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Financial Market & Institutions Analysis

22 Jan 2020

Financial Institutions

Relaxation of LTV Regulations to Bolster Residential Market Amid Numerous Risks (Current Issue No.3075)

The reduction in home ownership transfer fee in early 2020 and the Bank of Thailand’s decision to relax its loan-to-value (LTV) regulations for first-and second-time home buyers on January 20, 2020, with the aim of promoting home ownership and increasing consumer house-buying power, will likely give... Read more

17 Jan 2020

Financial Institutions

Household debt in 2020 may exceed 80% of GDP: closely monitor debt service ability of Thai household groups (Current Issue No.3073)

Thailand’s household debt continued to surge amid the slowing economy as the size of the household debt relative to GDP rose to 79.1 percent in 3Q19, the highest in almost three years. The high level of household debt nationwide is consistent with KResearch’s survey on household debt and savings in ... Read more

25 Dec 2019

Financial Institutions

Net Loans Increased Slightly in November 2019 Despite Loan Drawdown Season (Business Brief No.3841)

According to the statements of assets and liability (C.B. 1.1) of 14 Thai commercial banks as of the end of November 2019, net loans increased only slightly despite the loan drawdown season. The marginal rise in net loans was due to the negative factors stemming from loan repayment by the business s... Read more

17 Dec 2019

Financial Institutions

MPC Meeting, December 18, 2019: Policy Rate Likely Unchanged Pending Domestic Economic Assessment (Business Brief No.3838)

We at KResearch expect that the Bank of Thailand’s Monetary Policy Committee (MPC) will likely keep its policy rate steady at 1.25 percent during the final meeting of 2019 slated for December 18, 2019 pending a domestic economic assessment going forward. ... Read more

25 Nov 2019

Financial Institutions

Net loans in October 2019 drop at almost all banks due to debt repayment by corporate sector (Business Brief No.3835)

Net loans in October 2019 decreased from the previous month by 87.7 billion Baht amid the pressure on loans at almost all banks, especially from debt repayment by the corporate sector, SME business operators and the government. Nonetheless, retail loans, namely, personal loan and other unsecured loa... Read more

19 Nov 2019

Financial Institutions

Digital-only banks without branches for the new age, new business model that needs to be proven in Thai society (Business Brief No.3833)

Digital-only banking is a banking business in the modern age that can be categorized into two types based on business models, which aim at different groups of customers: First, digital-only banks which focus on servicing low to medium income earners who face certain limitations in accessing financi... Read more

13 Nov 2019

Financial Institutions

Slowing economy and low returns prompt more people to search for yield (Current Issue No.3054)

As the Thai economy has shown signs of slowing, the Monetary Policy Committee (MPC) has decided to cut the policy rate for the second time this year to 1.25 percent per annum during its meeting on November 6, 2019. The central bank’s policy rate cut has been passed on to the interest rate reduction ... Read more

11 Nov 2019

Financial Institutions

Ponzi scheme...and the need to enhance financial literacy to prevent scams (Business Brief No.3831)

When looking back at Thailand’s recent financial history, the search-for-yield behavior has always occurred regardless of how low or high the interest rate was at that given period. At any rate, during the slowing economy, which often comes with a low interest rate environment, people are more likel... Read more

7 Nov 2019

Financial Institutions

Thai Baht Weakens Slightly after BOT Relaxes Rules to Stimulate Capital Outflows (Current Issue No.3050)

On November 6, 2019, the Bank of Thailand (BOT) announced the “Relaxation of rules to facilitate capital outflows and lessen pressure on the Thai Baht”, while the Monetary Policy Committee (MPC) resolved to cut its policy rate to 1.25 percent. Their concurrent actions have caused the Baht to weaken ... Read more

1 Nov 2019

Financial Institutions

Signs of a slowing economy continue… prompting the MPC to cut policy rate by 0.25% (Business Brief No.3830)

Signs of a slowing economy in terms of exports, domestic spending and relatively low inflation reflect the vulnerabilities of the Thai economy, while the impact from the lackluster exports has begun seeping into the real economic sector. Although the government recently introduced a series of econom... Read more

25 Oct 2019

Financial Institutions

Slowing corporate loans curb the rebound of loan growth in September 2019 (Business Brief No.3829)

Net loans of commercial banks in September 2019 expanded within a limited range, due to lackluster signs of overall economic activity. Moreover, some big commercial banks have exercised a cautious approach in approving loans to ensure the quality of loans. Meanwhile, the growth of small and medium s... Read more

17 Oct 2019

Financial Institutions

Slowing Economy Projected to Pressure Core Business Income of Commercial Banks and Heighten Asset Quality Problem Despite Steady Growth Seen in 3Q19 Profit (Current Issue No.3041)

Although 3Q19 earnings of Thai commercial banks show that the Thai commercial banking system overall has been able to maintain profitability from extraordinary items, cut expenses from setting aside reserves and undertake efficient cost management, KResearch has assessed that the sluggish Thai econo... Read more

16 Oct 2019

Financial Institutions

Upward gold price strengthens Thai Baht...the turning point may be timing of the Fed’s hint at no more rate cuts (Current Issue No.3025)

The continuously strengthening Thai Baht has caused worries among the export-related business sector and the domestic tourism industry. Since the beginning of 2019, the Thai Baht has risen 7.4 percent against the greenback and other key major and regional currencies. The Thai currency has surged in ... Read more

9 Oct 2019

Financial Institutions

Thai Baht Tested THB30.30/USD, Representing the Strongest in more than Six Years (Current Issue No.3039)

The Baht has appreciated to test THB30.30/USD, representing the strongest in more than six years and Asia’s best-performing currency. The Thai currency has strengthened by approximately 7.4 percent against the greenback, outpacing the Indonesian Rupiah and Philippine Peso, which have appreciated onl... Read more

26 Sep 2019

Financial Institutions

Net loans of commercial banks in August 2019 continue to slow in line with economy (Business Brief No.3822)

Net loans of commercial banks (14 banks) in August 2019 increased only 3.84 percent YoY, the same growth as the rate registered in July 2019, which is the lowest rate in 21 months. Loan outstandings continue to slow in alignment with the overall economic sentiment. In particular, business loans are ... Read more

19 Sep 2019

Financial Institutions

MPC Likely Keep Policy Rate Steady at September 25, 2019 Meeting While Its Monetary Policy Stance Hinges Mainly on Thai Economic Developments (Business Brief No.3819)

We at KResearch expect that the Bank of Thailand (BOT)’s Monetary Policy Committee (MPC) will likely maintain its policy rate at 1.50 percent during the sixth meeting of 2019 slated for September 25, 2019. The fact that 3Q19 economic indicators did not deteriorate from those seen in 2Q19 may give th... Read more

10 Sep 2019

Financial Institutions

Life insurance business for 2019 continues to slow down in spite of a slight recovery in 2H19 (Current Issue No.3030)

Life insurance premiums received in 1H19 totaled THB295 billion, contracting 6.1 percent YoY. In 2H19, the business is likely to slightly rebound, but the mild recovery is not enough to push the overall business performance for the whole of 2019 back to positive territory. Total life insurance pre... Read more

16 Aug 2019

Financial Institutions

Curbing DSR of Low-Income Earners May Shave Retail Loan Growth by 5% (Current Issue No.3023)

New reports over the past one month may represent signals confirming that the Bank of Thailand (BOT) is in the process of carrying out two important matters to cope with hefty household debt. These include: 1) determining lending guidelines for low-income earners; and 2) preparation to set common le... Read more

15 Aug 2019

Financial Institutions

Lending rate cuts...generate over THB16 billion in net benefit to economy (Business Brief No.3813)

Within one week after the Bank of Thailand announced a policy rate cut, major Thai commercial banks have followed suit by cutting lending rates for their general customers. These banks have slashed their minimum overdraft rate (MOR) and minimum retail rate (MRR) by 12.5-25 basis points, but are keep... Read more

7 Aug 2019

Financial Institutions

MPC Cuts Policy Rate for the First time in 4 Years … Its Impact on Economy Warrants Close Monitoring Ahead (Current Issue No.3017)

Thailand’s Monetary Policy Committee (MPC) voted 5-2 to cut the benchmark rate for the first time in four years to 1.50 percent, from 1.75 percent, at its meeting, August 7, 2019. The MPC attributed its move to the weakening signs seen in the export sector and domestic demand, which have caused the ... Read more

5 Aug 2019

Financial Institutions

MPC Gives Weight to Risks to Financial System Stability While Making Economic Assessment (Business Brief No.3812)

KResearch projects that the Monetary Policy Committee (MPC) will keep its policy rate steady at 1.75 percent at the fifth meeting of 2019 slated for August 7, 2019. It is expected that the MPC will attach importance to long-term stability at the upcoming meeting as it is experiencing more challenges... Read more

25 Jul 2019

Financial Institutions

June Net Loans Increased Only Slightly on Slower Growth in Commercial and Retail Loans (Business Brief No.3810)

Commercial loans and many types of retail loans grew at a slow pace while SME loans did not recovered in June. This caused June net loans overall to increase only THB10.7 billion or 0.09 percent MoM. When compared to the same period of last year, June net loans expanded at the sluggish pace in almos... Read more

18 Jul 2019

Financial Institutions

Unfavorable Core Business Income Continues to Inhibit 2Q19 Profit of Commercial Banks (Current Issue No.3008)

We at KResearch project that net profit overall of commercial banks registered in Thailand will reach approximately THB51-52 billion in 2Q19, declining from the THB52.59 billion reported for 1Q19. Operating profit in 2Q10 may recover at a slower pace because income growth from core business of comme... Read more

15 Jul 2019

Financial Institutions

BOT issues measures to monitor short-term capital inflow Reduce channels for parking money to curb rapid gains of Thai Baht (Current Issue No.3007)

The Bank of Thailand (BOT), on July 12, 2019, issued the measures to enhance short-term capital flow surveillance under the measures to prevent Thai Baht speculation formally announced after the central bank had earlier sent signal and expressed concerns over the rapid gains of Thai Baht which had s... Read more

25 Jun 2019

Financial Institutions

Short-term corporate loans push net loans in May 19 up by almost THB90 billion over-month, highest jump this year. (Business Brief No.3807)

Bridge loans and working capital loans for corporate accelerated in May while retail loans in almost every category, especially auto loans as well as secured and unsecured personal loans, continued to increase. Hence, the net loans of 14 Thai commercial banks as of the end of May 2019 rose by almost... Read more

20 Jun 2019

Financial Institutions

MPC meeting on Jun 26 is expected to keep policy rate unchanged…amid concerns over stability of monetary system (Business Brief No.3805)

KResearch expects Thailand’s Monetary Policy Committee (MPC) to keep the policy rates unchanged at 1.75 percent during its fourth meeting of 2019. The MPC is likely to weigh risk factors to financial stability in its monetary policy. In particular, household debts further accelerated in the first q... Read more

7 May 2019

Financial Institutions

Roles of ATMs amid Transition Towards Cashless Society Needed to be Recognized (Current Issue No.2987)

In 2018, the number of ATMs and electronic devices used in the commercial banking system contracted 0.98 percent YoY, against the 5.17 percent growth reported for 2017, representing the first shrinkage in 35 years. Such a contraction was consistent with the substantial increase in the number of fina... Read more

30 Apr 2019

Financial Institutions

MPC Meeting, May 8, 2019: Policy Rate Likely on Hold Pending Economic Development (Business Brief No.3800)

We at KResearch expect that the Bank of Thailand’s Monetary Policy Committee (MPC) will likely keep its policy rate intact at 1.75 percent during the third meeting of 2019 pending an assessment of Thai economic development and results of the implementation of macro-and micro-prudential monetary poli... Read more

25 Apr 2019

Financial Institutions

The Baht Weakens Past THB32.00/USD Again…Regional and Political Factors May Pressure Thai Currency Ahead (Current Issue No.2985)

The Baht weakened past THB32.00/USD, moving within a range of THB32.02-32.09/USD on April 25, 2019, representing the weakest level since the beginning of 2019 and declining by approximately 1.5 percent from that reported one month ago. The softening Thai currency was consistent with cautious stance ... Read more

25 Apr 2019

Financial Institutions

Net loans in March 2019 increase MoM… but 1Q19 sees bearish sentiment which persists from late 2018 due to business loan repayment (Business Brief No.3798)

Net loans in March 2019 expanded from the previous month but the increase fails to lift the overall loans in 1Q19 back to positive territory. Net loans declined by 0.11 percent compared to the outstanding loans at the end of 2018, attributable chiefly to a steady drop of corporate and SME loans of s... Read more

12 Apr 2019

Financial Institutions

Auto loan control measures …enhance long-term financial stability for businesses and borrowers (Current Issue No.2981)

The Bank of Thailand recently sent a warning about increasing risks associated with auto loans due to competitive tactics by some banks in collaboration with some auto companies and car dealers to approve loan amount beyond the collateral value. For example, they did not deduct the discount the cust... Read more

5 Apr 2019

Financial Institutions

Reduction in Funds Transfer Fee via Digital Channels Continued to Pressure NIM of Thai Commercial Banks in 1Q19 (Current Issue No.2977)

The cancellation of funds transfer fee via digital channels was the main factor that continued to pressure operating results of Thai commercial banks during 1Q19. It is expected that their fees from other transactions, in particular insurance brokerage, management and advisory fees, may grow at a sl... Read more

26 Mar 2019

Financial Institutions

February Retail Loans Driven by Short-Term Factors (Business Brief No.3795)

Net loans accelerated in February, supported by key retail loans, i.e. home and auto hire-purchase loans, in line with growing loan demand as a result of short-term factors. These include higher number of home ownership transfers before the enforcement of a new home loan measure on April 1, 2019 and... Read more

26 Feb 2019

Financial Institutions

Net loans in Thai commercial bank system in Jan 2019 decelerate during the business loan repayment season (Business Brief No.3790)

KResearch summarizes the information about loans, deposits and financial liquidity at 14 Thai commercial banks as of the end of January 2019 based on the Summary Statement of Assets and Liabilities with highlights as follows: ... Read more

31 Jan 2019

Financial Institutions

Thai Baht surges past THB31.25/USD as weaker greenback continues to pressure Thai currency (Current Issue No.2962)

Thai Baht has surged to THB31.23/USD or up 4.4 percent from the beginning of this year due mainly to a weaker US dollar. The movement of Thai Baht was in alignment with other currencies in the region. However, from the beginning of this year, the Thai currency hit a record high in nine months and be... Read more

31 Jan 2019

Financial Institutions

MPC meeting on Feb 6 is likely to keep rate unchanged, while future rate hike depends on economic situation (Business Brief No.3786)

KResearch expects the Bank of Thailand’s Monetary Policy Committee (MPC) to keep the policy rate unchanged at 1.75 percent during the upcoming meeting after it raised policy rate by 0.25 percentage point on December 19, 2018. Since the Thai GDP growth begins to show signs of slowdown, the... Read more

31 Jan 2019

Financial Institutions

Stringent Control on Lenders Taking Car Registration Book as Collateral Set Clear Standards to Protect Consumers (Business Brief No.3785)

Over the past few years, the Bank of Thailand (BOT), Ministry of Finance and other relevant agencies have gradually introduced notifications and/or regulations to supervise various types of retail loans. Their attempts are intended to set clear scopes and conditions for related businesses, as well a... Read more

29 Jan 2019

Financial Institutions

Robust Net Loan Growth Seen at 2018 Yearend, Driven by Retail Loans (Business Brief No.3784)

In December 2018, net loans overall grew over the previous month by THB118 billion, or 1.03 percent MoM. As a result, net loans for 2018 increased 5.17 percent YoY, with net outstanding loans outstanding at THB11.63 trillion. Growth was seen in all types of loans, led by retail loans. Meanwhile, out... Read more

4 Jan 2019

Financial Institutions

Fixed deposit rate hike is in line with the BOT signal on policy rate increase and the banks’s attempt to maintain their market shares. (Current Issue No.2952)

The uptrend of interest rate is ultimately evident by commercial banks’s decisions to raise their interest rates by starting from deposit rates. Their fixed-deposit rates for three, six, 12, 24 and 36 months are raised by 25 basis points. Hence, the fixed deposit rates of some major commercial banks... Read more

26 Dec 2018

Financial Institutions

Credit Card Growth of Commercial Banks Sustained at 7% 0% Installment Remaining Most Favorite (Current Issue No.2950)

The credit card business is likely to end the year with satisfactory growth, similar to other types of retail loans. Toward the year-end, competition of the credit card business is characterized by active campaigns and special promotions presented by commercial banks and non-bank operators to boost ... Read more

24 Dec 2018

Financial Institutions

2019 Thai Bank Outlook … Many Challenges for their Profitability (Current Issue No.2948)

The year 2018 has been another year for Thai banks to always be vigilant of various issues. While their fee incomes have contracted due to the reduction of digital funds transfer fees, loan growth has been helpful in offsetting this negative factor. With the support of retail loan growth in the last... Read more

20 Dec 2018

Financial Institutions

The Monetary Policy Committee increases the policy rate for the first time in 7 years; the impact on economic growth is likely to be limited. (Business Brief No.3777)

The Monetary Policy Committee (MPC) agrees to lift the policy rate by 0.25 percentage points from 1.50 to 1.75, the first rate increase in seven years. The lift is aimed at building policy space for the future. KResearch views that the policy rate increase is unlikely to have a significant impact on... Read more

14 Dec 2018

Financial Institutions

MPC meeting on 19/12/18…Greater chance of interest rate hike After clear signal on enlarging policy space (Business Brief No.3775)

KResearch views that there is a greater chance that this year’s last meeting of the Monetary Policy Committee (MPC) will resolve to increase the policy interest rate by 0.25 percent after some signals were clearly sent by the committee on the necessity to rebalance the monetary policy in order to en... Read more

9 Nov 2018

Financial Institutions

New housing loan requirement by BOT will stimulate transactions before its enforcement on April 2019 (Current Issue No.2936)

The Bank of Thailand has announced the criteria to supervise housing loans by adjusting certain details in the Consultation Paper and postponed the effective date to April 1, next year (from the initial schedule of January 2019). The new requirement will not cover purchase and sale contracts or down... Read more

26 Oct 2018

Financial Institutions

Stable Net Loans and Deposits at Thai Commercial Banks in September 2018 (Business Brief No.3769)

In September, net loans in the Thai commercial banking system rose THB3.76 billion or 0.03 percent over the previous month, reaching THB11.345 trillion. The increase, which was supported by growth in all types of retail loans, resulted in the rise in net outstanding loans by 5.78 percent as compared... Read more