Banking
From The Report: Thailand 2017
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Although stable, liquid and profitable, Thailand’s banking sector saw growth moderate in 2016 as rising defaults in the highly leveraged consumer and small business segments weighed on lending growth. Large corporate lenders have increasingly turned to alternative financing channels, most notably the short-term bond market, further impacting loan growth in 2016. Non-performing loans are expected to peak in 2017, while rising bond yields and regulatory changes to bill of exchange issuance should see larger corporates return to conventional bank financing. Although efforts to digitise the Thai economy will impact fee-based income in the near term, the long-term benefits to the sector and the wider Thai economy should easily offset any losses. As such, the sector’s mid-term outlook remains positive, bolstered by new expansion opportunities in the ASEAN market. This chapter contains interviews with Veerathai Santiprabhob, Governor, Bank of Thailand; Chartsiri Sophonpanich, President, Bangkok Bank; and Darren Buckley, Country Head, Citibank.

Articles from this Chapter

Overview

Bouncing back: Banks return to profitability through moderate growth
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Although stable, liquid and profitable, Thailand’s banking sector saw growth moderate in 2016 as rising defaults in the highly leveraged consumer and small business segments weighed on lending growth. Large corporate lenders have increasingly turned to alternative financing channels, most notably the short-term bond market, further impacting loan growth in 2016. Non-performing loans (NPLs) are expected to peak in 2017, while rising bond yields and regulatory changes to bill of exchange…

Interview

Promoting innovation: Veerathai Santiprabhob, Governor, Bank of Thailand (BOT), on maintaining economic stability and promoting innovation
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Interview: Veerathai Santiprabhob How is monetary policy being employed to maintain economic stability in the country? VEERATHAI SANTIPRABHOB: Amid an uncertain global environment and domestic challenges, the Monetary Policy Committee (MPC) has pursued an accommodative monetary policy, and remains vigilant against potential risks. Since 2015 the MPC has kept the benchmark rate on hold at 1.5%, with a view that overall monetary conditions remained sufficiently accommodative and conducive to economic…

Interview

A solid outlook: Chartsiri Sophonpanich, President, Bangkok Bank, on investment, loan growth and embracing technology
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Interview: Chartsiri Sophonpanich What role can Thailand’s banking sector play in financing development projects among its highgrowth neighbouring economies? CHARTSIRI SOPHONPANICH: Combined with Thailand, the geographic region of Cambodia, Laos, Myanmar and Vietnam (CLMV) has a total population of 220m and a combined GDP of more than $1trn. This presents an exciting opportunity for establishing a regional supply chain as well as attractive urban consumer markets. Despite rapid growth, there…

Analysis

Going digital: Government policies focus on advancing financial technology
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Thailand’s National E-payment Master Plan (NEMP) is a five-pillar approach that aims to transform Thailand into a mostly cashless society through the launch of new digital and online payment options. The strategy, under development since 2014, has made major strides after the government launched the first pillar, known as PromptPay, in early 2017. Interbank transfers are offered at a fraction of the price previously charged by Thai banks. The voluntary scheme has already attracted millions…

Interview

Back on track: Darren Buckley, Country Head, Citibank, on the most significant contributors to banking sector growth
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Interview: Darren Buckley How do you assess the short-term stability of the banking sector in Thailand? DARREN BUCKLEY: The Thai banking system is in a relatively good position overall given global economic conditions. The sector is well regulated by the Bank of Thailand, and domestic banks have strong balance sheets, sufficient levels of capital and are fairly liquid, as is the country in general. Looking at the national economy overall, the pullback in consumer confidence seen during the recent…

Analysis

Conservative growth: Traditional bank financing competes with bond markets
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Loan growth in Thailand fell in 2016 as slower-than-anticipated infrastructure spending and weak private consumption weighed on the consumer segment, while corporate lending fell as firms increasingly turned to bond markets for more favourable terms. Outstanding bank loans in Thailand grew by just 2% in 2016 against 4.3% growth in 2015, according to the Bank of Thailand (BOT). The Thai Bankers’ Association (TBA) reports that this was the lowest lending growth recorded since a 1.7% contraction…