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Financial Market & Institutions Analysis

9 Oct 2020

Financial Institutions

Net profit for Thai banks in 3Q20 continues to show severe contraction; income from core businesses yet to recover (Business Brief No.3890)

KResearch assesses that the pandemic-stricken economic environment continued to undermine commercial banks’ profitability in 3Q20, with both interest income and fee income on a declining trend that corresponds to the continuous slump in economic activity across many sectors. Moreover, the interest i... Read more

2 Oct 2020

Financial Institutions

Financial and Capital Markets May Become More Volatile…Close Attention Must be Paid To Trump’s Illness (Business Brief No.3888)

The White House’s recent confirmation that President Donald Trump was diagnosed with coronavirus (COVID-19) is an issue that warrants close monitoring in the days ahead. KResearch views that President Trump’s illness may not affect his popularity as a Republican candidate for the US presidential ele... Read more

28 Sep 2020

Financial Institutions

Life insurance 2020: Sharp downturn continues from last year; insurers hasten to reduce sum insured of main policies while focusing on health riders (Current Issue No.3143)

Life insurance is among businesses that have been adversely affected by the COVID-19 pandemic. In the first seven months of 2020, life insurance premiums contracted by 3.6 percent YoY, reaching THB 329 billion. For 2020, life insurance premiums are projected to shrink in the range of 6 to 2 percent ... Read more

25 Sep 2020

Financial Institutions

2020 Unsecured PLoans Projected to Shrink 6.0% (Current Issue No.3142)

Changing economic conditions as a result of the coronavirus (COVID-19) pandemic present a number of challenges to personal loan (PLoan) service providers, both commercial banks and non-bank financial institutions. Key challenges include how to adjust strategies to reach targeted customers faster tha... Read more

22 Sep 2020

Financial Institutions

MPC Meeting, September 23, 2020: Policy Rate Likely on Hold at 0.5% while Focus Is on Assistance Measures for Borrowers (Business Brief No.3885)

We at KResearch expect that the Monetary Policy Committee (MPC) will keep its policy rate steady at 0.50 percent during its meeting slated for September 23, 2020 to maintain the monetary policy space. The MPC may view that a policy rate cut to near zero is not necessary at this time because it can... Read more

22 Sep 2020

Financial Institutions

Digital personal loan unveiled in BOT’s new announcement ... reduces cost and increases accessibility to loan for Thai public (Current Issue No.3139)

The digital personal loan regulations promulgated in the most recent announcement of the Bank of Thailand encourage service providers to use alternative data that does not concern personal income data to assess the willingness and ability of borrowers’ debt payment. This arrangement reflects two pos... Read more

11 Sep 2020

Financial Institutions

Understanding THOR … New Thai Reference Rate (Business Brief No.3883)

Preparedness for a new context in the financial world resulting from permanent cessation of the London Interbank Offer Rate (LIBOR) as an interest rate benchmark for financial transactions is an important mission of financial regulatory authorities in many countries. For Thailand, the Bank of Thaila... Read more

1 Sep 2020

Financial Institutions

Contactless payment: the push for continuous growth in mobile banking and e-wallet use amid fierce competition (Current Issue No.3131)

KResearch views that the ongoing COVID-19 pandemic is an important catalyst in transforming the way Thai consumers conduct funds transfer and pay for goods and services. Such trends have given rise to the “New Normal” which is geared towards making money transfers and purchases that do not require p... Read more

23 Jul 2020

Financial Institutions

Growth opportunities for digital lending market remain dependent on access to data and investment in digital technology (Current Issue No.3125)

KResearch assesses that, as of 2020, digital lending service in Thailand is still in its infancy and modest in scale as digital lenders lack sufficient customer data for risk profile assessment. Therefore, digital lending service during this initial period is seen mainly as an alternative for existi... Read more

20 Jul 2020

Financial Institutions

Projected Bank Operating Performace, 2Q20: Profit Set to Decline Despite Loan Growth Resulting from Assistance Measures for Businesses (Business Brief No.3876)

Persistent weakness seen in the Thai economy as a result of the coronavirus (COVID-19) pandemic since early 2020 has substantially hurt the profitability of commercial banks during 2Q20. The highly volatile economic cycle at this time has pressured income of commercial banks’ core businesses and in ... Read more

7 Jul 2020

Financial Institutions

Household debt increases amid immediate challenges in issuing relief measures to combat the COVID-19 crisis (Business Brief No.3874)

According to the latest information, Thailand’s outstanding household debt in 1Q20 fell by THB 3.56 billion compared to the previous quarter – down to THB 13.47 trillion, the first such drop in four and a half years, and close to the outstanding household debt of THB 13.48 trillion in late 2019; due... Read more

22 Jun 2020

Financial Institutions

Phase II guidelines to assisting retail customers Emphasis on interest rate cuts and debt restructuring may put more pressure on operating performance (Business Brief No.3872)

The Bank of Thailand (BOT) is forging ahead with its Phase II package of relief measures for small borrowers, which will emphasize relieving the financial burden of retail debtors by lowering the interest rate ceiling on credit cards and personal loans, as well as cutting the interest rate for refin... Read more

22 Jun 2020

Financial Institutions

MPC Meeting of June 24, 2020: Policy rate likely on hold at 0.5% to gauge effectiveness of previous measures (Business Brief No.3871)

Regarding the Monetary Policy Committee (MPC) Meeting on June 24, 2020, KResearch has assessed that the committee will consider putting the policy rate on hold at 0.50 percent as it waits to gauge the effectiveness of the monetary and fiscal measures that were previously issued. These measures inclu... Read more

4 Jun 2020

Financial Institutions

Baht Strengthens on Gold Exports and Repatriation of Funds to Thailand (Business Brief No.3869)

In April 2020, many countries around the world, including Thailand, began to implement lockdown measures to combat the coronavirus (COVID-19) pandemic. This has resulted in economic stagnation. At the same time, foreign investors became net sellers of Thai stocks and bonds. Meanwhile, the Baht has g... Read more

29 May 2020

Financial Institutions

How Will Commercial Banks Adjust to the “New Normal” Era? (Current Issue No.3115)

The coronavirus (COVID-19) pandemic has altered the business environment of commercial banks in two ways: 1) The speed of disruption has become faster; and, 2) There has been a “New Normal” environment in the commercial banking business. Such changes have inevitably affected business model of commer... Read more

25 May 2020

Financial Institutions

Policy Rate Cut Pressures NIM Amid Numerous Assistance Measures for Customers (Business Brief No.3867)

The Monetary Policy Committee’s decision to trim its policy rate on May 20, 2020 has prompted commercial banks in Thailand to cut their interest rates once again a few days after that. Large commercial banks have concurrently announced to reduce their minimum loan rates (MLR), minimum retail rates (... Read more

18 May 2020

Financial Institutions

MPC meeting on May 20 expect to adjust interest rate downward and maintain interest rate t 0.5 percent for the remainder of 2020 (Business Brief No.3865)

KResearch expects the Monetary Policy Committee (MPC) to consider adjusting interest rate downward by 0.25 percent from the current level of 0.75 percent to 0.50 percent, amid this risk-prone economic environment. The Thai economy has been significantly affected by the outbreak of COVID-19, as it ex... Read more

8 Apr 2020

Financial Institutions

BOT issues relief measures to support private sector in the fight against COVID-19 (Business Brief No.3859)

On 7 April 2020, the Bank of Thailand (BOT) issued additional measures to assist the private sector in combating the COVID-19 which primarily concern short-term liquidity boosting measures offered to small to medium enterprises (SMEs) that have been affected by the spread of the COVID-19 virus – a g... Read more

24 Mar 2020

Financial Institutions

COVID-19 Revives Retail Insurance Market via Digital Channel…2020 Core Business Bracing for Complex Challenges (Business Brief No.3857)

The unfolding COVID-19 pandemic has created a new record for the Thai retail insurance market with the total sales of insurance policies projected to reach more than 1 million in March 2020 alone. If so, the total sales of insurance policies overall in 2020 may top roughly 2-3 million, representing ... Read more

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

15 Jan 2020

Financial Institutions

Adjustment of Calculation Method for Loan Default Penalties Will Create New Standard, But Banks’ Income May be Affected in 2020 (Business Brief No.3843)

The Bank of Thailand recently revealed details on the improvements of calculation methods for interests and service charges, with the aim of protecting consumers in three areas. These include: 1) prepayment penalties for SME and personal loans; 2) default interests that must be based on outstanding ... 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