The banking system in the second quarter remained strong with high levels of capital funding and loan-loss provisions to handle the impact of the Covid-19 pandemic, while bad loans were steady, the Bank of Thailand (BoT) said on Monday.
The country's biggest coronavirus outbreak to date has hit economic activity, with stricter containment measures extended and areas expanded.
In the June quarter, the banking sector's capital funding is equivalent to a capital adequacy ratio (BIS ratio) of 20%, with the non-performing loan (NPL) coverage ratio at 152.2%, the Bank of Thailand said in a statement.
NPLs stood at 3.09% of total lending as of June, little changed from 3.10% as of March, helped by financial support measures and relaxed loan classification, it said.
"With the assistance measures, we don't think NPLs will surge, but rather gradually show as loans deteriorate in line with a long and difficult situation," Suwannee Jatsadasake, a senior director at the BoT, told a briefing.
Last week, the central bank approved additional financial measures to help debtors impacted by the outbreak, including providing liquidity and relaxed loan rules.
In the June quarter, banks' overall loan growth slowed to 3.7% year-on-year from 3.8% in the previous quarter as some firms switched to bond issues from bank loans, the BoT said.
However, lending to small and medium-sized businesses rose slightly in the second quarter for the time in five years, Ms Suwannee said.
