Economic Analysis - Drop In Profitability Should Reverse Unless Global Risk Aversion Returns - APR 2018

BMI View: We hold a relatively constructive view on the Thai banking sector as the improving macroeconomic backdrop should be supportive of loan growth and banks' profitability over the coming quarters. The key risks facing the banking system stem from global risk-off sentiment and volatility in the financial markets, which could disrupt international trade.

The decline in profitability across the Thai banking sector poses little threat to financial stability, and the recovery in the economy that has taken place over the past few quarters should translate into a recovery in profitability over the coming quarters. The main risk facing the banking system comes from a continued bout of risk aversion in global financial markets, which may presage a slowdown in global trade - the major pillar of the recovery in the Thai economy.

Profitability To See Improvement

Loan Growth Has Picked Up Considerably Since Mid-2017
Thailand - Outstanding Loans, % chg y-o-y

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