Bangkok--31 Mar--Fitch Ratings
Fitch Ratings (Thailand) Limited held a briefing in Bangkok today for more than 100 executives, including bankers, corporate treasurers, insurers and asset managers, to provide a medium-term view on the Thai bank sector landscape, as well as an update on the outlook for global financial markets.
Mr. Parson Singha, Senior Director of Financial Institutions at Fitch Ratings (Thailand), discussed key regulatory issues and potential technological developments affecting Thai banks. Basel regulatory requirements and International Financial Reporting Standard 9 will present banks with implementation difficulties in the near term, such as upgrading internal computer systems and expected loss models. However, the changes will also help banks withstand sharp downturns and improve clarity and transparency for investors.
Meanwhile, technological change will present both threats and opportunities to banks. Thai banks have recently stepped-up their investments in fintech operations, but in general these remain small and part of a defensive strategy. In the short term, any disruption is likely to be on the payments side, with less impact on Thai banks' lending and deposit operations. Banks continue to benefit from their strong franchises and significant barriers to entry in many key products and services. This should help banks sustain their market positions and profitability in at least the medium term. However, as technology usage becomes more prevalent in banks' customer service channels, such as mobile banking, cyber risks will escalate and will need to be an increasing part of banks' risk-management framework.
Fitch has a negative sector outlook on Thailand's banking system for 2017, as the agency expects the weak operating environment to continue hurting banks' asset quality and profitability. Nevertheless, these risks are mitigated by acceptable capital and reserve coverage buffers and the agency has Stable Outlooks for most of its rated Thai banks.
Fitch's event also featured guest speaker, Mr. Kobsidthi Silpachai, CFA, Head of Capital Markets Research at KASIKORNBANK Public Company Limited. Mr. Silpachai discussed the 2017 outlook for financial markets and volatility risks affecting bonds, interest rates and currencies.