Thai banks strong enough to weather consumer lending slowdown: analyst

Thanks to the banks' strong capital positions.

According to BMI Research, the balance sheets of Thai banks continue to strengthen as they benefit from the extended period of low oil prices and the rise in domestic savings relative to investment across the economy.

"We believe that the Thai banking system is in a strong position to weather the slowdown in consumer lending as their capital positions were bolstered by an increase in net interest income over recent years. This comes at a time even when the credit cycle is slowing, with total loans growing by just 2.0% y-o-y in December 2016, which was the slowest pace since the Global Financial Crisis."

The household deleveraging cycle in Thailand is therefore unlikely to result in considerable financial market instability, particularly as the economy appears to be showing signs of a cyclical pick up amid renewed political stability and increased infrastructure investment, adds BMI Research.