TLDR:
- Ten Thai commercial banks set aside 235.94 billion baht in provisions for bad loans in 2023, a jump of nearly 20% year on year.
- The provisions for non-performing loans (NPLs) is roughly the same as the total net profit of these 10 banks in 2023, at around 235 billion baht.
Ten commercial banks in Thailand have allocated 235.94 billion baht in provisions for bad loans in 2023, which is an increase of almost 20% compared to the previous year. These provisions for non-performing loans (NPLs) roughly match the total net profit of the banks in 2023, highlighting the cautious debt management of Thai commercial banks despite the country’s recovering economy. The 10 banks included in the report are SCBX, Kasikornbank, Bangkok Bank, Krung Thai Bank, Bank of Ayudhya, TMBThanachart Bank, Tisco Bank, LH Bank, CIMB Thai Bank, and Kiatnakin Phatra Bank. Although these banks reported a slight decrease of 0.2% in outstanding NPLs, they have significantly increased their NPL reserves.
Kasikornbank (KBank) tops the chart for the highest provisions for NPLs in 2023 at 51.84 billion baht, followed by SCBX at 43 billion baht, KTB at 37.08 billion baht, and BAY at 35.61 billion baht. The banks that saw the highest increase in NPL reserves year on year were KTB (52.37%), CIMBT (48.52%), BAY (33.64%), and SCBX (28.88%). In particular, KTB experienced a significant jump in provisions for bad loans in the fourth quarter of 2023, which led to a major sell-off in the bank’s shares and a decrease in its market capitalization.
According to experts, major banks are increasing their reserves due to the debts of Italian Thai Developer Plc (ITD) potentially declining in quality. ITD announced its request for deferment of payment on its outstanding debentures, causing some banks to downgrade ITD’s loans. Other factors contributing to the increase in reserves include uncertainties in the current economic climate that could impact debt quality for vulnerable groups, such as individual clients and SMEs.
Key Takeaways:
- Ten Thai commercial banks set aside 235.94 billion baht in provisions for bad loans in 2023, a jump of nearly 20% year on year.
- The provisions for non-performing loans (NPLs) is roughly the same as the total net profit of these 10 banks in 2023, at around 235 billion baht.
- Kasikornbank (KBank) leads in provisions for NPLs, followed by SCBX, KTB, and BAY.
- Major banks are increasing their reserves due to potential declines in debt quality, including debts by Italian Thai Developer Plc (ITD).
