The Bank of Thailand (BOT) has announced the commercial banks’ performance results in the second quarter of 2020. All banks had a sharp drop in profitability and the amount of non-performing loans (NPLs) increased by 3.09 per cent.
Tharith Panpiemras, the senior director of Banking Supervision and Risk Assessment Department of BOT, revealed that the financial performance of the banking system declined due to more provisions prepared for the possible impact of coronavirus.
The banking system holds capital funds of 2,877 billion baht or BIS ratio at 19.2 per cent, while the provision was set high to 743.7 billion baht or 144.1 per cent of NPL coverage ratio.
The Liquidity Coverage Ratio (LCR) stood at 183.4 per cent.
The loans amount of commercial banks rose up to 5 per cent year-on-year in the second quarter of 2020, increased from 4.1 per cent in the previous quarter.
A cumulative total of 65.2 per cent of loans were business loans, surging by 5.1 per cent, which is in line with the use of government and large corporate loans.
The SMEs sector, which was supported by the soft loan measure, contracted at a lower rate.
Consumer loans also made up 34.8 per cent of total loans, growing by 4.8 per cent as a result of contracting economic activities. Meanwhile, mortgage loans expanded in line with improving demand in the housing market.
NPLs
The outstanding balance of NPLs stood at 509 billion baht, or 3.09 per cent of the NPLs to total loans ratio. Last quarter, the ration was 3.04 per cent.
BOT said the decline was caused by the shrinking airline businesses.
The Significant Increase in Credit Risk (SCIR), however, stood at 7.48 per cent, declining from the last quarter of 7.69 per cent.
According to the BOT, commercial banks gained a net profit of 31 billion baht, decreased from last quarter’s 53.3 billion baht. The Return on Assets (ROA) also dropped to 0.57 per cent from 1.03 per cent in the last quarter.
The Net Interest Margin (NIM) contracted to 2.60 per cent from 2.90 per cent in the previous quarter. The decrease was due to the assistance measures to all debtors affected by COVID-19 to the financial institution development fund (FIDF).