Thai banks strong, can weather economic uncertainty - central bank

[AlfHuy]

And what's about the hundreds of new condo blocks going up everywhere. There are no buyers who buy off plan.

Money surely comes from the banks and they soon will get cold feet.

Building half ready, nobody will buy.

Pressure to finish them off, still no buyer.

Anticipated sale value falling.

Banks want companies to inject some fresh capital.

 

Wait until the first one go under.

 

[Brierley]

1 hour ago, AlfHuy said:

I'm always wondering about the "liquidity".

They always say that foreigners living here do not matter.

 

Let's say:

1 does have to hold in a Thai bank 800,000Baht (almost zero interest).

10=8,000.000

100=80,000.000

1000=800,000.000

10,000=8,000.000.000

100,000=80,000.000.000

Eighty Billion Baht.

 

If suddenly 100,000 expats who hold 800k in a Thai bank for visa purposes (I know, many hold 400k or do the monthly transfer).

If all 100,000 foreigner would call Thailand a day and request withdrawal of their 800k, that's an eye-watering 80Billion Baht.

That money, Thai banks use on their balance sheet, loan it for car purchases, businesses, mortgages, where they get at least a return of let's say 5%

 

I think a few banks would be in a bit of trouble.

We are not speaking about NPL, we speak about hard cash with doesn't generate any income for foreigners.

100,000 assumes all of them keep 800k in the bank for visa purposes, that's very unlikely, many will be married and hold half that amount.

 

80 bill baht is USD 2.6 bill. which is 5% of GDP....it's hardly anything at all, even to the Banks whose capitalization runs to the trillions of USD.

 

[Fex Bluse]

6 hours ago, Brierley said:

As said, non-performing loans remain about 3% plus the loan book grew by over 3%. That means 97% of people are repaying their loans and the volume of new business ha grown by 3%.

 

Hi. The world is littered with guys like you who are probably quite educated on the reported facts but who routinely fail to understand that the data they are being fed is erroneous or false. This is where guys with a bit more common sense and less statistics and finance acumen outperform the educated camp.

 

What if what you are being told, the statistics you are being given -- are materially falsified or simply incorrect due to error?

 

Edited May 18, 2021 by Fex Bluse

[Brierley]

3 minutes ago, Fex Bluse said:

 

Hi. The world is littered with guys like you who are probably quite educated on the reported facts but who routinely fail to understand that the data they are being fed is erroneous or false. This is where guys with a bit more common sense and less statistics and finance acumen outperform the educated camp.

 

What if what you are being told, the statistics you are being given -- are materially falsified or simply incorrect due to error?

 

What if, what if, what if! What if the world ended tomorrow, what if the covid was created by the Pentagon and what if anything else you'd care to hypothesize about. 

 

At some point a person has to put a stake in the ground and say these are things, given the benefit of the doubt, that I trust. In my case that stake is reporting by BOT, something I have watched closely for at least fifteen years and have never been able to or had reason to prove as false. And I know that other organizations outside of Thailand examine BOT's reporting very closely also, the IMF, The World Bank, the credit agencies and of course, the many components of the FOREX market. The fact is that if BOT fudged their numbers for very long, given the number of very talented people who look closely at such things, they would get found out in a very public way, very quickly.

 

None of the above is reason why you or anyone else cannot develop a conspiracy theory which if its ridiculous enough, lots of people will believe! Like the manipulation of Thai Baht for the benefit of the hi-so's theory, it doesn't hold water that BOT would fudge their numbers and certainly nobody has been able to successfully prove it, not for want of trying I might add. I appreciate that you guys with all the common sense don't need to  examine fact because your intuition and perception, drawn from anecdotal evidence alone, is much more effective and accurate. Why ever they don't simply disband the BOT, sell off the real estate and make a large profit and employ people like you instead, is one of those mysteries of life I'll never fully understand, it's so obvious! 

[Excel]

23 minutes ago, Fex Bluse said:

 

Hi. The world is littered with guys like you who are probably quite educated on the reported facts but who routinely fail to understand that the data they are being fed is erroneous or false. This is where guys with a bit more common sense and less statistics and finance acumen outperform the educated camp.

 

What if what you are being told, the statistics you are being given -- are materially falsified or simply incorrect due to error?

 

Err I think your are erring towards common sense issues here. That alone will exclude taking notice of some other posters????

[itsari]

2 hours ago, AlfHuy said:

I'm always wondering about the "liquidity".

They always say that foreigners living here do not matter.

 

Let's say:

1 does have to hold in a Thai bank 800,000Baht (almost zero interest).

10=8,000.000

100=80,000.000

1000=800,000.000

10,000=8,000.000.000

100,000=80,000.000.000

Eighty Billion Baht.

 

If suddenly 100,000 expats who hold 800k in a Thai bank for visa purposes (I know, many hold 400k or do the monthly transfer).

If all 100,000 foreigner would call Thailand a day and request withdrawal of their 800k, that's an eye-watering 80Billion Baht.

That money, Thai banks use on their balance sheet, loan it for car purchases, businesses, mortgages, where they get at least a return of let's say 5%

 

I think a few banks would be in a bit of trouble.

We are not speaking about NPL, we speak about hard cash with doesn't generate any income for foreigners.

Many foreigners invest much more than 800,000 baht. Yes I agree with your comments

[Eric Loh]

1 hour ago, Brierley said:

What if, what if, what if! What if the world ended tomorrow, what if the covid was created by the Pentagon and what if anything else you'd care to hypothesize about. 

 

At some point a person has to put a stake in the ground and say these are things, given the benefit of the doubt, that I trust. In my case that stake is reporting by BOT, something I have watched closely for at least fifteen years and have never been able to or had reason to prove as false. And I know that other organizations outside of Thailand examine BOT's reporting very closely also, the IMF, The World Bank, the credit agencies and of course, the many components of the FOREX market. The fact is that if BOT fudged their numbers for very long, given the number of very talented people who look closely at such things, they would get found out in a very public way, very quickly.

 

None of the above is reason why you or anyone else cannot develop a conspiracy theory which if its ridiculous enough, lots of people will believe! Like the manipulation of Thai Baht for the benefit of the hi-so's theory, it doesn't hold water that BOT would fudge their numbers and certainly nobody has been able to successfully prove it, not for want of trying I might add. I appreciate that you guys with all the common sense don't need to  examine fact because your intuition and perception, drawn from anecdotal evidence alone, is much more effective and accurate. Why ever they don't simply disband the BOT, sell off the real estate and make a large profit and employ people like you instead, is one of those mysteries of life I'll never fully understand, it's so obvious! 

 

Good post. As you stated in your earlier post that Thai banks are better regulated after the financial crisis. Moreover the big 3 credit agencies have the tools to assess the financial health of the banks and have not changed Thailand ratings. Thai banks are also analysed by a series of measures by CAMELS, a globally recognised system on soundness of the banks and they are rated high. Well except for liquidity which is really a sign of the current times. 

[CALSinCM]

4 hours ago, AlfHuy said:

And what's about the hundreds of new condo blocks going up everywhere. There are no buyers who buy off plan.

Money surely comes from the banks and they soon will get cold feet.

Building half ready, nobody will buy.

Pressure to finish them off, still no buyer.

Anticipated sale value falling.

Banks want companies to inject some fresh capital.

 

Wait until the first one go under.

 

1997 Redux.

[cclub75]

Banks under the water ? It's such a 20th century idea. ????

 

Since 2008... and the Big Crisis... how many banks went down ? In the world ?

 

Central banks are running the world... And they inject cash like there is no tomorrow... All the main central banks are doing this (call it QE, or else, it doesn't matter).

 

At the end of spectrum, a small country like Thailand. The BOT can not do what the FED, BCE, BOE, BOC, BOJ are doing.

 

But the whole country benefits as well of this global cash tsunami. Hence the condo mania we saw in BKK for instance.

 

And imagine if tomorrow a thai bank would be really in a difficult position.... It would be immediately bailed out by another bank, a foreign bank, or a large local company financed... by other local banks and foreign banks.

 

This is a new paradigm that few people understand. They keep repeating : "the banks are in danger ! Watch out ! Too much bad debts".

 

As long as the central banks circus continues... THEY WON'T BE ANY bank accident. None.

 

Those gazillons of empty condos in Bangkok have zero value ? Perception. They do have a value if... someone says so.

 

"But they are all empty !"

 

So what ?

 

Wake up... In China they don't have empty condos... they have empty cities !

????

And China is doing very well, thank you.

 

The main risk in Thailand is not... the bank system.

 

It's the social system.

 

When you deprive millions of people of their income... for a ridiculous virus that kills a few hundred of old and sick people in a country of nearly 70 millions inhabitants.... then you destroy the social structure...

 

Thailand can not afford the Covid drama.

 

The Covid drama is a fantasy.... for rich and old countries like Europe, USA etc. It's a luxury.

 

Yes, for sure, it gives some perks to the local "hard" gvt (Thailand, Cambodia, Lao etc.)... But the price to pay is way too high.

 

They can't afford it for a long time.

 

Borders closed, millions of people without income... SEA can not afford it... We had fun for 15 months.... We enjoyed scaring ourselves.... Okay.

 

But the music is about to stop.

 

The choice is clear :

-to continue and then it will probably lead to the destruction of Thailand

 

-to reopen everything Texas style... and forget the whole episode in a hurry...

[Bradmeister]

People are losing they're businesses, they're jobs, and productivity is down.

 

100's if not 1000's of factories cannot Work from Home..... but the BOT says almost everything is copestetic. Hunky Dorey, A OK! 

 

WHAT?????

 

Did or did they not just have a special session of Parlament to pass another trillions of Baht loan to The Goverment of Thailand? 

 

 

[Brierley]

2 minutes ago, Bradmeister said:

People are losing they're businesses, they're jobs, and productivity is down.

 

100's if not 1000's of factories cannot Work from Home..... but the BOT says almost everything is copestetic. Hunky Dorey, A OK! 

 

WHAT?????

 

Did or did they not just have a special session of Parlament to pass another trillions of Baht loan to The Goverment of Thailand? 

 

 

Yes, and?

[Logosone]

8 hours ago, Brierley said:

Ever since the crash of  1997, BOT watches and reports these things very very closely, the numbers are there to be scrutinised and the international community does just that.

 

Also, some of the Thai banks are seriously large. Bank of Ayudyha (sp) for example is owned by Bank Mitsubishi in Japan and has assets of USD 2.5 trillion!

 

Errr, no it doesn't.

 

Bank of Ayudhya has 87 Billion USD of assets. Which is a long, long way short of 2.6 trillion USD.

 

 https://asia.nikkei.com/Companies/Bank-of-Ayudhya-Public-Co.-Ltd

[Brierley]

4 minutes ago, Logosone said:

 

Errr, no it doesn't.

 

Bank of Ayudhya has 87 Billion USD of assets. Which is a long, long way short of 2.6 trillion USD.

 

 https://asia.nikkei.com/Companies/Bank-of-Ayudhya-Public-Co.-Ltd

Errr, yes it does!

 

On 18 December 2013, MUFG Bank, Ltd., the wholly owned subsidiary of Mitsubishi UFJ Financial Group (MUFG), Japan's largest banking group, replaced GE Capital as the major shareholder of Krungsri.

 

https://en.wikipedia.org/wiki/Bank_of_Ayudhya

[Logosone]

4 minutes ago, Brierley said:

Errr, yes it does!

 

On 18 December 2013, MUFG Bank, Ltd., the wholly owned subsidiary of Mitsubishi UFJ Financial Group (MUFG), Japan's largest banking group, replaced GE Capital as the major shareholder of Krungsri.

 

https://en.wikipedia.org/wiki/Bank_of_Ayudhya

 

No, it doesnt!

 

That figure is from 2016. In Dec 2020, as per the Nikkei link below, Bank of Ayudhya had 87 billion USD of assets. Not 2.5 trillion USD.

 

https://asia.nikkei.com/Companies/Bank-of-Ayudhya-Public-Co.-Ltd

 

Please do not post false information.

Edited May 18, 2021 by Logosone

[Brierley]

4 minutes ago, Logosone said:

 

No, it doesnt!

 

That figure is from 2016. In Dec 2020, as per the Nikkei link below, Bank of Ayudhya had 87 billion USD of assets. Not 2.5 trillion USD.

 

Please do not post false information.

And who is the parent company?

 

https://en.wikipedia.org/wiki/Mitsubishi_UFJ_Financial_Group

 

Please see Group Companies in the link above.

Edited May 18, 2021 by Brierley

[Logosone]

2 minutes ago, Brierley said:

And who is the parent company?

 

I'm not disputing who the parent company is, I am saying that bank does not have 2.5 Trillion USD in assets itself, it has a mere 87 billion USD in assets of Dec 2020.

 

You said that Bank of Ayudhya itself hat assets of 2.5 Trillion USD, that is factually incorrect.

 

Incidentally, MUFG Bank is not a parent of Bank of Ayudhya, it is just a majority shareholder. Mistubishi UFJ Financial Group however is a parent of MUFG. But not of Bank of Ayudhya.

[ThailandRyan]

9 hours ago, Brierley said:

You don't understand! NPL's, Non Performing Loans, are consumer loans where the borrower hasn't made payments for less than 90 days. These are not commercial loans, they are consumer loans.

 

There is a second category of non-performing consumer loans which is called special mention loans, these are loans that have the potential to not perform but haven't yet reached that status, that category is much higher. Still, NPL's are NPL's so to compare apples and apples, NPL's are at 3.1%. Check the BOT web site if you don't believe me, the Central Bank watches and reports on such things very closely.

 

 

And then there is the Household debt issue

https://www.thaienquirer.com/26412/the-thai-household-debt-situation-after-covid-19/

 

https://tpnnational.com/2021/04/07/thailand-household-debt-hits-14-trillion-baht-in-q4-2020-highest-in-18-years-says-kasikorn-research-center/

 

So continue on borrowing from the banks, all is good and they have plenty of money to weather the storm.

On 5/17/2021 at 5:22 PM, snoop1130 said:

Thailand's banking system remained resilient with high capital buffers and liquidity to cushion economic uncertainty, the central bank said on Monday, as the country deals with a third wave of coronavirus infections.

 

[Brierley]

1 minute ago, Logosone said:

 

I'm not disputing who the parent company is, I am saying that bank does not have 2.5 Trillion USD in assets itself, it has a mere 87 billion USD in assets of Dec 2020.

 

You said that Bank of Ayudhya itself hat assets of 2.5 Trillion USD, that is factually incorrect.

 

Incidentally, MUFG Bank is not a parent of Bank of Ayudhya, it is just a majority shareholder. Mistubishi UFJ Financial Group however is a parent of MUFG. But not of Bank of Ayudhya.

Last post on this silliness!

 

I did not say Bank of Ayudhya has USD 2.5 trill. in assets, I said that, "some of the Thai banks are seriously large. Bank of Ayudyha (sp) for example is owned by Bank Mitsubishi in Japan and has assets of USD 2.5 trillion!"

 

If you want to take a pop at me for referring to the parent group as Bank Mitsubishi and not Mitsubishi UFJ Financial Group, please be my guest.

 

[CALSinCM]

1 hour ago, cclub75 said:

And imagine if tomorrow a thai bank would be really in a difficult position.... It would be immediately bailed out by another bank, a foreign bank, or a large local company financed... by other local banks and foreign banks.

The banks would be bailed out by the IMF and the Thai public would be on the hook for the debt. After which bank execs get massive bonuses and the public get massive austerity.

[Mavideol]

10 hours ago, Brierley said:

As said, non-performing loans remain about 3% plus the loan book grew by over 3%. That means 97% of people are repaying their loans and the volume of new business ha grown by 3%.

my friend's GF works at BkBk and she said the opposite, her words """ more than 80% of people that borrow money from us can't pay, they keep coming back asking for more..."""  small Mom & Pop business it's almost 100% defections on loans, some ask for more money to pay the previous loan.....  but one can look at it on a positive way

[Brierley]

4 minutes ago, ThailandRyan said:

And then there is the Household debt issue

https://www.thaienquirer.com/26412/the-thai-household-debt-situation-after-covid-19/

 

https://tpnnational.com/2021/04/07/thailand-household-debt-hits-14-trillion-baht-in-q4-2020-highest-in-18-years-says-kasikorn-research-center/

 

So continue on borrowing from the banks, all is good and they have plenty of money to weather the storm.

 

Hmmm, difficult choice, who to read and believe on this, the Governor of the BOT or that bastion of financial reporting and integrity, the Thaienquirer. It sounds silly I know but  I think I'll stick with the Governor of the BOT. 

[Brierley]

Just now, Mavideol said:

my friend's GF works at BkBk and she said the opposite, her words """ more than 80% of people that borrow money from us can't pay, they keep coming back asking for more..."""  small Mom & Pop business it's almost 100% defections on loans, some ask for more money to pay the previous loan.....  but one can look at it on a positive way

Please see my response to ThailandRyan on this point and replace the words, "Thaienquirer" with "Mavideol's girlfriend".

[Mavideol]

1 minute ago, Brierley said:

Please see my response to ThailandRyan on this point and replace the words, "Thaienquirer" with "Mavideol's girlfriend".

per your assumption the  BoT governor knows better then any local branch manager responsible to evaluate loan demand, that's good to know, if I ever need a loan will go directly to BoT as my branch manager doesn't know <deleted>

[Logosone]

2 minutes ago, Brierley said:

 

I did not say Bank of Ayudhya has USD 2.5 trill. in assets, I said that, "some of the Thai banks are seriously large. Bank of Ayudyha (sp) for example is owned by Bank Mitsubishi in Japan and has assets of USD 2.5 trillion!"

 

If you want to take a pop at me for referring to the parent group as Bank Mitsubishi and not Mitsubishi UFJ Financial Group, please be my guest.

 

 

If  you look at your own sentence you will see that it in effect says that Bank of Ayudhya has 2.5 trillion USD in assets. If on the other hand you intended to say that the parent company of the majority shareholder of Bank of Ayudhya, Mitsubishi UFJ Financial Group has 2.5 trillion USD of assets, that in fact is also incorrect. Mitsubishi UFJ in fact has 3.1 trillion USD of assets. Not I stress, the fifth largest bank of Thailand, which has neither 2.5 nor 3.1 trillion USD of assets, but a mere 87 billion. By comparison, the fifth largest bank of the UK, Standard Chartered, has 789 billion USD of total assets. So I fail to see how 87 billion USD is in any way an indication of a bank having a large amount of assets. By international comparison it is ten times less the fifth largest UK bank.

 

 

[Brierley]

1 minute ago, Mavideol said:

per your assumption the  BoT governor knows better then any local branch manager responsible to evaluate loan demand, that's good to know, if I ever need a loan will go directly to BoT as my branch manager doesn't know <deleted>

I didn't say loan demand, the subject is the financial position of banks.,

[Brierley]

1 minute ago, Logosone said:

 

If  you look at your own sentence you will see that it in effect says that Bank of Ayudhya has 2.5 trillion USD in assets. If on the other hand you intended to say that the parent company of the majority shareholder of Bank of Ayudhya, Mitsubishi UFJ Financial Group has 2.5 trillion USD of assets, that in fact is also incorrect. Mitsubishi UFJ in fact has 3.1 trillion USD of assets. Not I stress, the fifth largest bank of Thailand, which has neither 2.5 nor 3.1 trillion USD of assets, but a mere 87 billion. By comparison, the fifth largest bank of the UK, Standard Chartered, has 789 billion USD of total assets. So I fail to see how 87 billion USD is in any way an indication of a bank having a large amount of assets. By international comparison it is ten times less the fifth largest UK bank.

 

 

And I think if you look at what I wrote it is fairly obvious to most normal people that what I intended to convey was that the ultimate ownership of the Thai bank was such that asset size and access to funding was never likely to be an issue. That point notwithstanding I agree I should have written the "which" not "and", my error, boo hoo, my bad! And thank you so much for researching the most recent assets valuation of the group, that's seriously useful for us all to know! 

[Thomas J]

Maybe

 

The USA banks were extremely strong in 2007 until they were not in 2008.  As a former banker banks are a mirror of the economy.  When the economy is strong businesses and consumers borrow and they repay those loans because their profits are good.  When the economy suffers and people are unemployed they lack the cash flow to repay their loans.  I see a huge number of shuttered businesses.  Most likely those businesses did not purchase all of their assets for cash and they are fully paid.  You have personal consumers with homes/cars who have lost their jobs and income.  I know in my village 14% of the homes have been repossessed and they have remained vacant for more than 5 years.  Now if those homes and business loans that are not paying have been written down to reflect their true recovery values, then the strength of the banks is probably reasonably accurate.  If they are holding those business loan assets, homes, and cars on non-performing loans at full book value, the true financial strength of the bank is overstated since they won't recover the full value.  That was vividly demonstrated in 2008 when the value of those "mortgage backed securities" and foreclosed homes were finally recognized as being worth far less than what the banks were stating they were worth. 

 

[ThailandRyan]

23 minutes ago, Brierley said:

Hmmm, difficult choice, who to read and believe on this, the Governor of the BOT or that bastion of financial reporting and integrity, the Thaienquirer. It sounds silly I know but  I think I'll stick with the Governor of the BOT. 

Yet you don't read the article you just criticized the link.  Here you go straight from the article I linked.

 

According to Bank of Thailand (BoT) data, debts under financial-relief programs stood at 2.79 trillion baht at the end of 2020, equivalent to approximately 19.9 per cent of the country’s household debts. The new round of pandemic is expected to further increase debt outstanding under financial-aid programs during February-April 2021, although such levels are not likely to surpass the prior peak seen in the third quarter of 2020.

 

But as you said it has to be from the BOT Governors mouth for you to believe.  Enjoy.....

[Logosone]

1 minute ago, Brierley said:

And I think if you look at what I wrote it is fairly obvious to most normal people that what I intended to convey was that the ultimate ownership of the Thai bank was such that asset size and access to funding was never likely to be an issue. That point notwithstanding I agree I should have written the "which" not "and", my error, boo hoo, my bad! And thank you so much for researching the most recent assets valuation of the group, that's seriously useful for us all to know! 

 

Okay, thank you very much for clarifying this, I of course accept your explanation. It takes a lot of courage to accept your own error. This is not just a technical quibble though, because your underlying point was that this Thai bank has a lot of assets, the point of this thread is to say that Thai banks are strong. However, if you look at real world figures, the fifth largest UK bank has TEN times the assets of the fifth largest Thai bank.

 

Just because the parent company of the majority Japanese shareholder of Bank of Ayudhya has 3.1 trillion USD in assets, I do not see how this in any way proves that Thai banks are strong. If you compare by assets, rather the opposite looks to be the case, the fifth largest UK bank has ten times the assets of the fifth largest Thai bank.

 

By the way, the fact that MUFG's parent has 3.1 trillion USD of assets is in no way a comfort to anyone in Krungsri if that bank were to go bankrupt, because as you probably know an investors' liability is limited to the amount of its shareholding. The Japanese investment in Krungsri is considerably less than 87 billion, and in the event of any bankruptcy any creditor claim of any Krungsri creditor on the majority shareholder's assets would be unlikely to get any portion remotely close to 3.1 trillion USD. It would just be impossible.

 

 

[Brierley]

1 minute ago, ThailandRyan said:

Yet you don't read the article you just criticized the link.  Here you go straight from the article I linked.

 

According to Bank of Thailand (BoT) data, debts under financial-relief programs stood at 2.79 trillion baht at the end of 2020, equivalent to approximately 19.9 per cent of the country’s household debts. The new round of pandemic is expected to further increase debt outstanding under financial-aid programs during February-April 2021, although such levels are not likely to surpass the prior peak seen in the third quarter of 2020.

 

But as you said it has to be from the BOT Governors mouth for you to believe.  Enjoy.....

The statement in the article refers to "debts under financial-relief programs", that includes targeted debt moratoriums for SME's and probably larger loans to large caps that have been reconfigured as a result of the pandemic. Doing those things is normal banking practice is it not, that is business as usual, regardless that the cause is a pandemic. The article in the OP takes an overall view of the banking sector and doesn't just mention one sector of banking, in isolation.