Siam Commercial Bank (SCB) believes it is properly positioned to withstand tariff-related uncertainties following a stress test mandated by the Bank of Thailand.
According to Kris Chantanotoke, chief executive of SCB, the bank conducted a stress test to assess the potential impact of the US tariffs, in compliance with the regulator's requirements.
He said the results indicate the bank is prepared to manage the associated risks.
In response to the potential risks, the central bank recently directed the country's six domestic systemically important banks (D-SIBs) to conduct stress tests to evaluate the impact of tariffs, particularly on exporters to the US and local small and medium-sized enterprises (SMEs) vulnerable to an influx of inexpensive imported goods.
The regulator said it wants to understand the impact across industries and borrower segments, including SMEs and retail clients, to design appropriate financial assistance measures.
On average, SME loans account for 20-30% of D-SIBs' loan portfolios, though the impact will vary depending on each bank's specific loan exposure.
Mr Kris said SCB, Thailand's fourth-largest lender by total assets, manages its export loans through a balanced and diversified portfolio. For clients exporting directly to the US, the bank is ready to offer tailored support and solutions.
"We assist exporters in exploring alternative markets, collaborating with partners to reduce risk, and adopting digital solutions to control operational costs, among other strategies," he said.
FULL IMPACT YET TO BE SEEN
According to SCB, the full effect of tariffs is expected to become clearer in the second half of the year. Although Thai GDP growth surpassed expectations in the first quarter this year, it does not yet reflect a complete picture of the economy's trajectory for the entire year, noted the bank.
Several government agencies and private research institutions have downgraded their Thai GDP growth forecast to 1.5-1.7% this year, said Mr Kris.
The National Economic and Social Development Council reported first-quarter economic growth this year was 3.1% year-on-year, following a 3.3% expansion the previous quarter. After seasonal adjustment, the economy increased by 0.7% from the fourth quarter of 2024.
However, the state planning unit slashed its growth forecast for this year to 1.8%, down from 2.8%, attributed to the impact of the trade war.
The revised projection includes the effect of government stimulus measures totalling more than 200 billion baht already injected into the economy.
Mr Kris said the main economic drivers are losing momentum, as foreign tourist arrivals are expected to total 36-37 million this year, down from an earlier estimate of 39 million.
Export growth is likely to be short-lived, and a reduction in household debt was primarily attributed to weakening consumer spending, he said.
In April, exports grew 10.2% year-on-year, as importers ramped up their inventories during the US's 90-day reciprocal tariff pause.
Exports in April tallied US$25.6 billion, while imports totalled $28.9 billion, a 16.1% year-on-year rise, resulting in a trade deficit of $3.32 billion, said Commerce Minister Pichai Naripthaphan.
For the first four months of this year, exports amounted to $107 billion, a 14% year-on-year gain, while imports totalled $109 billion, up 9.6%, leading to a trade deficit of $2.24 billion.
PRUDENT BUSINESS APPROACH
According to Mr Kris, SCB is adopting a more cautious approach to its operations to maintain asset quality. As a result, the bank's total loan expansion remained marginal during the first five months of this year.
"We are maintaining our loan growth target for this year at 1-2%, though it is more likely to come in at the lower end of that range," he said.
"However, we remain confident that growth will stay in positive territory."
Given the uneven K-shaped growth of the Thai economy, there are various promising industries and customer segments that can support loan expansion, according to SCB. Corporate lending and sustainable finance continue to show strong loan demand.
The bank remains focused on mortgage lending for properties priced at 5 million baht or more, given the strong purchasing power and debt servicing capacity of upper-income homebuyers.
However, Mr Kris acknowledged that SME lending, particularly for small SMEs and auto loans, face more challenges.
The bank slowed new electric vehicle loan approvals due to heightened uncertainty in the automotive market, primarily caused by price wars.