​Ms. Suwannee Jatsadasak, Senior Director, Bank of Thailand, reported on the Thai banking system’s performance in 2020 that the Thai banking system remained resilient with high levels of capital fund, loan loss provision and liquidity to support economic recovery from the COVID-19 pandemic.  Credit assistance measures, coupled with revisions to rules on loan classification and provisioning supported bank loan expansion and alleviated the deterioration of bank loan quality.  Meanwhile, banking system’s profitability declined as banks continued to set aside loan loss provision at a high level as a cushion against a potential adverse impact of COVID-19 on loan quality.  Details are as follows:

Capital Fund of the Thai banking system was at 2,994.3 billion baht, equivalent to capital adequacy ratio (BIS ratio) of 20.1%.  Loan loss provision remained high at 799.1 billion baht with NPL coverage ratio of 149.2%.  Liquidity coverage ratio (LCR) registered at 179.6%.

In 2020, banks’ overall loan growth was 5.1% year-on-year, edging up from 2.0% in 2019. Details on bank loan are as follows: 

Corporate loan (64.2% of total loan) expanded at 5.4% year-on-year, following a contraction of 0.8% in the previous year. This was mainly driven by an expansion in large corporate loan, where some large corporates switched their funding source from bond issuance to bank loan in the second quarter of 2020. Meanwhile, SME loan¹  contracted at a lower rate, assisted by the soft loan scheme. 

Consumer loan (35.8% of total loan) grew at a slower pace at 4.6% year-on-year, compared to an expansion of 7.5% in the previous year, which was consistent with weak household purchasing power due to COVID-19.  However, consumer loan growth improved across all portfolios in the second half of 2020 following an improvement in economic activity after the relaxation of lockdown measures.  In particular, mortgage lending expanded in line with an increase in demand for low-rise residential properties and developers’ marketing campaigns.  

On the loan quality front, debtors affected by COVID-19 continued to receive credit assistance from banks.  As a result, the gross non-performing loan (NPL or stage 3) outstanding slightly increased to 523.3 billion baht, equivalent to NPL ratio of 3.12%.  Meanwhile, the ratio of loans with significant increase in credit risk (SICR or stage 2) to total loans stood at 6.62%.   

The banking system recorded net profit of 146.2 billion baht in 2020, a decline from the previous year.  This was attributed to a high level of provisioning expenses to cushion against a potential impact of COVID-19 on loan quality going forward, combined with a high base effect from the recognition of extraordinary items from gains on sales of investments in 2019.  As a result, the ratio of return on asset (ROA) declined from 1.39% in the previous year to 0.65%.  The ratio of net interest income to average interest-earning assets (Net Interest Margin: NIM) decreased from 2.73% to 2.51%.  

 Bank of Thailand
 February 22, 2021

^{[1] Corporates with a maximum credit line of 500 million baht with a bank as of December 2020.}