Bank profits and business sentiment on the upswing
Thailand’s banks provided an economic bright spot last week, registering an 8.2 percent increase in net profits in 2018, as the business sentiment index continued to edge upwards despite economic growth for the year falling below forecasts because of a slowing in the global economy caused by trade tensions.
The 11 commercial banks listed on the Stock Exchange of Thailand posted combined net profits worth $6.57 billion for the year, for an 8.2 percent increase over the $6.07 billion recorded in 2017. The rise in profits came despite the banks waiving fees on digital transactions in an effort to speed the transition to a cashless society.
TMB Bank was the star of the sector with a 34 percent rise in net profits, while Krung Thai Bank, the country’s second-largest lender, scored a 27 percent rise increase in net profits. KBank, the third-largest lender, enjoyed a 12 percent improvement in the same category.
The robust performance of the Kingdom’s financial institutions buttressed confidence in the Thai economy even as the Fiscal Policy Office at the Ministry of Finance said gross domestic product growth for 2018 would total less than the 4.5 percent increase it had forecast earlier.
Based on a preliminary analysis of its figures, the office said growth would most likely increase by 4.1 to 4.2 percent. Economists at the ministry said the shortfall was a result of exports growing by 6.7 percent instead of the 8 percent targeted by the government.
Thailand is just one of the dozens of countries reporting slightly lower growth than expected. Most economists and officials agree that trade tensions have been affecting exports and causing economies to slow. China recently reported its lower growth increase in decades.
Adding to Thailand’s dilemma has been the relative strength of its currency the baht compared to the dollar. The baht has steadily strengthened in recent months because of the large foreign reserves held by the Bank of Thailand. The pace of the baht’s rise has been faster than that of many other currencies in the region.
The Thai economy has remained on solid and stable footing because of substantial growth in the two other pillars of the economy: consumption and investment.
Those factors helped the Business Sentiment Index compiled by the University of the Thai Chamber of Commerce to inch up for the second straight month.
“Overall business sentiment in December was shored up by government spending and investment, continued gains in tourism and exports, clarity on the election date and relatively low energy prices,” said Sauwanee Thairungroj, the university president.