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Asset quality deterioration in Thailand, along with low interest rates, could hurt bank profitability in the coming quarters, Standard & Poor’s Ratings Services said in a report published yesterday.

The report, “Slow Economic Recovery Haunts Thai Banks In 2015”, said declines in asset quality for the banks had been more severe in the loan segments for small and medium-sized enterprises and retail customers than for large companies, barring the impact from Sahaviriya Steel Industries’ financial restructuring recently.

In an economic downturn, small and medium-sized enterprises form the most vulnerable segment for banks because these companies typically have limited funding sources.

Thai households, already |facing high leverage, are also vulnerable.

Standard & Poor’s expects Thailand’s recovery to remain slow in the near term because of a global economic slowdown, domestic structural issues such as rising labour costs rendering exports uncompetitive, and the impact of drought on agricultural products, especially rice.

As a result, the rating agency expects Thailand’s economic growth to be driven mainly by the pace of public spending.

Thai banks have turned cautious and reduced their growth targets. In first half of this year, credit growth was only 1.5 per cent.

Standard & Poor’s expects full-year growth in the low single digits.

Ananda sells bt1 bn worth of townhouses

Ananda Development has sold Bt1 billion worth of townhouses in three projects under the Arden brand. The projects, worth Bt3.04 billion, were introduced in the third quarter.

Chief executive officer Chanond Ruangkritya said yesterday that the projects were on Rama III, Pattanakarn, and Lat Phrao 71.

Townhouses are Ananda’s new market segment.

Don Muang Tollway downgraded by Tris

Tris Rating has downgraded the company rating of Don Muang Tollway and the ratings of DMT’s existing senior unsecured debentures to “BBB+” from “A-”.

At the same time, Tris has assigned the rating of “BBB+” to DMT’s proposed issue of up to Bt1.1 billion in senior unsecured debentures maturing in 2019. The outlook remains “stable”.