Despite fading foreign direct investment in China amid the Sino-US trade war, Bangkok Bank (BBL) says its international banking business is thriving from a shift towards Asean.
The bank's international banking business, covering nine of the 10 Asean nations, shows positive signs, mainly due to higher investment in Asean from regional business operators and foreigners, said a source familiar with the issue.
Large Thai and regional investors have shifted investment away from China and towards Asean, driven by trade tensions, and the fast-growing economies of the bloc are providing greater business opportunities, the source said.
The mainland's intense competition in all areas, including funding, market, technology and people, is compelling Thai business operators to shun China and shift to regional markets.
Cambodia, Laos, Myanmar, Vietnam and Indonesia are top investment destinations for both Thai business operators and others including Chinese.
At the same time, China's Going Out policy has supported Chinese direct investment in Asean.
China's direct investment in Thailand has been rising significantly, particularly in consumer products, food, auto parts and rubber-related business.
"Several Chinese customers who relocated manufacturing bases to Thailand over the past few years are also eyeing business expansion, particularly building new factories here," the source said. "They also use Thailand as a business hub to branch into neighbouring markets."
The positive trend will facilitate BBL's international banking business this year and next, given its extensive network in Asean.
BBL is Thailand's largest international banking business network with operations in all Asean countries except Brunei.
The source said Bangkok Bank China, a wholly owned unit, would see a softer loan growth this year than in 2018 but single-digit lending growth is still reachable.
As of June, the Chinese unit's total loan portfolio rose 6-7% from the end of last year to around US$1.3 billion.
BBL shares closed yesterday on the Stock Exchange of Thailand at 176 baht, up two baht, in trade worth 578.8 million baht.