Thai banking keeps stable outlook amid violence

Moody's is maintaining its stable outlook on Thailand's banking system despite the recent escalation of violence in the country. This is based on the sector's asset quality and earnings showing considerable resilience to political turbulence in recent years.

According to Moody's, the Thai banking system remains capable of managing—without deeply compromising its capitalisation—any incremental losses due to the country's political turmoil. However, it will be closely monitoring the impact of the current disruptions on exports and economic activity more generally since lengthy delays to the restoration of transport communications would eventually have a negative impact on many borrowers' cash-flows.

"But the banking system has instead demonstrated these past few months its resilience and it will continue to benefit from the country's expansionary budget and Bt1.4 trillion (US$43 billion) stimulus program," says Karolyn Seet, a Moody's Assistant Vice President and Analyst.

"Indeed, the system has in the recent past weathered a coup—that in September 2006—and various other events since then," adds Seet.