The Thai banking industry will continue to face high levels of uncertainty in business operations in the second half of the year, mainly due to the rising number of Covid-19 cases, said Thanyalak Vacharachaisurapol, deputy managing director at Kasikorn Research Center (K-Research).
Banks will need to continue to help customers in the area of debt restructuring for the remainder of this year, Ms Thanyalak said.
With a solid cushion, the banking industry will not be pressured with loan loss provisions after they have set aside additional reserve handling for unexpected situations.
However, banks will fill up provisions as a strong risk management basis amid the rising trend of non-performing loans (NPLs) because of the prolonged outbreak.
But additional reserve would not be a significant amount in the second half of this year.
Many SET-listed commercial banks have already reported unaudited financial performances for the second quarter and the first half of this year this week.
Bangkok Bank reported a net profit of 13.28 billion baht for the first half of 2021.
It said that Thai economic recovery in the second quarter of 2021 will be affected by the third wave of the pandemic, leading to a deterioration in various economic indicators, including consumer confidence which has fallen to a 19-year low and will impact consumption and investments by the private sector.
With international travel restrictions still in place, the tourism sector has been unable to recover. However, Thailand's exports have grown in line with robust economic recovery among key trading partners and this has been a predominant supporting factor for the Thai economy, together with government spending.
As Thailand continues to face a high degree of uncertainty, continual government measures are still needed to sustain economic recovery and support affected business operators and retail debtors.
Bangkok Bank said it has continued to support government measures and accelerated help to provide customers with appropriate assistance since the beginning of the outbreak. At the same time, the bank has prioritised risk management while maintaining its financial stability, liquidity levels and strong capital position.
The bank continues to set aside expected credit losses in response to the potential impact from a prolonged outbreak on the Thai economy, driven by a ratio of loan loss reserves to non-performing loans (NPL) of 190.3%.
Siam Commercial Bank and its subsidiaries reported a consolidated net profit of 8.8 billion baht for the second quarter of 2021, up 5.4% year-on-year.
For the first half of 2021, net profit increased by 7.3% year-on-year to 18.9 billion baht.
Given the current economic uncertainty, the bank has set aside 10 billion baht of provisions for the second quarter and 20 billion baht in total for the first half.
Arthid Nanthawithaya, the bank's chief executive, said that amid a challenging business environment and continuing headwinds, the bank has extended relief programmes to affected customers. It is also developing comprehensive debt restructuring plans to maximise the chance of customers' survival and sustainable recovery.
At the same time, the bank is laying the groundwork for post-pandemic business opportunities by building new businesses with high growth potential by offering the next generation digital banking experiences and broadening the scope of customer engagement beyond financial services, he added.
Krungsri (Bank of Ayudhya PCL and its business units) reported a first-half 2021 net profit of 21.05 billion baht.
It has offered multiple series of assistance measures to customers over the first six months of 2021 to ease the impact of economic retrenchment and provide additional liquidity support to both businesses and households.
Krungsri president and chief executive, Seiichiro Akita, said Krungsri remains focused on alleviating the adverse impacts on both businesses and households and supporting the economic recovery through both credit and debt restructuring measures as well as additional liquidity and rehabilitation support as necessary.
"The asset quality will be vigilantly monitored and managed to ensure both safety and soundness while prudential oversight will also be strictly imposed to ensure high levels of capital funds and loan loss provisions to withstand further financial and economic challenges."
Kattiya Indaravijaya, chief executive of Kasikornbank (KBank), said the Thai economy in the second quarter of 2021 has been affected by a third wave that has weighed on household and business spending and delayed the recovery path of the tourism sector.
Although government relief measures and strong export performance have helped support the economy, the economic outlook for the rest of the year will depend on the rollout of vaccines, the course of the pandemic, and related control measures.
For operating performance for the first half of 2021, KBank and its subsidiaries reported a net profit of 19.521 billion, an increase of 104.40% over the same period of 2020.
KBank and its subsidiaries are closely assessing and preparing for uncertainties of economic contraction and delayed recovery while still continuously supporting customers through various measures.
KBank and its subsidiaries are considering setting aside expected credit loss in the first half of 2021 amounting to 19.457 billion which conforms with the prudent approach.