Executive Summary

In 2010, the Thai economy recovered significantly with 7.8 percent growth compared to last year. This was attributable to export, private consumption and government spending. Both internal and external stability was satisfactory. Inflation, although accelerating, remained manageable with headline inflation and core inflation at 3.3 percent and 1.0 percent, respectively. Unemployment rate dropped to 1.0 percent. International reserves remained high at 172.1 billion USD.

The banking system continued to play a dominant role in supporting the economic expansion. Loan expanded by 11.3 percent from the previous year, from both corporate and consumer loans. SME loan grew at 7.4 percent in contrast with last year contraction. Global economic expansion together with continued improvement in risk management resulted in an improved asset quality of the banking system. Non-performing loans (NPL) continuously declined, with the ratio of net NPL to total loans of 1.9 percent. Loan expansion together with improved asset quality led to higher net profit of 123.0 billion baht, from both interest and non-interest incomes as well as decreased allowance for loan loss. Return on Assets (ROA) rose to 1.1 percent and capital adequacy ratio (BIS Ratio) slightly increased to 16.2 percent. In all, the banking system remained sound and resilient.

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