? 

Arguing that Foreigners have higher value savings accounts than locals achieves nothing. Banks attract savings which  allows them to lend, if the foreigner savings weren't there they would have to find new sources of liabilities such as offering higher interest rates to local residents. 

[Brierley]

1 minute ago, itsari said:

Mr Brierly , you seem educated and knowledgeable on the banking system in Thailand . You seem as though you are a paid up member of save the banks society .

I however am but a uneducated sceptic. I do not believe Thailand has just 3 percent of loans in trouble . 

 

 

Ever since the crash of  1997, BOT watches and reports these things very very closely, the numbers are there to be scrutinised and the international community does just that.

 

Also, some of the Thai banks are seriously large. Bank of Ayudyha (sp) for example is owned by Bank Mitsubishi in Japan and has assets of USD 2.5 trillion!

[itsari]

2 minutes ago, Brierley said:

Arguing that Foreigners have higher value savings accounts than locals achieves nothing. Banks attract savings which  allows them to lend, if the foreigner savings weren't there they would have to find new sources of liabilities such as offering higher interest rates to local residents. 

In other words the forced savings from foreigners deposited in Thai bank accounts is an asset to all Thais in that they have lower interest rates as a result .

[robblok]

13 hours ago, Brierley said:

What nonsense! Tier 2 Capital adequacy levels of Thai banks are some of the highest in the industry and because of the demands made by BOT, far higher than they need to be. NPL's are only slightly higher than trend and the despite a sick global economy, the banks grew their loan books by over 3%...what more do you want for goodness sake.

NPLS are not saying much currently because of the debt mortarium. So people are not paying on their loans and so the real number of NPLS is probably much higher. I do agree with the rest there is enough capital and the guy saying one has to worry about money in Thai banks is crazy. As long as you stay under the limits of what they will reimburse your ok.

[LazySlipper]

Today on the Krungsri currency exchange the Greenback and Canadian Loonie jumped ahead again... happy days...

 

Guys stop putting these forecasters and bankers down... they are doing a wonderful job. Maybe we will see a 30bht to the dollar Loonie and maybe a 35bht to the dollar Greenback if these guys keep doing their jobs as well as they have so far...

 

Happy days!!!!

Edited May 18, 2021 by LazySlipper

[Brierley]

1 minute ago, itsari said:

In other words the forced savings from foreigners deposited in Thai bank accounts is an asset to all Thais in that they have lower interest rates as a result .

Not at all. The savings rate of Thai banks is determined by the BOT rate which is established the MPC, that in turn is determined by the state of the economy. There is nothing to prevent Thai banks from offering higher savings rates but why should they when nobody else does and BOT doesn't require it. You talk about Thai's having lower interest rates as a result. The range of lending rates to Thais (and others) are also determined by BOT, these are also determined by the economy. Really, the only advantage to Thai banks of being able to hold our 800k's is that it can lend more and do more business.

 

The difference between is itsari is not that I'm a bank supporter and you are a doubter. The difference is that when the BOT says something, I believe it until it is disproven by related events. Your position seems to be the exact opposite, which is quite common amongst expats in Thailand. This is why many of them have either lost money or missed out on gains, over time, because they won't invest in Thailand, THB or the banks. Som nam na.

[Brierley]

6 minutes ago, robblok said:

NPLS are not saying much currently because of the debt mortarium. So people are not paying on their loans and so the real number of NPLS is probably much higher. I do agree with the rest there is enough capital and the guy saying one has to worry about money in Thai banks is crazy. As long as you stay under the limits of what they will reimburse your ok.

The debt moratorium is targeted and is aimed at some SME's, not consumers.

[robblok]

3 minutes ago, Brierley said:

The debt moratorium is targeted and is aimed at some SME's, not consumers.

That is something new to me, but does that matter so much SME are also in trouble because of Covid. So in fact it hides the true percentage.

[Sticky Rice Balls]

1 hour ago, Pravda said:

 

Things can and do change overnight. 

reminds me after a night of samgsom going to bed with a beautiful gal and waking up to a dude ????

[CALSinCM]

18 hours ago, snoop1130 said:

Thailand's banking system remained resilient with high capital buffers and liquidity to cushion economic uncertainty, the central bank said on Monday, as the country deals with a third wave of coronavirus infections.

The Thai population is drowning in debt and the banks hold the notes.
If the economy goes seriously sideways such as in reaction to the economic devastation caused by covid lockdowns targeting small and medium businesses as non-essential, then the banks will end up with collateral that can not be sold except for satang on the baht.  The banking sector can't be trusted to regulate itself.  Whence the public goes, there goes the banks. 

[CALSinCM]

4 hours ago, itsari said:

3 percent of loans not being paid . I find that very hard to believe . Many loans not being paid after an  agreement has been made with the bank. Then the loan is not considered non performing . That then gives the banks time before they must place money in reserve to cover the non performing loan.

During good times Thais routinely find someone who will provide capital so they can repay their loans and then renegotiate the same loan.  That's not the sign of a healthy economy.  It's a sign of excessive debt that most Thais can not discharge.  And these are no longer good times.  Banks will talk happy talk until they fail, then they will go to the government with their hands out while saying, "We never saw it coming", to the press.  High level execs will get bonuses.

[AlfHuy]

I'm always wondering about the "liquidity".

They always say that foreigners living here do not matter.

 

Let's say:

1 does have to hold in a Thai bank 800,000Baht (almost zero interest).

10=8,000.000

100=80,000.000

1000=800,000.000

10,000=8,000.000.000

100,000=80,000.000.000

Eighty Billion Baht.

 

If suddenly 100,000 expats who hold 800k in a Thai bank for visa purposes (I know, many hold 400k or do the monthly transfer).

If all 100,000 foreigner would call Thailand a day and request withdrawal of their 800k, that's an eye-watering 80Billion Baht.

That money, Thai banks use on their balance sheet, loan it for car purchases, businesses, mortgages, where they get at least a return of let's say 5%

 

I think a few banks would be in a bit of trouble.

We are not speaking about NPL, we speak about hard cash with doesn't generate any income for foreigners.