Banking Sector Quarterly Brief (Q3 2023)

The Thai banking system remains resilient with robust levels of capital, loan loss
provisions, and liquidity. In the third quarter of 2023, the banking system’s loans slightly
contracted for 0.9% YoY 1 due to the gradual repayment of business loans, following
the accommodative growth in liquidity facilities during the COVID-19 period, particularly from
SMEs, export-related large corporates, and the government, combined with the banks’
portfolio management. Nevertheless, banks’ lending continued to expand in some sectors,
mainly in holding businesses and construction. Consumer loans continued to grow
at a slower pace across most portfolios. Loan quality slightly deteriorated, particularly from
consumer loans, while banks continued with their loan portfolio management and assisted
debtors through debt restructuring. As a result, the banking system's gross non-performing
loans (NPL or stage 3) slightly increased to 494.6 billion Baht, equivalent to the NPL ratio
of 2.70%. Meanwhile, the ratio of loans with significant increase in credit risk (SICR or stage 2)
stood at 5.84%, decreased from 6.08% in the previous quarter.
The banking system’s profitability in the third quarter of 2023 improved from
the previous year mainly driven by the higher net interest income, despite higher costs of funds
from rising deposit rate and FIDF fee normalization together with the increased operational
costs and provisioning expenses. However, compared to the previous quarter, net profit
declined primarily due to a reduction in seasonal dividend income and a decline in FVTPL
profit resulting from losses in the sale of derivatives.
However, there remains a need to monitor the debt serviceability of SMEs and
some vulnerable households with slow income recovery. The household debt to GDP
ratio in the second quarter of 2023 remained unchanged from the previous quarter,
while the corporate debt to GDP ratio slightly increased. Overall corporate profitability was stable,

1 Excluding the impact of a banks’ transfer of credit card and personal loans to its subsidiaries, the total loan contraction was 0.2% yoy.
with a slight improvement in the chemical manufacturing sector in contrast to the performance
of other manufacturing sectors. However, the profitability of tourism-related sectors
experienced a negative impact from the low season.

For further information, please contact: Banking Risk Assessment Division

Tel: +66 2283 5980, +66 2356 7796
E-mail: BRAD@bot.or.th
Banking Sector Quarterly Brief
(Q3 2023)
20 November 2023
 Banking Sector Quarterly Brief (Q3 2023)
Thai banking system remains resilient. However, there remains a need to monitor
the debt serviceability of SMEs and some vulnerable households with slow income recovery.
Capital, loan loss provisions, and liquidity remained robust.
Bank loans slightly contracted due to the gradual repayment of business loans after the COVID-19 period, combined with the
Commercial banks’ portfolio management. Nevertheless, bank loans continued to expand, mainly from large corporates in holding businesses
and construction. While consumer loans continued to grow at a slower pace.
Banking system Loan quality slightly deteriorated in consumer loans. The overall NPL amount marginally increased, mainly from consumer loans.
Meanwhile, the Stage 2 loan amount decreased from the previous quarter in most portfolios, except for auto loans.
Profitability improved mainly from higher NII despite higher costs of funds, operational costs, and provisioning expenses.
Household debt to GDP ratio remained stable, but it is necessary to continue monitoring the debt serviceability of vulnerable
Household households with slow income recovery.
The corporate debt to GDP ratio slightly increased, while the overall corporate profitability was stable, with a slight improvement
Corporate in the chemical manufacturing sector in contrast to the performance of other manufacturing sectors. However, the profitability of
tourism-related sectors experienced a negative impact from the low season.
Loans under relief measures slightly increased from last quarter, primarily driven by the sustainable debt restructuring of
Relief measures consumer loans.
2 /11
 Commercial Banking System
Thai banking system remains resilient to serve as a key mechanism
to accommodate loan demand going forward.
Capital, loan loss provision, and liquidity indicators Bank loan and corporate bond growth
Banks’ capital, loan loss provisions, and liquidity remained at high levels. Bank loans slightly contracted mainly due to corporate debt repayments.
Meanwhile, fund-raising through the bond market expanded at a slower pace,
following accelerated bond issuance in the preceding periods.
Q3/2023 Q2/2023 Q3/2022
%YoY %YoY
16 10
Capital 14 12.8
(BIS ratio) 19.9% 19.5% 19.2% 12 5
10
8 0
8.0
6 -5
Liquidity 4
(Liquidity coverage 196.0% 188.0% 185.4% 2 -10 0.4
ratio: LCR) 0 -0.2*
-2 -0.4 -0.9 -15
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Loan loss provision
176.0% 175.6% 171.6% 19 20 21 22 23
(NPL coverage ratio)
GDP (RHS) Bank loans Corporate bonds
Note: * Excluding the impact of a bank’s transfer of credit card and personal loans to its subsidiaries.
Source: BOT, NESDC, SEC and ThaiBMA 3 /11
 Commercial Banking System
Bank loans slightly contracted due to corporate debt repayments, particularly from SMEs, export-related
large corporates and government. However, corporate loans continued to expand, mainly in holding businesses and construction,
while consumer loans expanded at a slower pace across most portfolios.
Overall loan growth by portfolio Corporate loan growth by size Consumer loan growth by portfolio
%YoY %YoY %YoY
10 16 20
9 14
8 12
7 10 9.5*
6 10
8 7.9*
5 4.1* 6 4.4* 4.4*
4 4.1 2.8
3 3.5* 4 0 2.8 2.4
2 1.6 0.8
2 1.9 0.9
1 0.4* 1.2 0 -0.2
0 -2 -10
-0.2* -4
-1 -0.4 -0.9 -5.6 -5.7
-2 -6 -16.3
-1.5 -2.1 -16.2
-3 -8 -20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
19 20 21 22 23 19 20 21 22 23 19 20 21 22 23
Mortgage loans (50%) Auto loans (22%)
Total Corporate (65%) Consumer (35%) Credit line >500 MB** Credit line ≤500 MB**
Credit card loans (4%) Personal loans (24%)
Note: Numbers in the parentheses show the proportion of total loans. ** Corporates’ credit line per bank as of September 2023. Note: Numbers in the parentheses show the proportion of total retail loans.
* Excluding the impact of a bank’s transfer of credit card and personal * Excluding the impact of a bank’s transfer of credit card and personal
loans to its subsidiaries. loans to its subsidiaries.
Source: BOT 4 /11
 Commercial Banking System
Overall NPL slightly increased, particularly from consumer loans, while the loan quality of SME businesses marginally improved.
Banks continued to manage their loan portfolios and assist their debtors.
NPL (Stage 3) of consumer loans
NPL (Stage 3) of total loans by portfolio NPL (Stage 3) of corporate loans by size
by portfolio
% % %
4 8 4
6.71 6.68 3.34
3.16 3.24
6 3
2.98
3 2.79
2.71 2.32 2.38
2.70 2.10
2.67 2.67 4 2
2.65 2.05
2
2 1.21 1
1.18

1 0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
19 20 21 22 23 19 20 21 22 23 19 20 21 22 23
Mortgage loans Auto loans
Total Corporate Consumer Credit line >500 MB * Credit line ≤500 MB *
Credit card loans Personal loans
Note: A bank has transferred credit card and personal loans to its * Corporates’ credit line per bank as of Sep 2023.
subsidiaries since Q4 2022.
Source: BOT 5 /11
 Commercial Banking System
Stage 2 ratio decreased from the previous quarter in both corporate and consumer loan portfolios,
except for the auto loan that still increased.
Stage 2 of consumer loans
Stage 2 of total loans by portfolio Stage 2 of corporate loans by size
by portfolio
% % %
8 14 16
7 6.71 14 14.55
6.66 12 14.39
6.08 10.85
6 5.84 12
10 10.74
5 5.81 5.50 10
8
4 8
6 4.60
3 6
3.98 4.53 4.49
2 4 4 4.53 4.48
3.61 4.45
1 2 2
0 0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
19 20 21 22 23 19 20 21 22 23 19 20 21 22 23

Total Corporate Consumer Mortgage loans Auto loans

Credit line >500 MB * Credit line ≤500 MB *
Credit card loans Personal loans
Note: loan classification was adjusted following TFRS9 adoption in 2020, and * Corporates’ credit line per bank as of Sep 2023.
a bank has transferred credit card and personal loans to its subsidiaries since Q4 2022.

Source: BOT 6 /11

 Commercial Banking System
Bank profitability improved from the previous year mainly from higher net interest income.
Compared to the previous quarter, net profit declined due to a reduction in seasonal dividend income and a decline in FVTPL profit.
Pre-provision operating profit (PPOP) Net profit
Provisioning expenses
Billion THB %yoy 6.5% Billion THB %yoy 7.6%
%qoq -6.4% %qoq -12.5% Billion THB %yoy 4.1%
500 271 %qoq -1.0%
405 416 474 238
181 230
147 196 183
132 163 45 53 48 47
136 128 60 63 60 74 65 45
120 119
19 20 21 22 22Q3 22Q4 23Q1 23Q2 23Q3 19 20 21 22 22Q3 22Q4 23Q1 23Q2 23Q3 19 20 21 22 22Q3 22Q4 23Q1 23Q2 23Q3

Net interest income [77%] Non-interest income [23%]

Ratios 19 20 21 22 22Q3 22Q4 23Q1 23Q2 23Q3
Billion THB %yoy 18.3% Billion THB %yoy -17.2%
%qoq 5.0% %qoq -22.2%
522 577 NIM (%) 2.73 2.63 2.46 2.62 2.64 2.88 2.77 2.95 3.11
504 514
373
241 249 256 ROA (%) 1.39 0.69 0.81 1.01 1.01 1.07 1.00 1.26 1.10
164 173 63 72 56 67
146 160 154 53
ROE (%) 9.90 4.84 5.80 7.49 7.51 7.98 7.41 9.44 8.19
19 20 21 22 22Q3 22Q4 23Q1 23Q2 23Q3 19 20 21 22 22Q3 22Q4 23Q1 23Q2 23Q3

Note: Numbers in the parentheses show the proportion of net income.

Source: BOT 7 /11
 Household
Household debt-to-GDP ratio remained unchanged from the previous quarter since household debt has risen at the same pace as GDP.
However, it is necessary to continue monitoring the debt serviceability of vulnerable households with low income level or slow income recovery.
Household debt to GDP
% to GDP
“accelerated speed” “curbed the curve “aggravated by “gradual economic
100
yet built-up new debts” COVID-19” recovery”
95 91.5 91.4 90.7 90.7
90 85.9 94.2 94.7
84.1
85 Sustainable level of 80% according to
Bank for International Settlements (BIS)
80
75
76.1
70 Economic contraction, HH debt to GDP has gradually
revolving demand for
65 Accelerated loan growth due to the Continued economic and personal and reduced in line with the economic
Great Flood in 2011 and the later loan growth resulted in agricultural loans, and recovery, while loan growth slowed
60 economic stimulus package a relatively stable ratio debt holidays caused down following the end of
55 the ratio to remain high relief measures
50
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022/Q3

2022/Q4

2023/Q1

2023/Q2
Source: BOT and NESDC 8 /11
 Corporate
Corporate debt to GDP ratio slightly increased, while the overall corporate profitability was stable,
with a slight improvement in the chemical manufacturing sector in contrast to the performance of other manufacturing sectors.
However, the profitability of tourism-related sectors experienced a negative impact from the low season.
Corporate debt to GDP Operating profit margin (OPM) by sector

% to GDP %
100 14
12
90 88.0 10 9.98
8 7.37
80 6 6.14
6.07
4
70
2
0
60
Q1/18 Q3/18 Q1/19 Q3/19 Q1/20 Q3/20 Q1/21 Q3/21 Q1/22 Q3/22 Q1/23

50
Q1/13 Q1/14 Q1/15 Q1/16 Q1/17 Q1/18 Q1/19 Q1/20 Q1/21 Q1/22 Q1/23 Q2/23 Tourism related Other services Manufacturing Total business

Note: Median values are shown. The manufacturing sector includes manufacturing and petroleum
businesses. The tourism-related sector includes hotels, airlines, restaurants and trade.
Source: BOT and NESDC Source: SEC and computed by BOT
9 /11
 Development in credit assistance from financial institutions
Overall, loans under relief measures slightly increased from the previous quarter,
mainly due to sustainable debt restructuring by SFIs and non-banks to support retail consumers.
Loan outstanding under Banks + non-banks: Number of accounts Banks + non-banks:
assistance 1.87 trillion baht under assistance 2.46 million accounts
3.44 trillion baht SFIs: 1.57 trillion baht 5.99 million accounts SFIs: 3.53 million accounts
Trillion baht Million accounts
7
4
6
3 5
Banks and 4 SFIs
2 non-banks
SFIs 3 Banks and
non-banks
1 2
1
0 0
July-20 Dec-20 Dec-21 Dec-22 Jun-23 Sep 23 July-20 Dec-20 Dec-21 Dec-22 Jun-23 Sep-23

Large corporates SMEs Retail consumers

Note: Dark colours represent banks and non-banks, while light colours represent SFIs.

Source: BOT 10 /11

 Progress of the financial rehabilitation measures as of November 6, 2023
Approved loan Number of debtors Average approved
Rehabilitation Loan under loan scheme credit line
Credit line 275,886 MB* 254,385 MB 65,458 debtors 3.9 MB / debtor
Well distributed by size, business sector, and region
By existing credit line 72.4% 68.1% 69.6%
of debtors are of debtors are in of debtors are from
New debtors
21.6% New Micro SMEs and SMEs commerce and service provincial areas
debtors
20.6% (existing credit lines < 50 MB) sectors

by debtors by credit line Debtors (%) Debtors (%) Debtors (%)

Number of debtors Average approved
Approved loan under loan scheme credit line
Transformation loan 7,449 MB 537 debtors 13.9 MB / debtor
A loan measure under the Rehabilitation
วงเงินLoan Act (ending
100,000 ลบ. Innovation Innovation
April 9, 2024, along with the rehabilitation loan program) 11% 18%
Green Green
65% Digital Technology 66% Digital Technology
24% 16%

by debtors By credit line

* Note: Credit line for rehabilitation and transformation loans includes the remaining credit line from the asset warehousing program which ended on April 9, 2023
with approved loan of 74,114 MB for 500 debtors. 11 /11