BANGKOK, Nov. 26 (Xinhua) -- Thailand's banking sector has remained resilient in the third quarter, maintaining robust capital levels, loan loss provisions and liquidity amid a contraction in loan growth and rising bad debts, the central bank said on Tuesday.
According to the Bank of Thailand (BOT), loan growth in the Southeast Asian country's banking system fell to 2 percent year on year in the July-September period due to elevated debt repayments, particularly by the government and large corporations.
While new lending to large corporations in the service, real estate and trade sectors continued, alongside personal and mortgage loans, the overall pace of expansion slowed, the central bank said in a statement.
The banking system's gross non-performing loans (NPLs) rose to 553.4 billion baht (about 15.96 billion U.S. dollars) in the third quarter, equivalent to an NPL ratio of 2.97 percent, up from 2.84 percent in the previous three months, driven by a shrinking loan base and higher NPLs in business and consumer loans.
On the profitability front, the banking sector experienced improved performance compared to a year earlier, primarily due to gains from financial instruments measured at fair value through profit or loss despite a decline in quarterly net profits, said BOT Assistant Governor Suwannee Jatsadasak.
It remains essential to monitor potential risks, including the debt servicing challenges of small and medium-sized enterprises (SMEs) and households with slower income recovery amid elevated debt burdens, Suwannee told a news conference.
Structural competitiveness issues in some business sectors were also noted as factors that could contribute to a gradual increase in NPLs, although the risk of an abrupt spike remains low, she added. ■
