Ms. Suwannee Jatsadasak, Senior Director, Bank of Thailand, reported on the Thai banking system’s performance in the third quarter of 2021 that the Thai banking system remained resilient with high levels of capital fund, loan loss provision and liquidity to serve an important role in assisting borrowers and accommodating loan demand to support economic recovery amidst uncertain COVID-19 situation. Credit assistance measures, along with revisions to rules on loan classification and provisioning, helped alleviate the deterioration of bank loan quality. Meanwhile, the banking system’s profitability improved from the same period last year mainly due to lower provisioning expenses as well as effective cost management. Details are as follows:

The Thai banking system capital fund stood at 3,024.8 billion baht, equivalent to capital adequacy ratio (BIS ratio) of 19.9%. Loan loss provision remained high at 872.0 billion baht with NPL coverage ratio of 155.0%. Liquidity coverage ratio (LCR) registered at 186.8%.

In the third quarter of 2021, banks’ overall loan growth was 5.6% year-on-year, increasing from 3.7% in the previous quarter. Bank loans continued to grow from last quarter, even after excluding loans to government and financial assistance measures. Details on bank loans are as follows: 

Corporate loans expanded at 6.3% year-on-year due to an increase in large corporates’ loans¹  across almost all sectors as well as loans to government. This reflects financing needs of businesses following the relaxation of containment measures and the improving economic activities related to the country’s reopening. In addition, SME loans²  continued to grow owing primarily to rehabilitation credit scheme.

Consumer loans expanded at 4.2% year-on-year, declining from 5.7% in the previous quarter. Auto loan and credit card loan growth slightly contracted, due respectively to a reduction in domestic car sales and lower credit card spending during the containment measures. Mortgage loans expanded at a slower pace in line with declining demand for residential properties. Personal loans grew at the same pace as the previous quarter, following an increase in household liquidity needs.

Bank loan quality in the third quarter of 2021 weakened only slightly, supported by financial assistance as well as revisions to rules on loan classification. The gross non-performing loans (NPL or stage 3) increased to 546.3 billion baht, equivalent to the NPL ratio of 3.14%. Meanwhile, the ratio of loans with significant increase in credit risk (SICR or stage 2) to total loans stood at 6.69%, increasing from 6.34% in the previous quarter.

The banking system recorded a net profit of 38.5 billion baht in the third quarter of 2021, increasing 45.1% from the same quarter last year. This was mainly attributed to a decrease in provisioning expenses, as banks set aside an elevated level of provision in 2020, coupled with banks’ effective cost management. Meanwhile, net interest income slightly increased due to loan expansion. However, compared to the previous quarter, net profit declined due to non-interest income following a decline in dividend income from the high base last quarter, together with an increase in provisioning expenses. Consequently, the return on asset ratio (ROA) decreased to 0.69% from 1.09% in the previous quarter. Meanwhile, the ratio of net interest income to average interest-earning assets (Net Interest Margin: NIM) remained stable at 2.47%. 

Bank of Thailand
November 12, 2021

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[1] Corporates with a credit line more than 500 million baht with a bank as of September 2021.
[2] Corporates with a credit line not exceeding 500 million baht with a bank as of September 2021.}