Bank profits boosted by BOT’s deferment of IFRS9
Banks showed signs of a recovery in earnings in the third quarter, helped by a slower rate of increase in loan-loss provisioning following the Bank of Thailand’s deferred adoption of the International Financial Reporting Standard 9 (IFRS9) to 2020.
BOT senior director Somchai Lertlarpwasin said on Monday that commercial banks were still continuing to set aside a part of their earnings as loan-loss provisioning, but at a slower expansion rate as a result of the IFRS9 postponement, which has given them time for adjustment – and less provisioning than originally expected has meant higher profits.
At the end of the third quarter, the whole banking system’s loan-loss reserves totalled Bt652 billion, up Bt15 billion from the previous quarter and about Bt50 billion higher than at the end of last year.
The ratio of loan-loss provisioning to non-performing loans (NPLs) stood at 146.5 per cent at the end of September, compared to 143 per cent in the prior quarter and 139.5 per cent at the end of 2017, he said.
Following Thai economic growth, bank loans expanded by 6.3 per cent year on year in the third quarter, compared to growth of 5.4 per cent in the previous quarter.
Bank-loan growth is forecast to hit the target of 6-8 per cent for the whole of this year, the BOT’s senior director said.
During the third quarter, consumer lending climbed 8.4 per cent, thanks to a 12.5-per-cent rise in auto hire purchase, an 8.8-per-cent increase in personal loans and an 8.2-per-cent advance in credit-card loans.
Residential lending, meanwhile, grew 6.4 per cent and business loans rose 5.2 per cent, year on year.
Among business loans, lending to large businesses inched up 0.6 per cent, while and small and medium-sized enterprise (SME) lending increased 7.2 per cent, the central banker added.
NPLs across the banking sector remained steady at 2.94 per cent of outstanding loans at the end of September, compared to 2.93 per cent at the end of July.
Outstanding NPLs rose Bt1.25 billion to Bt443 billion, with the third-quarter rise coming mainly from SME loans, reflecting challenges for adjustment to structural changes and business transformation, Somchai said.
SME NPLs stood at 4.65 per cent, compared to 4.45 per cent in the prior quarter.
