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Financial Market & Institutions Analysis

11 Feb 2021

Financial Institutions

Can QE Help Sustain Thai Economic Recovery? (Current Issue No.3187)

Quantitative easing (QE) is a form of unconventional monetary policy, which is typically used by central banks of major countries, including several nations in Asia, in helping address their economic woes after having to cut their policy rates to near zero percent. The details and size of asset purc... Read more

29 Jan 2021

Financial Institutions

MPC Meeting, February 3, 2021: Policy Rate Likely to Remain Unchanged at 0.5% and Close Attention Must be Paid to New Economic Assessment Results to be Released in March (Business Brief No.3911)

KResearch assesses that the Monetary Policy Committee (MPC) may keep its policy rate steady at 0.50 percent during its first meeting of 2021, scheduled for February 3, because the government has just implemented new monetary and fiscal measures. Its spending under the new fiscal stimulus package acc... Read more

27 Jan 2021

Financial Institutions

Asset Quality Problem Remains Major Risk for Financial Institutions in 2021 (Business Brief No.3910)

Based on 4Q20 financial statements of commercial banks, KResearch assesses that non-performing loans (NPLs) in the commercial banking system may reach approximately THB523 billion as of the end of 2020, accounting for 3.16 percent of total loans. For 2021, we are of the view that NPLs will likely tr... Read more

22 Jan 2021

Financial Institutions

Bond Market 2021: Yields may gradually rise after President Joe Biden signals additional economic stimulus (Current Issue No.3181)

Aside from growing risks posed by the new COVID-19 outbreak which may hamper Thailand’s economic recovery in 2021, another important factor that warrants attention is the rising fund raising cost in the Thai bond market early in the year. This situation is partly due to projections regarding the inc... Read more

13 Jan 2021

Financial Institutions

BOT offers borrowers an extension of relief measures... a lifeline to ease financial burdens and counter new COVID-19 outbreak (Business Brief No.3906)

The new COVID-19 outbreak which has dragged on into 2021 continues to affect economic activity that had previously been on the verge of recovery. Such circumstances have further intensified the issues of financial vulnerability, lack of liquidity and deteriorating debt servicing ability among many ... Read more

6 Jan 2021

Financial Institutions

BOT Presses Ahead with Adjustment of Foreign Exchange Market Ecosystem... But Strong Baht Still Supported by Specific Factors (Business Brief No.3905)

Since the start of 2021, major currencies and Asian currencies, including the Chinese Yuan, have continued to strengthen while the greenback has been facing sell-off, pressured by the Fed’s quantitative easing and the US presidential transition. Meanwhile, the Thai Baht’s value has surged past the 3... Read more

30 Dec 2020

Financial Institutions

Hefty Household Debt Likely to Persist in 2021...Helping Borrowers Survive New Wave of COVID-19 Presents Immediate Challenge (Business Brief No.3904)

According to the Bank of Thailand’s latest report on loans to households during 3Q20, Thailand’s household debt remained at a high level and is projected to rise steadily amid weak economic conditions. The household debt to GDP ratio hit a new 18-year high of 86.6 percent in 3Q20, driven by new home... Read more

29 Dec 2020

Financial Institutions

Commercial Banking Business, 2020: Close Attention Must be Paid to New Wave of COVID-19 (Business Brief No.3903)

In 2020, the COVID-19 pandemic has not only dealt a blow to economic activity, but pressured operating results of commercial banks in many ways. KResearch expects that net profit of domestic-registered commercial banks may reach THB144 billion, representing the lowest level in nine years since 2012.... Read more

17 Dec 2020

Financial Institutions

MPC Meeting, December 23, 2020: Policy Rate Likely Maintained at 0.50% after Economy Has Picked Up (Business Brief No.3901)

KResearch expects that the Monetary Policy Committee (MPC) will keep its policy rate steady at 0.50 percent during the meeting slated for December 23, 2020 because there are signs showing steady recovery in the Thai economy after the government implemented measures aimed at stimulating the economy a... Read more

16 Dec 2020

Financial Institutions

Auto hire purchase market 2021: Recovery expected, but asset quality merits close watch (Business Brief No.3900)

Auto hire purchase is another business that has been affected by the COVID-19 pandemic. Its impact on purchasing power consequently affected the outstanding balance of auto loans in 3Q20, causing a slower growth rate at 3.5 percent, as opposed to 7.7 percent in 2019. The slowdown resulted from a dec... Read more

20 Nov 2020

Financial Institutions

BOT Places emphasis on balancing fund flows in new Baht measures (Business Brief No.3897)

The Thai financial market has substantially been affected by increased volatility and downside risks in the global financial markets since the beginning of 2020. Recently, there was an influx of investment in assets within the emerging markets, including Thailand, following the US Presidential elect... Read more

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