Author Topic: Banks viruscrisis  (Read 1007 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.

channelnewsasia.com
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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.

bangkokpost.com
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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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SE Asia region adjusts to a cashless 'new normal'



In Southeast Asia, going cashless is growing to be part of the "new normal".

The novel coronavirus outbreak has encouraged most consumers in the region to adopt cashless transactions.

With governments enforcing lockdown measures to contain the spread of the virus, people who were forced to stay home have resorted to digital wallets and online shopping to maintain their lifestyles.

And even as the region is gradually lifting lockdown measures, industry players expect consumers to continue to use mobile payment options.

"While people hesitate to use digital products and continue to trust the traditional method of handling money, once they try alternative digital methods, they become users because of the convenience of the product," Maria Aurora Sy-Manalang, chief technology and operations officer at Philippine carrier Globe Telecom Inc, said. Globe Telecom operates GCash-the Philippines' leading digital wallet.

"We believe that the cashless payments' share of overall consumer spending will accelerate in the coming months as the ongoing pandemic influences the payment behavior of consumers and merchants," said Sampath Sharma Nariyanuri, fintech analyst at S & P Global Market Intelligence.

As cashless transactions continue to grow, businesses themselves are expected to cater to and promote this mode of payment.

"It is unlikely that most consumers will switch back to cash. Our previous studies show that shifts to digital payments tend to be irreversible," he said.

As an example, Nariyanuri cited India where, after the government withdrew 500-rupee ($6.60) and 1,000-rupee notes from circulation in November 2016, a temporary cash crunch pushed Indians to opt for cashless payment. And, he said, while physical cash did eventually return, cashless transactions nonetheless continued to surge in India.

Nariyanuri said Southeast Asian retailers are promoting contactless payment. And central banks in Singapore, Malaysia, Indonesia and Thailand are encouraging the use of low-cost, standardized quick response codes that allow merchants to accept payment solutions offered by various banks and nonbanks.

And safety and convenience have likewise spurred more consumers across the region to use digital wallets as social distancing has become the norm amid the COVID-19 outbreak.

In Brunei, food delivery application GoMamam is enjoying brisk business, with its couriers delivering as many as 200 meals a day as people stay home.

According to GoMamam's co-founder and Chief Executive Officer Hadi Wahab, a growing number of these clients are also using Quick Pay, the cashless payment system developed by Bank Islam Brunei Darussalam, the sultanate's biggest bank.

"The outbreak has forced Bruneians to adopt digital (tools) and most of them were pleasantly surprised at how easy and useful they are," Wahab said.

Sign-up rates doubled

In Malaysia, the country's top lender Maybank said sign-up rates for its MAE e-wallet doubled, while GrabPay Malaysia's cashless transactions have grown by about 1.7 times since movement control order was implemented on March 18, according to a report by local newspaper The Star.

Meanwhile, the Monetary Authority of Singapore is urging individuals and businesses in the city-state to use digital financial services and e-payments, noting that this will help in enforcing "safe distancing measures".

As for the future of digital payments given the ongoing pandemic, Manalang said: "Now more than ever, fintech will play a big part in defining a new normal in the midst of a public health crisis."

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Record flood of new deposits is a problem for banks

Thais are turning to banks as a safe haven, adding deposits at a record pace in the Covid-19 era. While that’s a vote of confidence, the lenders are likely to face a hard time putting all the funds to good use.

Total deposits at all commercial banks surged by 833 billion baht in March, a record for a single month, according to Bank of Thailand data dating back to 2001. That could signal pressure on net interest margins amid challenging lending conditions, according to Yuanta Securities (Thailand).

There’s less opportunity to find enough borrowers as Thailand faces its deepest economic contraction since the late 1990s. The pandemic has badly damaged the nation’s traditional drivers, tourism and exports. A lockdown is being eased gradually but still prevents normal business operations.

“While deposit growth has largely been in the low-cost current and savings segment, a lack of opportunities to lend and lenders’ risk aversion could pressure banks’ loan-to-deposit ratios, and consequently hurt margins,” said Diksha Gera, an analyst at Bloomberg Intelligence.

Companies have hoarded cash to avoid a “liquidity crunch,” SCB Securities said in a note. The operating margin of listed Thai banks narrowed to 30% in the January to March period, the lowest level since 2017, according to data compiled by Bloomberg.

As of March 31, bank loans were 92% of total deposits, the lowest proportion since 2009. The stock market gauge of commercial banks has dropped 33% this year, outpacing a 15% decline in the benchmark SET Index.

That’s not to say banks aren’t seeing new business. Domestic banks’ outstanding loans rose by 224 billion baht in March, the biggest increase since 2017. Some firms have turned to banks because it’s become more difficult to borrow in the corporate bond market.

Even so, new lending accounted for about a fourth of new deposits in March as companies delayed investment and expansion, SCB Securities said. The climb in deposits that month was 39% higher than the combined increase for all of 2019, Bank of Thailand data show.

If history is any guide, major banks won’t lend in haste. Bangkok Bank, Kasikornbank and Siam Commercial Bank were among the few local survivors of the late 1990s Asian financial crisis. That experience made them more conservative than many peers in Southeast Asia.

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State of economy worse than initially estimated: BOT

The economy will be highly unpredictable due to the global slowdown and the state of financial markets, Titanun Mallikamas, the Bank of Thailand (BOT)’s assistant governor of the monetary policy committee, said on Wednesday (June 3).

He added that the economy will contract more than initially estimated, and there are concerns that the baht will strengthen further and adversely affect economic recovery.

Meanwhile, the country’s current account had run into a US$700-million deficit in April. If the account did not include gold, then it would have been imbalanced by $3.1 billion. This is the highest contraction in 20 years.

In the next phase, the rising price of oil and limits on the arrival of foreign tourists will continue reducing the current account surplus.

Titanun added that the current account should be closer to the balance point at least until the tourism sector recovers.

The committee will publish an estimation of economic expansion, inflation rate and the current account in its next meeting on June 24.

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Re: consumer price index marks biggest drop in nearly 11 years
« Reply #16 on: June 04, 2020, 08:00:34 PM »
Thailand's headline consumer price index marks biggest drop in nearly 11 years

Thailand's headline consumer price index (CPI) fell 3.44% in May from a year earlier, its biggest contraction in nearly 11 years and more than expected, commerce ministry data showed on Thursday.

While there is a risk of deflation if the economy does not perform as well as expected, Thailand is not currently in deflation as the inflation rate has been negative for just three months, Don Nakornthab, senior director of the central bank's economic and policy department, said in a statement.

Deflation would entail a prolonged period of negative inflation as well as price falls in several goods and services sectors and other factors, he said.

He added that the central bank, which is monitoring the situation closely, expects negative inflation for the rest of the year before turning positive next year.

The reading compared with expectations of a 2.95% decline in a Reuters poll, and with a fall of 2.99% in April. The central bank targets headline inflation of 1%-3%.

The annual core inflation rate was 0.01%, which compares compared with a forecast of 0.35%, and April's 0.41%. REUTERS

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SET rises sharply as foreign investors return in droves
The Stock Exchange of Thailand (SET) was the only index in the region to rise sharply as foreign investors spent more than Bt11 billion on Thai stocks, said Nuttachart Mekmasin, research analyst at Trinity Securities.

On Friday (June 5), SET Index rose by 24.69 points or 1.75 per cent, closing at 1,435.70, the highest in four months.

Nuttachart said that among other Asian indices, the SET rose 28.4 per cent followed by Japan’s Nikkei rising 23.2 per cent and South Korea’s KOSPI 19 per cent.

“The SET gained positive sentiment from more foreign investors returning to buy Thai stocks,” he said.

“Since the beginning of this month, foreign investors have spent more than US$189 million on Thai stocks, $237 million in Indonesia, $49 million in the Philippines, $2.249 billion in India, $1.239 billion in Taiwan and $210 million in South Korea.”

He added that SET also gained positive sentiment from the uptick rule that requires short sales to be conducted at a higher price than the previous trade, causing the short-selling value to drop below Bt1 billion per day.

“If the SET extends the uptick rule, the index may maintain a high level,” he said, adding that while the index rose sharply, the trading proportion of individual investors also rose 50 per cent.

“Stocks that pushed the index to rise were energy stocks led by PTT and PTT Exploration and Production [PTTEP], and PTT Global Chemical [PTTGC], whose price rose by 4 to 8 per cent after Opec+ decided to keep oil production low for up to three months,” he added.

Meanwhile, a stock analyst at Capital Nomura Securities said that since the end of May, foreign investors had spent up to $4.281 billion on Asian indices.

“However, the SET Index may fall as it has risen to the resistance line at 1,430 points,” the analyst said. “We advise investors to hold only 30 per cent and buy stocks that have strong basic factors every month.”

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Credit card operators aim to cash in on online shopping surge after Covid-19
Credit card operators are rolling out promotional campaigns to boost usage during mid-year sales, especially in online shopping and food delivery.

Pittaya Vorapanyasakul, executive vice president at Krungthai Card Plc (KTC), said the company was focusing on post-lockdown marketing campaign to restore sales lost during the Covid-19 crisis. “As the mid-year sale is drawing close, we will promote convenience in digital shopping via KTC mobile application where shoppers can pay via linkpay system and exchange their points for rewards at any time,” she said. “We estimate that third-quarter sales will see negative growth but it will improve over the second quarter. The sectors that will see largest increase are supermarkets, online shopping and food delivery due to changing customer behaviour after the Covid-19 lockdown.”

Thakorn Piyaphan, chairman of Krungsri Consumer Group, said the company will organise promotional campaigns for online shopping and food delivery by cooperating with partners such as Central, The Mall and Home Pro. “Customers will enjoy up to 5 per cent discount for online shopping with zero interest for six months,” he said. “Furthermore, customers can use their points in exchange for discount up to 13 per cent and receive up to 17 per cent cash back reward.”

Thakorn added that the company’s survey revealed that the sectors in which credit card sales have grown significantly are online shopping (90 per cent increase), fund investment (51 per cent) supermarket and hypermarket (21 per cent), and convenience store (7 per cent).

“Due to Covid-19, credit card sales overall in 2020 should decrease by 35-40 per cent compared to last year, which expanded by 10 per cent from the previous year,” he added.

Anisa Choochan, assistant general manager of credit card products at Siam Commercial Bank (SCB), said the bank would focus mainly on online shopping in response to customers’ behaviour in the new normal era.

“SCB will promote contactless and digital payment to reduce the risk of germs spreading via cash,” she said. “The sectors that we will be focusing our promotions on are supermarket, insurance and hospital, as people have become more health conscious due to the outbreak.”

“SCB will also allow customers to exchange their points for rewards via electronic channel as well as provide e-coupon that can be used as instant discount for their next purchase,” she added.

Kanjana Rojwatanyu, chief marketing officer at TMB Bank Pcl, said that TMB/Thanachart credit cards will continue to promote spending under the new normal lifestyle. “We have cooperated with leading online shopping platforms such as Lazada, Uniqlo, Grab Foods, Foods Panda and Lineman to provide benefits to online shoppers,” she said.

“Meanwhile, the bank will also organise promotional campaigns for other sectors such as department stores and supermarkets to boost sales after the lockdown in many businesses has been lifted.”

“TMB estimates that credit-card spending in the online sector in 2020 will grow by 25 per cent from last year,” she added.

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SET plunges after second-wave of Covid-19 infections hits several countries
The Stock Exchange of Thailand (SET) Index fell 14.21 points or 1.02 per cent, closing at 1,382.56 today (June 12). Total transactions amounted to Bt85.786 billion with an index high of 1,386.22 and a low of 1,353.51.

During the morning session, a stock analyst from Krungsri Securities said he expected the index to fall to between 1,350 and 1,365 due to uncertainty caused by a second wave of Covid-19 infections after several countries eased lockdown measures.

“Investors are also worried about the US economy after the US Federal Reserve forecast that the country’s gross domestic product this year would contract by 6.5 per cent and the unemployment rate would be 9.3 per cent,” the analyst said.

“In addition, energy stocks came under pressure after the price of crude oil dropped sharply due to uncertainty following a drop in demand for petrol with expectations of a second wave of Covid-19 emerging.”

The top 10 stocks with the highest trade value today were SUPER, BAM, PTT, MINT, CPF, PTTEP, AOT, STA, PTTGC and KBANK.

As of 4.30pm, the price of crude oil rose by US$0.07 or 0.19 per cent to $36.41 per barrel, while gold rose by $2.70 or 0.16 per cent, to $1,742.50 per ounce.

Asian indices mostly fell:

Japan’s Nikkei Index closed at 22,305.48, down 167.43 points, or 0.75 per cent.

China’s Shanghai SE Composite Index closed at 2,919.74, down 1.16 points, or 0.040 per cent, while Shenzhen SE Component Index closed at 11,251.71, up 8.09 points, or 0.072 per cent.

Hong Kong’s Hang Seng Index closed at 24,301.38, down 178.77 points, or 0.73 per cent.

South Korea’s KOSPI Index closed at 2,132.30, down 44.48 points, or 2.04 per cent.

Taiwan’s TAIEX Index closed at 11,429.94, down 105.83 points, or 0.92 per cent.

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Re: viruscrisis - Stock markets slip on fears of second virus wave
« Reply #20 on: June 16, 2020, 11:01:53 AM »
Stock markets slip on fears of second virus wave
Equities tumbled Monday, extending last week's losses on fears of a second wave of virus infections around the world that could put the brakes on the easing of lockdowns and a budding economic recovery.

While European nations press ahead with their reopening after months of strict shutdowns, there are signs that the deadly disease is coming back in China and seeing a resurgence in the United States too.

The worrying figures will provide a test for stock markets, which have soared up to 50% from their March troughs thanks to the lifting of stay-at-home orders and trillions of dollars of stimulus and central bank backstopping.

Beijing has carried out mass testing and locked down several neighbourhoods after 75 cases were linked to a single wholesale food market in the capital. City official Li Junjie said Monday that cases had also been found at another market.

The city has raced to quash the new outbreak, issuing travel warnings, closing the market, deploying paramilitary police and putting nearby housing estates under lockdown.

That came as more than a dozen US states, including populous Texas and Florida, reported their highest-ever daily case totals, while Rome and Tokyo have also seen fresh spikes.

"It means the virus hasn't lost its infectiousness, it isn't weakening... we shouldn't let down our guard," World Health Organization deputy director Ranieri Guerra told Italian journalists.

AxiCorp's Stephen Innes said in a note: "Falling infection rates have provided investors the confidence that the lockdown approach was working, allowing equity investors to look forward to 2021 as impressive monetary and fiscal policy provide a post-pandemic bridge."

"However, rising new daily Covid-19 cases in two of the three most populous states in the US will test that resolve."
- Reopening borders -

Tokyo tumbled 3.5% and Seoul sank 4.8%, while Hong Kong, Sydney, Singapore, Mumbai and Bangkok were all down more than two%.

Shanghai was one% off, Manila also lost 4.8% and Taipei slipped 1.1%, with Wellington off 0.4%.

London, Paris and Frankfurt all lost more than two% at the start of trade.

Still, there is hope for the recovery in Europe, with Germany, Belgium, France and Greece opening their borders to EU countries from Monday. Austria will follow on Tuesday, while Spain said it will do so on June 21.

Meanwhile, France from Monday will allow cafes and restaurants to open in full, instead of just their terraces.

"As economies reopen, an increase in infection rates is to be expected, the question is whether detecting measures will be efficient enough to allow for localised containment measures without having to shut the whole economy again. China could be the template to watch here," said Rodrigo Catril of National Australia Bank.

Oil prices extended last week's losses on fears that a second wave could lead to new lockdowns and hit demand for the commodity again.

Traders are also keeping tabs on a technical meeting of key producers led by Russia and Saudi Arabia, with a panel discussing output cuts.

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Re: viruscrisis - Household debt could soar beyond 80% of GDP
« Reply #21 on: June 18, 2020, 12:27:56 AM »
Household debt could soar beyond 80% of GDP due to Covid-19 crisis: NESDC
The Covid-19 crisis has had a massive impact on household debt and it is expected to rise to more than 80 per cent of GDP, the National Economic and Social Development Council (NESDC), a state think-tank, has warned.

Thai household debt stood at 79.8 per cent of gross domestic product (GDP) in the first quarter of this year.

The pandemic resulted in businesses shutting down in addition to the drought already having hit households hard, leading to increased borrowing of money as incomes declined, NESDC secretary-general Thosaporn Sirisumphand said.

The economic impact will be severe in the second quarter, he predicted, as many businesses have laid off workers, or cut their employees' salaries.

“The income shock led to continued expansion of consumers loans, growing 7.1 per cent, while the NESDC had predicted it should be lesser,” he said. Consumer loans expanded 7.5 per cent in the fourth quarter of last year.

While overall GDP value decreased to Bt15 trillion this year from Bt16 trillion last year, combined with the income shock household debt is expected to surpass 80 per cent of GDP this year, he warned.

Consumers also used personal loans for doing businesses, estimated to be 17.9 per cent of total personal loans, which include hire purchase, auto loans and mortgage, he said. Taking this behaviour into account, household debts could be lower, he estimated.

Non-performing loans arising from consumption loans is about 3.23 per cent of total consumption loans, up from 2.9 per cent in the fourth quarter of last year. Bad debts amounted to Bt156 billion, he added.

Thai household debt totalled Bt13.47 trillion in the fourth quarter of last year, up 5 per cent but down from 5.5 per cent in the pervious quarter. The debt-to-GDP ratio was 79.8 per cent, the highest in 14 quarters. It is expected to surpass 80 per cent of GDP this year.

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Tourism slump to weigh down Thailand economy for years: Report
THAILAND’S economy will not fully recover from the novel coronavirus pandemic for another two years, no thanks to the drag from an insipid tourism industry, one economist has warned.

Citi analyst Nalin Chutchotitham expects economic activity to rebound to 2019 levels only in mid-2022, as the killer contagion compounds structural issues such as an ageing population.

“It remains to be seen how Thailand would re-design and implement its development plan for the medium term,” she added, calling for new policy strategies on issues such as international trade, the digital economy, and building higher value-add industries like medical tourism.

The slow recovery in the arrival of international tourists - whose spending makes up between 12 per cent and 20 per cent of gross domestic product - will be the main lead weight on the economy, as “it remains unclear when Thailand would welcome tourists again”, Ms Nalin said.

While the Thai government plans to boost local tourism with moves such as vouchers and new public holidays, her report noted that the revenue generated from domestic receipts is expected to be “much lower compared (with) the lost revenues from international visitors”.

Meanwhile, some losses in the overall labour market could turn permanent on the back of structural changes - which poses another risk to the economic recovery, the report said. Besides layoffs in other sectors, official forecasters expect about 700,000 tourism jobs to be axed.

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More cash changed hands in April, as people made large withdrawals out of uncertainty



The amount of cash circulated in the economy was far higher than expected during the height of Covid-19 outbreak because many consumers had a lot of cash in hand due to the unpredictable situation wrought by the virus and lockdown restrictions.

Cash circulation in April surged to an all-time high at Bt2.1 trillion or up 13.3 per cent, even though conditions were tough in March and April as the government told businesses to stop operating temporarily and closed the country to foreigners.

In response to these changes, consumers decided to hold more cash than usual, resulting in Bt1.6 trillion worth of Bt1,000 banknotes being used or 8.4 per cent more than the Bt1.5 trillion worth used in April last year. They also used 23.3 per cent more Bt500 banknotes worth Bt190.5 billion, up from Bt154.7 billion in April 2019.

Somboon Chitphentom, the Bank of Thailand’s assistant governor, said people withdrew large amounts of money in April as the crisis hit acute levels and the government put the country under state of emergency. Many venues were closed, and Thailand’s borders were sealed off.

These factors created uncertainty, leading consumers to hold more cash, he noted. They began withdrawing large amounts in the last week of March and continued to do so until mid-April, he said.

The government’s financial aid for affected people also contributed an increase in the circulation of cash in the economy, as the first batch of cash was distributed in April, leading to Bt64.5 billion being withdrawn from banks.

Now that the government has lifted most lockdown restrictions, the withdrawal of cash has returned to normal, Somboon said.

He also believes that people will use more digital money in the post-Covid new normal, especially since online transactions have become so easy and more widespread.

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Re: Banks viruscrisis - Central bank orders cut in interest rates
« Reply #24 on: June 19, 2020, 12:10:19 AM »
Central bank orders cut in interest rates across the board
The Bank of Thailand (BOT) has ordered commercial banks and non-banking entities to cut down the interest rates they charge for credit cards, personal credit and hire purchase by 2 to 4 per cent in a move to help people struggling with debt due to the Covid-19 crisis.

On Wednesday (June 17), the central bank invited the representatives of financial institutions to inform them about the remedial measures created to help people overwhelmed with household debt, such as outstanding credit card bills, car payments and home mortgages.

This reduction will standardise interest charged by banks and non-banking entities, unlike the measure issued in late April, which allowed banks to help their customers as per their discretion.

The central bank said interest rate will be cut in general, not just for consumers affected by Covid-19.

BOT also plans to expand the financial coverage limit on all credit cards as well as personal credit and cash cards.

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Re: Banks viruscrisis - No big profits for banks
« Reply #25 on: June 20, 2020, 12:13:50 AM »
No big profits for banks, leasing companies after BOT places ceiling on interest rates



The profits of commercial banks and non-banking entities may be under pressure now that the Bank of Thailand (BOT) has issued measures to help debtors.

The central bank recently ordered them to cut down the interest rates they charge for credit cards, personal credit and hire purchase by 2 to 4 per cent in a bid to help people struggling with debt due to the Covid-19 crisis.

Anekpong Putthapiban, assistant director at Asia Plus Securities, said BOT’s move may have an adverse impact on commercial banks’ net interest margin due to the decline in real interest rate depending on the number of debtors participating in these measures.

"For every 0.10 per cent drop in net interest margin, banks’ profit forecast this year will decrease by about 5 per cent,” he said.

He also said that for every 1 per cent interest rate cut by leasing companies, such as Aeon Thana Sinsap (AEONTS), Srisawad Corporation (SAWAD) and Muangthai Capital (MTC), their net profit forecast this year will drop by 3 to 9 per cent.

"AEONTS’s net profit will be affected by the new interest rate ceiling on credit cards because they charge approximately 20 per cent, but the new interest rate ceiling is 16 per cent," he said. "However, the impact on SAWAD and MTC's net profit are limited because they charge for personal loans at 24 per cent, which is less than the new interest rate ceiling of 25 per cent.”

He advised investors to avoid investing in leasing companies, because most leasing firms’ stock prices rose to its base value and received a negative factor from BOT's interest rate control measures.

Meanwhile, a stock analyst at Yuanta Securities said BOT's measures will affect the profit earned from credit-card interest the most.

"Therefore, we expect Krungthai Card and AEONTS's profit forecast this year to drop by 4.1 per cent and 2.1 per cent respectively," the analyst said.

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Re: Banks viruscrisis - new measures aim to avoid a repeat of 1997
« Reply #26 on: June 23, 2020, 10:14:50 AM »
Central bank soothes investors, saying new measures aim to avoid a repeat of 1997
The Bank of Thailand (BOT) has launched pre-emptive measures to prevent a financial crisis like the one in 1997, BOT deputy governor Ronadol Numnonda said in response to investors’ concerns about the resilience of local commercial banks in the Covid-19 fallout.

The Stock Exchange of Thailand (SET) Index closed at 1,352.18 on Monday (June 22), down 18.64 points or 1.36 per cent. Total transaction volume was Bt65.772 billion with an index high of 1,367.98 and a low of 1,347.60. Stock analysts are blaming the central bank’s measures for pulling down the index.

BOT on Friday ordered commercial banks to hold off on paying interim dividends and also stopped them from buying back shares to strengthen their capital ratio in response to the pandemic.

To clarify this move, Ronadol said the central bank was only taking pre-emptive measures.

“We have learned from the 1997 crisis that we should not let the situation get out of hand. At that time, bad loans skyrocketed to 50 per cent of total bank loans because no pre-emptive measures had been taken. Today, we are implementing preventive measures and bad debts are just 3.05 per cent of total bank loans,” he said.

Bad debts stood at Bt490 billion at the end of this year’s first quarter.

BOT has also called on commercial banks to conduct a stress test on the management of their capital in the next one to three years.

Bank capital adequacy ratio is at the heart of the banking business, as it underpins bank lending and reserves against risk assets in case debtors get into trouble in the future.

Banks are expected to submit results of their stress test to BOT as of late July.

Ronadol, meanwhile, reassured investors that banks have strong capital. As of the end of the first quarter, the average BIS capital adequacy ratio was 18.7 per cent, which can be considered relatively high compared to the minimum requirement of 8.5 per cent, he said.

During the 1997 financial crisis, the BIS ratio was 8.1 per cent.

“After consulting with bankers, we believe that when  BIS ratio is between 11.5 and 12.5 per cent, banks could handle the Covid-19 fallout,” he said.

If the BIS ratio falls below that level, banks will have to conduct capitalisation through different methods, such as holding off on paying dividends or buying back shares. Banks can also increase their Tier 1 capital by selling shares or raise Tier 2 capital by issuing debentures, he said.

nationthailand.com
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Offline thaiga

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Re: Banks viruscrisis - Savings accounts surge 14%
« Reply #27 on: July 03, 2020, 12:22:51 AM »
Savings accounts surge 14%
Banks' outstanding balance in savings accounts at the end of June jumped 14% from the end of last year, showing money continued to pour into bank deposits as they are perceived a safe haven amid economic uncertainties caused by the pandemic, despite the rock-bottom interest rates.

Bank of Ayudhya's (BAY) outstanding deposits in its savings accounts at the end of June grew by 16%, exceeding the industry pace, said Phonganant Thanattrai, head of the retail banking and distribution group.

The bank's total deposits at the end of June expanded 8% from the end of 2019.

"Deposits in savings accounts rose 4-5% over the past 3-4 years," he said.

According to Bank of Thailand data, the number of deposit accounts tallied 102 million, with total deposits of 15 trillion baht at the end of April.

Some 88 million accounts, or 86.8% of the total deposit accounts, had an outstanding balance of less than 50,000 baht, with 10% of accounts between 50,000 and 500,000 baht, and the remainder with deposits of more than 500,000 baht.

BAY alone had total deposits of 1.65 trillion baht, up from 1.56 trillion at the end of 2019.

Mr Phonganant said people are risk-averse, switching to bank deposit accounts against the backdrop of the pandemic.

"About 50% of Thais aged around 30 shoulder a debt burden and around 20% of those are defaulters," he said.

To encourage the younger generation to save more, BAY launched an application to help customers manage their savings, targeting two segments -- Gen Z, aged 10-23, who are starting to save money for specific purposes, and Gen Y, aged 23-40, who want to maintain savings for the future and look for investment opportunities.

The Kept by Krungsri app offers an attractive interest rate at 1.6% for the first year and 1.8% from the second year.

The bank targets 200,000 downloads for the app within 12 months and deposits of around 4-5 billion baht with an average 20,000 baht per account.

Year-to-date, users and transaction numbers of the bank's Krungsri mobile application have grown by 12% and 21%, respectively.

According to central bank data, as of the end of March, the number of mobile banking app users in Thailand totalled 62.8 million, up from 60 million at the end of last year, with transaction volume rising 13.8% to 593 million.

BAY shares closed yesterday on the Stock Exchange of Thailand at 23.10 baht, up 30 satang, in trade worth 9.08 million baht.

bangkokpost.com
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Re: Banks viruscrisis - Thai financial system more vulnerable
« Reply #28 on: Yesterday at 10:53:29 AM »
Thai financial system more vulnerable as pandemic hits economy -cbank minutes
(Reuters) - Thailand’s financial system had become more vulnerable due to a weaker-than-expected economic outlook amid the coronavirus outbreak, minutes from the latest policy meeting showed on Wednesday.

On June 24, the Bank of Thailand’s (BOT) monetary policy committee voted unanimously to leave the one-day repurchase rate unchanged at a record low of 0.50%.

The committee assessed that the monetary policy stance had been eased in a timely manner since the outbreak took place, with three policy rate cuts to a record low, the minutes said.

It was necessary to prepare financial measures to continuously alleviate the outbreak impact, the minutes said.

At the meeting, the BOT cut its 2020 GDP outlook to a record contraction of 8.1% from the previous forecast 5.3% shrinkage.

reuters.com
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Offline thaiga

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Thai first quarter household debt at 80% of GDP, highest in four years
(Reuters) - Thailand’s household debt level to gross domestic product (GDP) rose slightly to 80.1% in the first quarter, the highest level in four years, central bank data showed, with the trend set to continue as the coronavirus outbreak squeezes the economy.

Southeast Asia’s second’s largest economy could shrink a record 8.1% this year, the central bank predicts.

As of March, household debt stood at 13.479 trillion baht ($431.47 billion), little changed from the 13.483 trillion baht at the end of last year, equal to 79.9% of GDP.

The debt to GDP ratio may jump to 88-90% at the end of this year, which would be the highest in the 18 years that the central bank has compiled records on household debt, according to Kasikornbank’s research centre.

A sharp economic contraction and banks’ debt relief measures, including lower loan repayments and debt moratoria, are likely to keep household debt levels high, it said.

Soft loans offered to households hit by the outbreak are also likely to push up debt levels, which are already among Asia’s highest.

reuters.com
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