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BANKING
Thai banks could suffer slowing growth and deteriorating asset quality in the second half of the year due to a weakening economic outlook and falling consumer and business sentiment, according to the credit agency Fitch Ratings.
But Fitch noted that first-half bank results showed ''resilience amid global economic shocks and local political uncertainty'', with TMB Bank, Bank of Ayudhya and Krung Thai all reporting stronger results.
''Barring further economic or political shocks, lower provisioning and higher loan growth should see overall stronger results in 2008 for the Thai bank sector,'' Fitch said.
Vincent Milton, the managing director of Fitch Ratings, said the second-half outlook for banks would be affected by high oil prices and political uncertainties that have affected consumption and investment.
''The operating environment remains challenging and heightened credit and market risks could impact results over the next year, although the major banks should be more resilient,'' he said.
Non-performing loans for the major banks are projected to fall below 5% of total loans by the end of the year, as institutions have accelerated asset sales to clean up their legacy bad loans from the 1997 crisis.
Capital ratios should remain strong even though provisioning costs and losses could rise with the weakening credit environment.
Fitch added that funding costs could also rise with tightening liquidity, with smaller banks possibly subject to rising funding pressures.
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