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28 Apr 2021

Econ Digest

Consolidated financial statements of 9 banks in 1Q21 show that income from core businesses has yet to recover


         KResearch has compiled key financial data from the consolidated financial statements of 9 commercial banks and their subsidiaries for the first quarter of 2021. The results reveal that these commercial banks and their subsidiaries recorded a net profit of THB46.071 billion, or a growth of 47.4%QoQ compared to the net profit of THB31.259 billion in the fourth quarter of 2020, mainly due to a reduction in provision and operating expenses, while the income from core businesses has still not recovered.


         For the remainder of 2021, KResearch believes that the capacity and effectiveness of the measures in combating the third wave of the COVID-19 pandemic and the progress of vaccination will be the major variables affecting the Thai economic outlook, and will determine the operating performance of the commercial banks and their subsidiaries, particularly in 3 key areas: 1)  asset quality; 2) the loan growth rate as a major source of income for commercial banks; and 3) the debtor assistance mechanisms/measures that need to be adapted and tailored quickly.


          ​Should the third wave of the COVID-19 pandemic persist for many months, it will further delay Thailand's reopening for international travelers and could compel financial institutions to be more proactive in addressing asset quality, while being more cautious about debtors' credit risk in granting new credit. As for debtor assistance measures, while the recent data shows that the overall percentage of debtors entering financial institution assistance measures will fall to about 15.4% in February 2021, the number of debtors applying for assistance from commercial banks and non-bank operators has already started to move higher, which could continue to rise in 2Q21 consistent with the risk of the COVID-19 pandemic. This situation is depressing the future actual income of financial institutions, and the weak economic activities could also make it more difficult to maintain positive growth in fee income, as seen in the first quarter of 2021. 

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Econ Digest