30-6-2023 (BANGKOK) Thailand’s top three banks collectively hold non-performing loans (NPLs) exceeding US$9.6 billion, the highest in Southeast Asia, according to the Federation of Thai Capital Market Organizations (Fetco). Despite this, Thai banks as a whole maintain a robust level of reserves to address bad debts.
Fetco recently published its “Capital Market Snapshot” report titled “Aspects in Stability of the Banking Industry in Asean,” which sheds light on debt, deposit, and loan risks within Thailand’s commercial banking sector, as well as other Asean countries.
The report reveals that Singapore exhibits the highest proportion of accounts receivable and customer deposits (non-financial institutions) compared to its GDP, standing at 228% and 287% respectively. Thailand, Vietnam, and Malaysia display similar ratios of accounts receivable and deposits relative to their respective GDPs. On the other hand, the Philippines reports the lowest figures in this regard, at 56.4% and 85.4% respectively.
Among the six Asean countries, Thailand boasts the highest value of bank deposits at $55.4 billion, constituting 17% of its GDP. However, the total value of NPLs for the top three Thai banks exceeds $9.6 billion, equivalent to 1.69% of the country’s total debts, as highlighted by Fetco.
In the Philippines, the top three banks’ combined NPLs exceed $2.5 billion, representing 1.23% of the country’s total debts. Meanwhile, Indonesia’s three largest banks report NPLs surpassing $4.6 billion, accounting for 1.21% of the nation’s total debts.
The report emphasizes that although Thai banks experience a 4% bad debt level relative to total debt, they consistently maintain a high level of provisioning for bad debts.
Furthermore, the proportion of short-term deposit accounts (less than one year) in Thailand has been steadily increasing since 2017.
Singapore stands out with the lowest economic risks, while its banking sector demonstrates the highest lending and customer deposits within the region, relative to GDP.
In terms of the number of banks operating within Asean, Malaysia leads with 311, whereas Thailand has the smallest number, with only 58 banks.
In the Philippines, short-term deposits make up around 60% of total bank accounts, but the country maintains the lowest debt-to-deposit ratio among the six Asean nations.
