Banking
From The Report: Thailand 2018
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The banking sector experienced mixed results in 2017. Although bank loans and asset quality benefitted from the country’s ongoing economic recovery – with operating profits rising as a result – high provisioning costs and preparations for the new accounting standards that take effect in 2019 saw net profits decline for many larger commercial banks. The sector is resilient, well capitalised and liquid, but non-performing loans remain high, particularly for smaller businesses. According to S&P, 2018 is set to be a turning point for the sector, with macroeconomic expansion, stabilising asset quality and an anticipated increase in public investment likely to end the credit down cycle. Banks will experience gains in earnings as provisioning costs drop and loan growth recovers, with rising infrastructure investment expected to support broader industry expansion. This chapter contains an interview with Prasarn Trairatvorakul, Former Governor, Bank of Thailand; a dialogue with Predee Daochai, Chairman, Thai Bankers’ Association; and President, Kasikornbank; and Piti Tantakasem, CEO, TMB; and an interview with Antoine Gustin, CEO, BNP Paribas Thailand; and Chairman, Association of International Banks.

Articles from this Chapter

Overview

Turning point: Increased loan demand driving sector out of credit down cycle
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The banking sector experienced mixed results in 2017. Although bank loans and asset quality benefitted from the country’s ongoing economic recovery, with operating profits rising as a result, high provisioning costs and preparations for the new accounting standards that take effect in 2020 saw net profits decline for many larger commercial banks. The sector is resilient, well capitalised and liquid, but non-performing loans (NPLs) remain high, particularly for smaller businesses. Similarly, consumer…

Overview

Turning point: Increased loan demand driving sector out of credit down cycle
OBG
plus

The banking sector experienced mixed results in 2017. Although bank loans and asset quality benefitted from the country’s ongoing economic recovery, with operating profits rising as a result, high provisioning costs and preparations for the new accounting standards that take effect in 2020 saw net profits decline for many larger commercial banks. The sector is resilient, well capitalised and liquid, but non-performing loans (NPLs) remain high, particularly for smaller businesses. Similarly, consumer…

Interview

Finding a balance: Prasarn Trairatvorakul, Former Governor, Bank of Thailand, on digitalisation and the impact of a strong baht
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Interview :Prasarn Trairatvoraku To what extent should the sector be preparing for merger and acquisition (M&A) opportunities? PRASARN TRAIRATVORAKU: Most Thai banks are privately run, so the issue for those banks lies in identifying the value of M&A. In the past, the Thanachart Bank and Siam City Bank merger occurred because both parties recognised their synergy. There are talks about mergers involving the country’s big four banks; however, we observe a lot of overlap between them,…

Analysis

Stable ground: Following the 1997-98 financial crisis, the authorities have led sweeping reforms to strengthen the sector
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The 1997-98 Asian financial crisis saw many leading South-east Asian economies collapse as a result of high levels of foreign debt and rapid capital outflows following a US Federal Reserve interest rate hike. Thailand was among one of the hardest hit, with negative GDP growth of 7.6% at the height of the crisis, pushing many Thai people below the poverty line. Since then, the government and various regulatory authorities have made major progress in preventing a repeat of the crisis. As a result,…

Interview

Rebuilding for resilience: Predee Daochai, Chairman, Thai Bankers’ Association (TBA); and President, Kasikornbank; and Piti Tantakasem, CEO, TMB Bank, on how regulatory supervision built a stronger sector
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Interview :Predee Daochai and Piti Tantakasem How resilient is Thailand’s banking sector compared to its neighbours two decades after the 1997-98 Asian financial crisis? PREDEE DAOCHAI: The crisis provided many important lessons that ultimately brought changes to the financial institutions system in Thailand. Modifications were evident in many aspects of regulatory supervision and rules, as well as risk management of financial institutions, especially commercial banks. Over the course…

Analysis

Financial facilitator: New tech initiatives to improve efficiency and cut costs
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Under the auspices of Thailand 4.0, which targets economic growth through technology and innovation, the banking industry is slated to undergo major changes. Although banking is not one of Thailand 4.0’s strategic industries, the sector is still expected to benefit from increased deployment of financial technology (fintech). Fintech Digital innovation offers notable potential cost benefits to the sector, and the Bank of Thailand (BOT) has actively sought to promote fintech adoption among traditional…

Interview

Shift to services: Antoine Gustin, CEO, BNP Paribas Thailand; and Chairman, Association of International Banks, on the role of high earners, growing competition and regulatory change
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Interview :Antoine Gustin How can foreign banks capitalise on high-networth individuals and a growing middle class? ANTOINE GUSTIN: Unlike many countries in the region, Thailand’s economy is predominantly driven by its private sector. There are only a few large public groups, such as PTT and Siam Cement Group, and the rest are companies that are family owned or run by entrepreneurs, some of which are listed. There are many high-net-worth individuals in this country. These people are very…

Analysis

Building bloc: Regulators work to establish a single ASEAN financial market
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While the ASEAN Economic Community (AEC) was formally established in 2015, financial cooperation across the region remains somewhat fragmented. Goods and services move freely between countries, but banks, stock exchanges and securities companies tend to be limited to their home markets. Since the 1997-98 Asian financial crisis, ASEAN has remained focused on integrating regional financial markets. This issue is key to the AEC Blueprint 2025, ASEAN’s long-term development plan that seeks to facilitate…

Analysis

Building bloc: Regulators work to establish a single ASEAN financial market
OBG
plus

While the ASEAN Economic Community (AEC) was formally established in 2015, financial cooperation across the region remains somewhat fragmented. Goods and services move freely between countries, but banks, stock exchanges and securities companies tend to be limited to their home markets. Since the 1997-98 Asian financial crisis, ASEAN has remained focused on integrating regional financial markets. This issue is key to the AEC Blueprint 2025, ASEAN’s long-term development plan that seeks to facilitate…