BOT satisfied with financial position of banks

Salinee Wangtal, BOT assistant governor for Supervision Group, said that Thai commercial banks’ strength lay in their high loan loss provision and capital fund, given their high earnings.

Since the 1997 Asian financial crisis, Thai commercial banks have conducted risk management with credit screening as the first line of defence and also made adequate provisions for non-performing loans, impaired assets and possible impaired assets.

About 80 per cent of Thai commercial banks’ revenue currently comes from lending, which is in line with a 13-14 per cent growth expected in total loans from the financial system in the first quarter of this year, Salinee said.

"Lending is growing while non-performing loans are declining as commercial banks are managing risks well and the [Thai] economy is growing," Salinee said, noting "we have not seen any sign of bubbles yet." Thai commercial banks currently maintain a high capital adequacy ratio, and loan loss provisions.

As of February 2012, total loans of Thai commercial banks grew 13 per cent. Loans to large-sized businesses expanded 8.8 per cent, loans to small- and medium-sized enterprises (SMEs) rose 14.3 per cent and retail loans increased 16.2 per cent.

Loans to large-sized businesses saw a slower growth from a year earlier as an infrastructure project made debt repayment during the period and new infrastructure projects may not commence after last year’s devastating floods, Salinee said.

Such a high growth figure for SME loans means that Thai SMEs have started to experience a better lending environment and now may be a good time to provide SMEs serious assistance based on commercial viability, she added.

"Most of the retail loans are for auto hire purchase. Many cars were damaged during the floods and purchase of new cars is normal. Credit card and property loans are still rising at normal levels. We have not seen any bubble signs at the moment," Salinee said.