KResearch has compiled major financial data from the consolidated financial statements of nine commercial banks and their subsidiaries for 1Q21. The latest data reveals that these commercial banks and their subsidiaries recorded a net profit of Baht 46.071 billion, or growth of 47.4 percent QoQ, compared to 4Q20 which recorded a net profit of Baht 31.259 billion. The increase could be attributed mainly to reduced loan loss provision and operating expenses. Meanwhile, the income from core businesses of these commercial banks has yet to return to pre-pandemic levels, on account of Thailand's economic conditions, which remain subject to pressures from the prolonged COVID-19 outbreak.
Regarding the outlook for the remainder of 2021, KResearch assessed that the capacity and effectiveness of the measures used in combating the third wave of COVID-19, and efforts to speed up vaccinations, will serve as major variables that will not only affect the direction of the Thai economy, but also hold significance for the operating performance of the aforementioned commercial banks and their subsidiaries in three major ways, namely 1) asset quality; 2) the growth rate of loans, which are commercial banks' core income; and 3) the mechanism/assistance measures for debtors, all of which need to be addressed accurately and appropriately.
Should the third wave of COVID-19 persist for many months, Thailand's reopening for international travelers could face further delays and compel financial institutions to take more proactive measures concerning asset quality. Similarly, the mechanism for issuing new loans may have to exercise increased caution towards clients' credit risks. Recent data suggests an overall drop in the proportion of debtors who have applied for assistance measures, falling to approximately 15.4 percent in February 2021. However, this figure is expected to see continuous growth over the course of 2Q21 – consistent with the risks posed by COVID-19 – which will in turn pressure the actual income of financial institutions over the medium term. Weakening economic activity could also make it more difficult to maintain fee income in the positive territory as seen during 1Q21.