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24 Oct 2023

Econ Digest

KResearch views that the banks’ financial statements for 3Q2023 still reflect adjustments to sustain their operating performance, despite benefiting from interest rate hikes


        The recent released financial statements for 3Q2023 of Thai commercial banks reflected adjustments to sustain operating performance. Even though the rising domestic interest rates should boost interest income, the cost of deposits is also increasing. As a result, the net interest margin (NIM) in the Thai banking system rose within a limited range in 3Q2023. Meanwhile, the overall loans grew at a meager pace and the ratio of non-performing loans (NPLs) to total loans has resumed rising, causing many banks to continue to set aside provisioning expenses at high levels.

        For the remainder of 2023, KResearch expects that net interest income will continue to grow and become an important boon for operating performance in the final quarter of 2023. However, maintenance of operating results amid the uncertain economic outlook both at home and abroad remains a challenge, which has prompted commercial banks to accelerate their adjustments. In addition, commercial banks need to be prepared for compliance with the Bank of Thailand’s responsible lending guidelines to be implemented at the beginning of 2024.

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