Author Topic: Banks viruscrisis  (Read 446 times)

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Banks viruscrisis
« on: April 28, 2020, 12:21:50 PM »
Moody's cuts view for local banks

Moody's Investors Service has revised the outlook for 10 Thai banks to stable from positive, with asset quality and profitability poised to weaken because of the coronavirus crisis.

But the international rating agency affirmed the banks' long-term deposit ratings and their long-term senior unsecured debt ratings and issuer ratings.

"Moody's expects that the operating environment for the Thai banks will deteriorate in the next 12-18 months due to disruptions from the coronavirus outbreak, and this will lead to a weakening of banks' asset quality and profitability," it said.

The 10 affected banks are Bangkok Bank, Bank of Ayudhya, CIMB Thai Bank (CIMBT), Export-Import Bank of Thailand, GHB Bank, Kasikornbank, Krungthai Bank, Siam Commercial Bank, TMB Bank and United Overseas Bank Thai.

The rapid and widening spread of the coronavirus, deteriorating global economic outlook, volatile oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets.

The Thai banking system has been one of the sectors affected by the shock, particularly given the role that tourism plays in Thailand's economy, Moody's said.

Thailand's sovereign credit strength is a key input in Moody's ratings for Thai banks, because the country's credit strength affects Moody's assessment of the government's capacity to provide support to the banks in times of stress.

"The change of sovereign outlook to stable from positive means that the upside for long-term bank deposit and senior debt/issuer ratings is now eliminated, leading Moody's to revise the outlooks on the 10 Thai banks to stable," Moody's said.

"Yet banks' strong capital and liquidity, as well as government support to the broader economy, will provide a buffer against growing risks."

Most SET-listed commercial banks in the first quarter remained resilient amid the floundering economy, while building higher provisions for expected loan losses from rising bad debt as new financial reporting standards are adopted and the coronavirus spreads.

Banks' first-quarter results were better than expected because they had yet to see the full impact of the outbreak, while non-performing loans did not reflect the real state of the economy, due to the government's relief package, said Finansia Syrus Securities.

The long-term bank deposit and senior unsecured debt/issuer ratings of nine Thai banks, except CIMBT, are already at Baa1, meaning that these ratings are unlikely to be upgraded unless the sovereign rating is upgraded, Moody's said.

A rating downgrade is possible for all 10 banks if their stand-alone creditworthiness deteriorates significantly or the sovereign rating is downgraded.

bangkokpost.com
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Biggest banks set aside $66 billion to handle bad loans

The world's biggest banks have set aside $66 billion for an expected increase in bad loans as lockdowns to combat the spread of the coronavirus raise the specter of large-scale corporate defaults.

U.S. banks were among the most aggressive, with six of the biggest earmarking $26 billion. Europe lagged behind, with six of the largest banks that have reported results putting away $11.5 billion, led by U.K. firms and Spain's Banco Santander.

The figures are an early indication of the damage the crisis is expected to inflict on lenders across the globe, but there are lots of variables that can make them difficult to compare. Banks in the U.S., for instance, have been more profitable than European lenders and can afford to take a significant hit up front. Some of them are also more exposed in areas such as credit card debt and lending to oil and gas companies.

In Europe, HSBC Holdings and Barclays were among the most aggressive, with HSBC saying credit losses could swell to $11 billion this year. Eurozone lenders heeded a call from the European Central Bank to avoid a sharp increase. The ECB has encouraged lenders to be flexible in applying accounting standards, recognizing both their relative weakness and their systemic importance in a region where companies still depend largely on bank lending rather than capital markets for funding.

Several European banks pointed out that they had reduced lending to oil and gas producers in recent years. Others such as UBS Group, which took the lowest provisions among the six European banks, touted the "high quality" of its borrowers - many of them millionaires with assets to back their loans, even if the value of those assets has recently fallen.

Governments have also made life easier for European banks with wide-ranging guarantees and payment stays extended to corporate and consumer loans. Deutsche Bank, which took a relatively small hit, said it was comfortable doing so because many of its corporate clients are small and medium German businesses that benefit from one of the world's most extensive aid packages.

Despite the relief, Europe's top investment banks are on course for the highest level of loan loss provisions since the aftermath of the financial crisis, with more to come. Deutsche Bank said it expects provisions to peak in the second quarter. But as the crisis ripples through the economy, there's a high degree of uncertainty, particularly for banks that have taken relatively benign provisions.

"We might see a further reserve build in the coming quarters," said Credit Suisse Group Chief Executive Officer Thomas Gottstein.

In China, where the virus hit first, regulators have also allowed banks to take a more lenient approach on how they classify bad debt. The country's banks had already been grappling with a growing pile of bad loans for several years and saw a slight increase in their share of overall credit in March. That increase was limited by lenders agreeing to let small businesses defer payments and roll over debt.

nationthailand.com
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HSBC profits halved as virus batters global economy
HSBC on Tuesday said first quarter pre-tax profits almost halved as the banking giant is battered by the global coronavirus pandemic while it embarks on a major restructuring.

The lender reported pre-tax profits of $3.2 billion, down 48 percent from the same period in 2019, citing credit losses from clients hit by the economic slowdown as a major cause.

"The economic impact of the Covid-19 pandemic on our customers has been the main driver of the change in our financial performance since the turn of the year," newly confirmed CEO Noel Quinn said in a statement.

The Asia-focused lender has embarked on a huge cost-cutting initiative as it battles multiple uncertainties caused by the grinding US-China trade war, Britain's departure from the European Union and now the pandemic.

Earlier this year it announced plans to slash some 35,000 jobs, trimming fat from less profitable divisions, primarily in the United States and Europe.

But COVID-19 has thrown a spanner into the works with HSBC on Tuesday confirming many of the redundancies would be put on hold for now "to reduce the uncertainty" many of its employees would face in a decimated jobs sector.

Banks are being hammered by market volatility and the economic slowdown caused by the virus crisis.

But they are also on the receiving end of huge bailouts and support from central banks and regulators.

Quinn is tasked with transforming the sprawling international bank, which spans more than 50 countries but makes the vast majority of its profits in Asia.

In recent years HSBC's Asia business has done well -- fuelled primarily by China -- but Europe and the US have disappointed.

Before the coronavirus went global the bank announced plans to make $4.5 billion in cost cuts by 2022, with restructuring costs of around $6 billion.

Many of the cutbacks will be in the European and US investment banking sectors, while units in more profitable Asia and the Middle East would be bolstered.

The restructuring plans are the most ambitious since 2012 when HSBC was caught up in a Mexican money laundering scandal.

Quinn took over as acting CEO after the shock ouster last August of John Flint. He was finally confirmed as the bank's head last month.

msn.com
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Re: Banks viruscrisis - 9 banks seek central bank MFLF aid
« Reply #3 on: April 30, 2020, 05:08:46 PM »
9 banks seek central bank MFLF aid
30 mutual funds granted support

Nine commercial banks have sought liquidity support worth a total of 56 billion baht for their purchases of mutual fund units through the Bank of Thailand's Mutual Fund Liquidity Facility (MFLF) as of April 24, according to central bank data.

The MFLF has already provided assistance to 30 mutual funds over the same period, the Bank of Thailand said.

The facility was announced by the central bank and related regulators in March after some mutual fund companies ceased redemptions for fixed-income funds following a sell-off triggered by growing concerns over the pandemic.



The special liquidity facility is aimed at maintaining stability in the financial system amid tight liquidity in the debt instrument market and unusual financial market conditions.

According to the credit facility requirement, commercial banks are allowed to purchase investment units in all money market funds or daily fixed-income funds affected by ailing market liquidity, but the central bank will repurchase only underlying assets that meet its requirements.

The Corporate Bond Stabilisation Fund (BSF), a 400-billion-baht bridge financing facility to help investment-grade corporate bond issuers that are unable to fully roll over bonds maturing during 2020-21, is limited to investment of up to 3% of the entire facility in each corporate bond issuer, and not exceeding 10% for each sector to diversify risks, said Vachira Arromdee, assistant governor of the Bank of Thailand.

The BSF is prohibited from investing in more than 10% of each company's financial liabilities.

The fund started operating on Wednesday.

The central bank initially estimated that demand for the credit facility would be insignificant as several companies can raise funds by themselves, she said. Loans from financial institutions are another option if they fail to mobilise enough funds, with the BSF as their last resort.

During May to June, 200 billion baht worth of debentures are due for redemption, of which 68% have a credit rating of A- or higher, 22% have a rating in a band of BBB+ to BBB-, with lower credit ratings making up the remainder.

Commenting on sentiment in the local bond market, Ms Vachira said investor confidence has improved from March, but the situation has not yet normalised.

"The BSF is a preemptive measure to curb bond market risks and build up investor confidence. The fund is a mechanism to sustain financial system stability, a key role of the central bank," she said.

Given that BSF functions akin to bridge financing, the fund's investment period will not exceed 270 days and companies that use the special credit facility will be charged a higher rate than the market to force them to seek other funding sources before tapping the BSF's facility, said Ms Vachira.

The BSF will charge the facility premium at 1% per year for up to 30% of the rollover amount, and 2% for the remainder, she said.

To be eligible for the BSF, corporate bond issuers have to raise at least 50% of the needed funding by themselves, of which no less than 20% each comes from issuing bonds to public and non-bank companies, and seeking financial institution loans or selling bonds to them. If they are unable to get at least 50% from either party, they must ask shareholders to provide the remaining funding.

Ms Vachira confirmed the BSF will invest only in investment-grade bonds with a credit rating of BBB- or above as its size represents 90% of the 3.6-trillion-baht corporate bond value, with most of it allocated to investors, mutual funds, the Government Pension Fund and provident funds. Non-investment-grade bonds account for a marginal portion and most are sold to specific investors.

If corporate bond issuers are downgraded to below investment-grade after participating in the liquidity facility scheme, the BSF is allowed to continue holding their bonds until maturity.

Qualified corporate bonds must be issued by companies listed on the Stock Exchange of Thailand or Market for Alternative Investment, with operations in Thailand. They must not be state enterprises and financial institutions.

While the government has limited its loss compensation at 40 billion baht, the central bank can negotiate for a higher loss-sharing proportion, said Ms Vachira. But the central bank estimates the 40-billion-baht loss compensation will be sufficient, she said.

Proceeds arising from the BSF scheme are prohibited to be used to repay debt early, lending to directors and shareholders, paying bonuses to directors or the top two executives, as well as dividend payments, except for payments announced before April 29.

To manage the BSF, a steering committee chaired by the permanent secretary for finance has been formed to set out investment and risk management policies, while an investment committee chaired by a deputy governor of the central bank has also been set up to undertake investment. Krungthai Asset Management has been appointed as the BSF's fund manager. Companies interested in applying for the special credit facility are required to submit the proposal 45 days before the bond redemption date.

bangkokpost.com
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 Of the five major banks, SCB had shut the most number of branches -- 113 -- compared to the same period last year, followed by Krungthai Bank (54), Kasikornbank (40), Bangkok Bank (15) and Krungsri (11).

After the Covid-19 crisis, the number of branches and ATMs are likely to decrease due to customers increasingly opting for mobile banking. Traditional banking will rarely be used for standard transactions such as deposits, withdrawals, funds transfers, and payments, but more complex financial services will still be available in physical branches.

Many more bank branches might close in the aftermath of Covid-19  nationthailand.com



The Covid-19 pandemic has compelled changes in consumer behaviour, and it remains to be seen if these changes will be the "new normal". One of the areas of behavioural change is in the use of financial services.

Since the Covid-19 outbreak, more people have turned to mobile banking. As a result, the number of transactions through the mobile channel saw a big leap. Commercial banks are beginning to review their branch strategies and how to adjust to changing customer behaviour.

Siam Commercial Bank (SCB) president Arak Sutivong said it was expected, after the Covid-19 crisis ends, that many commercial banks would reduce the number of physical branches due to the changing customer behaviour, which is considered an important catalyst. In the past three years since the announcement of the SCB Transformation Strategy, he said the bank had closed many traditional branches. Currently, there are a total of 911 branches, but the bank has added other touchpoints such as SCB Express, which focuses on providing services via automated machines, or the SCB Investment Centre Wealth Management Centre, which focuses on financial and investment consulting, etc.

The number and rate of reduction of physical branches would depend on many factors, he said, adding the bank would use service satisfaction and customer experience as important factors in determining the design of the network and the service channels of the bank.

The bank focuses on providing omni-channel services in which customers can choose to use the service from their preferred service channels whether through a bank branch, through partners such as 7-Eleven, or via digital channels such as SCB Easy, he said. Overall, even though the number of bank branches may be reduced, access to financial services would reach more customers, he added.

Kasikornbank (KBank) senior executive vice president Wirawat Panthawangkun said the bank still gives importance to a variety of channels or "various platforms that customers can use for convenience". He said customers still used both channels -- physical branches and the digital medium.

"The bank's approach is that we will lean towards service channels by having the right number of branches through consolidation so as to maximise productivity and resources, including staff. Employees will pool at the branch and a new plan will ensure there are no layoffs. At the same time, the bank will accelerate reskilling of employees to be ready to handle new jobs, and enable employees to create value for themselves and the organisation in the future."

Thakorn Piyapan, Krungsri's head of Krungsri Consumer Group and Head of Digital Banking and Innovation Division, believes that branch channels are required for face-to-face service, which builds relationship with customers in ways that online services cannot, such as by talking, giving advice, providing detailed information. "Face-to-face service is still needed. But some transactions should be pushed to online as much as possible, such as bill payments or money transfers, because they can be done through mobile phones. But some customers still want to do their transactions at the bank. After the Covid-19 crises, we must wait to see how much public behaviour changes," Thakorn said.

Bangkok Bank executive vice-president Thaweelap Rittapirom said that in the future, the number of commercial banks' branches would gradually decrease in line with economic conditions and consumer behaviour. However, they are still considered necessary because branches are a channel of communication for everyone at all levels to have access to financial services such as during the Covid-19 pandemic. The branch is a necessary channel that can help customers in need of financial services or get help from various government measures.

Naris Sathaphondecha, the senior director of the TMB economic analysis centre, said that at the end of March, there were 6,436 branches, down 72 from the end of 2019.

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Finance Ministry to launch Bt50 billion savings bonds

The Finance Ministry will raise Bt50 billion from sale of savings bonds to mitigate the Covid-19 impact on the economy and society. The bonds will be on sale from May 14 to June 10 this year.

Finance Minister Uttama Savanayana said that saving bonds were one of the financial tools to promote investment in safe haven assets and enable people to receive returns on investment when financial markets have risks due to economic fluctuation.

“We will sell savings bonds with a limit of Bt50 billion from May 14 to June 10 this year,” he said. “The average interest rate for five-year bonds will be 2.40 per cent a year and 3 per year for 10-year bonds.”

Meanwhile, Patricia Mongkhonvanit, director-general of Public Debt Management Office (PDMO), said that the sales of saving bonds will be divided into three periods as follows:

In the first period, the office will sell savings bonds to people aged over 60 years with Thai nationality or live in Thailand from May 14 to 20.

In the second period from May 21 to 27, the office will sell saving bonds to people with Thai nationality or living in Thailand

In the third period from May 28 to June 10, the office will sell saving bonds to people with Thai nationality or live in Thailand as well as non-profit organisations .

“People and non-profit organisations who are interested can buy saving bonds via Bond Direct smartphone application or through four banks, namely Bangkok Bank, Krungthai Bank, Kasikorn Bank and Siam Commercial Bank,” she said.

She added that the PDMO had informed banks to adjust subscription methods to comply with government’s measures to prevent the spread of Covid-19 and make sure that investors can conduct transactions safely.

“Investors can contact for more information via various channels of banks, including Bond Direct smartphone application,” she added.

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Quality of commercial banks’ assets expected to be low in Q2

The quality of commercial banks’ assets is expected to deteriorate in the second quarter owing to the impact of the Covid-19 fallout, a survey conducted by the Bank of Thailand showed.

The survey, conducted from March 12 to April 16 on banking and non-banking lenders, found that both large and small businesses needed to borrow more money in the first quarter to boost their working capital and refinance their debt due to the impact of the outbreak.

With the pandemic bringing the economy to a near standstill, many businesses suffered a tight squeeze on their cash flow, while they were also unable to raise funds via bonds and equities due to panic among investors. However, the demand for loans to finance capital spending on fixed assets and inventories, especially by property developers, has dropped.

Businesses will still need to take loans in the second quarter to stay liquid as the impact of Covid-19 is far more severe than expected. Some SMEs may even seek financial aid from the government, though overall, they will not need to borrow much owing to the sharp slowdown. So, the demand for loans from SMEs may be flat compared to the previous quarter.

Also, commercial banks were more careful in approving loans in the first quarter, demanding higher interest margin and extra collateral from large firms. These banks are still cautious about lending in the second quarter because they worry that the loan quality may deteriorate. However, this may be offset by the government’s financial aid to SMEs.

On an individual basis, the demand for car, home and credit-card loans is expected to drop substantially from the previous quarter, the survey showed.

Both banking and non-banking lenders have imposed stringent rules for the approval of credit cards and car loans, demanding higher interest rate margins and extra collaterals as the credit worthiness of borrowers shrinks.

Surat Leelataviwat, executive vice president of Kasikornbank, said bad debts will rise given the current dire condition of the economy, but support packages introduced by banks to support their clients may help the borrowers maintain status quo financially.

Though new lending by commercial banks may be on a downward trend, lending via government financial aid facilities may rise, he added.

Naris Sathapholdeja, head of TMB Analytics, said non-performing loans (NPLs) in the first quarter was 3.24 percent, up from 2.98 percent at the end of last year, while bad debt from mortgage loans rose to 3.93 percent from 3.71 per cent.

NPLs in the second quarter are expected to be flat due to the government’s financial aid, though when this aid runs out later, the direction NPLs take will only become obvious in the fourth quarter of this year, he said.

nationthailand.com
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Re: viruscrisis - Thai economy slips into recession
« Reply #7 on: May 18, 2020, 07:51:33 PM »
Thai economy slips into recession after worst quarter in 8 years

Thailand's economy contracted at its sharpest pace in eight years in the first quarter, pushing Southeast Asia's second largest economy into recession sooner than expected, as the coronavirius pandemic hit tourism and domestic activity.

The state planning agency, reporting January-March data on Monday, slashed its forecast for 2020 gross domestic product (GDP) to a contraction of 5.0-6.0 per cent from growth of 1.5-2.5 per cent projected in February.

That would be the worst decline since 1998 when the Asian financial crisis damaged the economy.

The economy shrank 1.8 per cent in the first quarter from a year earlier, the deepest contraction since the fourth quarter of 2011, when there was bad flooding.

That was better than a 4.0 per cent contraction seen in a Reuters poll, and compared with downwardly revised 1.5 per cent growth in the final quarter of 2019.

"The outbreak impact in Q2 will be much bigger than in Q1," said Phacharaphot Nugtramas, economist at Krung Thai Bank, who predicts the economy will shrink 8.8 per cent this year.

The impact of lockdowns, while having eased somewhat, will continue to affect household spending and private investment for the rest of the year, he added.

On a quarterly basis, the economy shrank a seasonally adjusted 2.2 per cent, also the worst decline since 2011, but less than the poll's 4.5 per cent decline.

The agency revised October-December's quarterly GDP to a 0.2 contraction from 0.2 per cent growth, meaning the economy slipped into a technical recession.

WORSE YET TO COME

The economy will be hit the hardest in the second quarter by lockdowns, Thosaporn Sirisumphand, head of National Economic and Social Development Council (NESDC), told a news briefing.

"There should be a U-shaped recovery," he said, adding foreign tourists may be allowed to return in the third or fourth quarter.

Thailand on Sunday opened malls and department stores for the first time since March in its second phase of relaxing measures as the number of new coronavirus cases slowed.

The government has extended a ban on passenger flights until end-June to try to curb the spread, which has infected more than 4 million globally and 3,031 people in the country.

The agency cut its projection for this year's exports and foreign tourist numbers, the main drivers of Thai growth.

It now expects exports to fall 8 per cent this year, rather than rise 1.4 per cent, and slashed its forecast for foreign tourist numbers this year to 12.7 million, down from 37 million seen earlier, and last year's record 39.8 million.

However, the government's 1 trillion baht (US$31.22 billion) borrowing will help, Thosaporn said, referring to the latest step to mitigate the outbreak impact.

Most economists expect the central bank to cut its key interest rate further from a record low of 0.75 per cent this week.

"With the outlook for near term growth and the recovery very poor, the Bank of Thailand is set to ease policy further on Wednesday. We have pencilled in a 25 bps cut, to a record low 0.5 per cent," Capital Economics said in a note.

"Overall, we think the economy will shrink by 9 per cent this year, which would be worse than even during the Asian financial crisis."

In the first quarter, foreign tourist numbers tumbled 38 per cent from a year earlier, while private investment fell 5.5 per cent and public investment dropped 9.3 per cent. Private consumption rose at a slower pace of 3 per cent.

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Thai central bank seen cutting key rate to help economy in recession

(Reuters) - Thailand’s central bank is widely expected to cut its benchmark interest rate to a new low at its policy review on Wednesday to cushion the economy from the impact of the coronavirus outbreak.

Sixteen of 18 economists in the poll predicted the Bank of Thailand’s (BOT) monetary policy committee would cut its one-day repurchase rate THCBIR=ECI by 25 basis points to 0.50% - which will be the fifth reduction in borrowing costs since August.

The other two economists forecast the central bank would keep the rate at 0.75%, the lowest on record.

The BOT left the rate unchanged at its March 25 meeting after cutting it by a quarter point at a special meeting on March 20, saying the effects of the pandemic would be more severe than previously expected.

On Monday, Thailand reported its economy contracted 1.8% in the first quarter from a year earlier, and 2.2% from the December quarter, as social restrictions to halt the spread of the pandemic hit tourism and domestic activity.

The National Economic and Social Development Council (NESDC), which complies GDP data, slashed its 2020 GDP outlook to a 5.0-6.0% contraction from growth of 1.5-2.5% seen earlier, with exports expected to fall 8%.

In March, the BOT forecast the economy would shrink 5.3% this year, the deepest contraction since the 1997-98 Asian financial crisis.

“We continue to look for another easing of 25 bps in this meeting,” said Kobsidthi Silpachai, head of capital markets research at Kasikornbank.

“The NESDC forecasts are painting that the economic outlook will get worse before it gets better,” he added.

Tim Leelahaphan, economist at Standard Chartered Bank, predicts a quarter point cut this week and a similar reduction in the third quarter.

But some think policymakers may want to wait to assess the effects of government and central bank steps introduced to mitigate the impact of the virus, which had also prompted banks to cut their lending rates.

“We think the policy rate could go lower this year, but it may not be at this time,” said Phacharaphot Nugtramas, economist at Krung Thai Bank.

reuters.com
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Commercial banks' NPLs hit 9-year high at end of March

Local commercial banks' non-performing loans (NPLs) climbed to a nine-year high at 3.05% of loans outstanding at the end of March, with consumer bad loans outpacing commercial NPLs for the first time in four years.

Stage 2 loans, defined as those with credit risk that increased significantly, spiked to 7.7%, according to a senior official at the central bank.

The higher NPLs (Stage 3) and Stage 2 loans could be attributed to the sagging economy, affected by the Covid-19 pandemic and new Thai Financial Reporting Standards 9 implemented this year.

Commercial banks' loan quality deteriorated from the end of last year with NPLs amounting to 497 billion baht at the end of March, said Tharith Panpiemras, senior director of banking supervision and risk assessment management at the Bank of Thailand.

NPLs increased to 3.05% at the end of March from 2.98% at the end of last year, 2.94% at the end of 2018 and 2.91% in 2017.

Stage 2 loans jumped to 7.7% of loans outstanding at the end of March from 2.79% at the end of 2019, 2.42% at the end of 2018 and 2.55% in 2017.

The NPL outlook depends on the efficiency of banks in assisting virus-hit debtors, business operators' adaptation and the domestic and global economies, he said.

Operators in supply chains and manufacturers are expected to rebound swiftly after production volume picks up.

Consumer bad loans surged to 3.23% of total lending at the end of March from 2.90% at the end of 2019, 2.67% at the end of 2018 and 2.68% in 2017.

Non-performing commercial loans declined to 2.97% at the end of March from 3.01% at the end of last year, 3.05% at the end of 2018 and 3.01% at the end of 2017.

Even though the bad credit ratio of business loans fell, that of small and medium-sized enterprises (SMEs) increased to 4.81% at the end of March, from 4.63% at the end of last year, 4.56% at the end of 2018 and 4.51% in the preceding year.

Consumer loan quality deteriorated across product types. The bad mortgage ratio soared to 4.04% at the end of March from 3.71% at the end of last year, with Stage 2 loans jumping to 6.65% from 1.89%. The NPL ratio for auto loans rose to 2.09% at the end of March from 1.86% at the end of 2019, while Stage 2 loans shot up to 9.65% from 7.43%.

The NPL ratio of personal loans increased to 2.61% from 2.33% at the end of last year.

Commercial banks' loans at the end of March expanded 4.1% year-on-year, driven by commercial loans as some companies switched to financial institution lending from bond issuance amid the volatility in the debt instrument market, said Mr Tharith.

Commercial loans, which made up 64.8% of their total loans, grew 3.3% year-on-year at the end of March, compared with a 0.8% fall at the end of last year. Consumer loan growth slowed to 5.6% at the end of March from 7.5% at the end of 2019 due to lower demand for home, credit card and auto loans.

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Thai stocks hit 10-week high amid regional rise on vaccine hopes

Southeast Asian stock markets gained on Tuesday, with Thailand hitting its highest level in more than two months, as investors cheered positive data from an early-stage study testing a coronavirus vaccine. Southeast Asian stock markets gained on Tuesday, with Thailand hitting its highest level in more than two months, as investors cheered positive data from an early-stage study testing a coronavirus vaccine.

Asian equities tracked Wall Street's rally on Monday after drugmaker Moderna Inc's experimental Covid-19 vaccine appeared safe and showed promise in a small group of healthy volunteers, according to very early data.

"The peak-virus trade continues to gather momentum after last night's Moderna headlines," said Jeffrey Halley, senior market analyst at OANDA. "Moderna's trial is terrific news, but the sample size was not statistically significant... Thus, in the best-case scenario, it will probably be another year before normal life will make a comeback, at best."

Leading gains in the region, Thai shares rose 1.8% to close at their highest level since March 6, lifted by industrial and energy stocks. Thai Airways International surged 14.6% and boosted the index after the cabinet approved a court-led restructuring of the troubled national carrier.

Indonesian shares, which rose as much as 2.2% in the session, closed 0.8% higher after the central bank kept its policy rate steady against expectations for a cut. Interest rate-sensitive bank stocks rose on the news, with Bank Tabungan Pensiunan Nasional Syariah PT jumping 8.1% and PT Bank Rakyat Indonesia (Persero) surging 9.2%.

However, Bank Indonesia (BI) pledged to maintain ample cash in the financial system and said there was room to cut rates in the future to cushion Southeast Asia's biggest economy. "With BI retaining its accommodative stance we continue to expect more rate cuts in the coming months given expectations for a contraction in GDP as early as the 2Q," ING Economist Nicholas Mapa wrote in a note.

Singapore shares extended gains into a third session, buoyed by financial and consumer service stocks.

Malaysian stocks rose 1%, closing at its highest level since April 20, after the world's biggest edible oil importer India resumed purchases of Malaysian palm oil after a four-month gap following a diplomatic row. Petronas Chemicals Group climbed 5%, while palm oil and rubber plantation company Kuala Lumpur Kepong Bhd rose 3.5%. For

Asian markets were likely to be the first to recover, said William Haandrikman, general manager of the Sofitel Legend Metropole Hanoi, an iconic, colonial-era hotel whose crowds of wealthy Western tourists are long gone.

"We have had to re-invent ourselves to focus directly on the local domestic market as well as regional Asian markets," he said. That includes room deals with $100 credits for food.

Domestic tourism is now on the rise, with most Vietnamese airlines reporting their limited domestic flights are fast reaching capacity.

Lured by low prices, Le Thi Mai Phuong, a 38-year-old businesswoman from Hanoi, spent last weekend in the central city of Danang.

"I'm afraid that if we wait until the virus is over, the cost will go up and the beaches will become too crowded," she said. "We don't know if the virus will return to Vietnam and cause another lockdown".

"I'd have to stay at home and dream about travelling again."

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Re: Banks viruscrisis - Thai central bank cuts key interest rate
« Reply #11 on: May 20, 2020, 04:37:16 PM »
Thai central bank cuts key interest rate

The Bank of Thailand's Monetary Policy Committee (MPC) on Wednesday (May 20) cut the key interest rate to 0.50 per cent from 0.75 per cent, MPC secretary Titanun Malikamas said.

The committee voted 4-3 for the rate cut, which is effective immediately, in response to economic contraction deeper than previously predicted due to the sharper global contraction, he said.

This is the second time this year the MPC has cut the policy rate.

The MPC had decided unanimously on March 20 to cut the key policy rate by 0.25 of a percentage point, from 1.00 to 0.75 per cent, effective from March 23, to reduce the interest burden on borrowers affected by the Covid-19 outbreak and to alleviate the liquidity strain in the financial markets.

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Thai stock market’s valuation vaults to record in pandemic

Thailand’s bear-market stock rally may stall after a series of earnings estimate downgrades helped push valuations to their most-expensive on record.

The benchmark SET Index trades at about 17.7 times its 12-month consensus profit forecast, a record high, according to Bloomberg data dating back to 2005. The pricey multiple comes after analysts slashed earnings estimates on  companies by 27% since the end of last year, putting them at the lowest levels since 2010. Meanwhile, equity index surged 30% from a March low -- but is still down 16% this year.

“Current valuations are unjustifiable given Thailand’s steep economic contraction,” said Apichat Poobunjirdkul, a senior strategist at Tisco Securities. “Earnings downgrades will put a damper on any further gains.”

Southeast Asia’s second-biggest economy is forecast to suffer its worst recession in more than two decades as the coronavirus pandemic prompts the shutdown of its borders. Although the gradual re-opening of businesses and services has fuelled some optimism, the state of emergency remains in place, and officials are mulling extending it through June 30.

Analysts’ earnings estimate cuts have accelerated this month after companies reported disappointing first-quarter results. Aggregate earnings of 552 listed companies in the first quarter slid 58% from a year earlier, with energy and petrochemical companies leading the decline, according to Tisco Securities.

“Thailand has long-term growth potential, but the stock market is predominantly made up of old-economy stocks,” said Alan Richardson, a fund manager at Samsung Asset Management in Hong Kong. “Most don’t benefit from the coronavirus, unlike counterparts elsewhere with large representations of technology stocks that benefit from work-from-home activity and stay-at-home entertainment.”

International investors have pulled a net US$5.9 billion from the equity market this year, according to Bloomberg data. Meanwhile, foreign tourist arrivals are forecast to tumble 60% this year, according to the Tourism Authority of Thailand.

“Foreigners are selling out of all emerging-market stocks out of panic and worries about post-Covid aftershocks,” said Nader Naeimi, the head of dynamic markets at AMP Capital Investors in Sydney. “Thailand is very very tourism-dependent, and tourism has been at the heart of the Covid shock.”

One bright spot may be the baht, which has strengthened 1.6% against the US dollar this month, the best performer in Asia in the period, according to data compiled by Bloomberg. Still, the currency dropped more than 7% in the first four months of this year.

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