A better year expected for banking sector
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Thailand's loan growth is expected to recover this year but the low interest environment will pressure Thai banks' interest income, said an analysis by TMB Analytics.
The economic team of TMB Bank expected the outstanding loans to show an increase of 7-8 per cent from last year, or with the net amount of about Bt800 billion.
In 2014, the loan growth was only 5 per cent, the lowest in five years. In the preceding four years, the growth rate was 11-15 per cent.
TMB Analytics forecast 5 per cent growth in deposit or a net amount of Bt600 billion.
However, Thai banks may need to boost non-interest income in light of the low interest environment. After the Bank of Thailand's decision in March to lower the policy rate to 1.75 per cent, it is unlikely that the interest rate would rise in the near future.
Thai banks' fee-based income has increased from 15.8 per cent of total revenue in 2012 to 16.3 per cent and 17 per cent in 2013 and 2014, respectively. The percentage ratio tends to rise further thanks to the new technology which allows the institutions to launch new products and services.
