Banks face challenges
The impact from last year's floods and the upcoming reduction of deposit protection remain challenges for Thai commercial banks in the next period amid the global economic uncertainty, particularly Europe's debt problems, the Bank of Thailand said.
The key for commercial banks is their risk management in credit and liquidity, Nawaporn Maharag-kaga, senior director of the Financial Institutions Strategy Department, said yesterday.
The commercial banking system remained stable with continuous risk management last year despite the severe floods, she said.
Personal loans were in speedy acceleration, reflecting demand for household consumption during the floods, she added.
However, industrial loans, loans for commercial purposes and consumer loans witnessed slowdowns as the flood started to have an impact.
Commercial banks set aside more reserves for doubtful debts that could arise from the floods, reducing their average return on assets to 1.1 per cent for full-year 2011 from 1.2 per cent in the first nine months of last year.
For all of 2011, commercial banks’ loans grew 14.9 per cent, compared with an 11.3-per-cent expansion the year before. Business loans, which accounted for 71.2 per cent of total loans, rose 14.8 per cent last year, compared with 9-per-cent growth a year earlier. Loans for small and medium-sized enterprises, which amounted to 51.7 per cent of total business loans, grew 14.4 per cent, compared with a 7.2-per-cent expansion in 2010.
Growth in consumer loans slowed to 15.4 per cent last year in almost all types from 17.7 per cent a year earlier.
Only personal loans managed to rise on necessary expenses during the floods.
Deposits, including bills of exchange, accelerated with last year’s expansion of 13 per cent.
Lower growth in deposits than that of loans prompted some tightening in liquidity, with the ratio of loans to deposits, including B/Es, at 89.9 per cent.
Outstanding non-performing loans (NPLs) totalled Bt265.4 billion in 2011, a decline of Bt47.2 billion from 2010 due mainly to debt repayment and loan sales to asset-management companies.
The rate of gross NPLs dropped to 2.7 per cent total loans and that of net NPLs to 1.3 per cent.
Bad business loans declined to 3 per cent, while consumer NPLs also dropped to 2 per cent.
