Thai banks' interest income drops for 3 consecutive quarters

It fell by 1.2% in Q215, worsening from -0.8% in Q115.

Analysts at BMI Research are bearish towards the Thai banking sector for the coming quarters, owing to the continued lacklustre economic conditions and high level of household debt in the country. In a sign of rapidly deteriorating performance of the banking sector, the latest data from the Bank of Thailand (BoT) showed that interest income fell by 1.2% y-o-y in Q215, worsening from -0.8% in Q115 and marking the third consecutive quarter of contraction. 

BMI Research adds:

Meanwhile, interest expense has continued to rise, resulting in a rapid deceleration in net interest income growth, which came in at -0.1% y-o-y in Q215. The contraction in net interest income in Q215 also marked a reversal from recent quarters of y-o-y expansions, reflecting immense downward pressure on the Thai banking sector.

Consequently, the weak Thai economy will also see loan growth remain muted over the coming quarters. As such, we maintain our forecast for loans to grow by only 5.0% in 2016, unchanged from an estimated 5.0% in 2015.