Uncertainties surrounding COVID-19 are resurfacing during the transition towards 2022 and will not only affect the pace of Thai economic recovery, but also the commercial banking business over the course of next year. If Thailand can effectively control the Omicron variant of COVID-19, commercial banks may have time to recoup their core business income and overall operating results. However, their net profit and profitability indicators, such as ROA and NIM, will likely rebound at a slower rate and remain below pre-pandemic levels. KResearch expects that the net profit of commercial banks registered in Thailand will reach roughly THB186 billion in 2022, which would be lower than pre-pandemic levels of more than THB200 billion/year.
Meanwhile, it is expected that loan growth in the Thai commercial banking system will slow down slightly at 4.0-5.5 percent in 2022, against the 6.0 percent growth projected for 2021, driven primarily by conventional factors. However, loan quality is an issue that must be closely monitored as NPLs are projected to increase to 3.20-3.50 percent of the total loans during 2022 despite benefits from the Bank of Thailand’s relaxed asset classification rules.
Looking ahead, close attention must be paid to risks stemming from the Omicron variant of COVID-19. If such risks increase and related control measures have a prolonged effect on economic activity as compared to that projected during the beginning of 2022, core business income and the overall operating results of commercial banks will likely be affected, as well. With this in mind, commercial banks are set to become more cautious in their business operations and put appropriate strategies in place to cope with intense competition during 2022, especially in service fees and digital loans. They are expected to seek new business opportunities in the global financial markets during the digital era.