The Bank of Thailand (BOT) recently issued a statement emphasising the financial stability of the domestic banking industry despite two years of Covid-19 induced pain — such were the shockwaves of the March decision by S&P Global Ratings to downgrade four of the country’s six biggest banks.
The downgrades themselves were hardly shocking. Fitch Ratings had issued similar bank downgrades in 2020, at the beginning of the pandemic, citing similar reasons: mounting bad debt and a low-profit, low-growth environment. These were not just Covid-related problems, but rather the result of deeper structural issues in Thailand: an ageing society, high household debt and declining competitiveness in a fast-growing, dynamic region.
