Nevertheless, Fitch expects that these pressures should remain manageable for most banks, which is why most ratings remain on stable outlook. We expect the weaker financial ratios to be in line with what would be seen in a normal downtrend in the business cycle.
Asset-quality risks are mitigated by relatively high loan-loss reserve coverage (average for the sector is 127%), and Fitch expects the pace of delinquencies to decline gradually in 2017. Banks should also continue to be able to maintain their solid capital ratios (sector Tier 1 ratio is 14.2%), which presents another significant buffer against a worse-than-expected deterioration in sector conditions.
The report "2017 Outlook: Thai Banks" is available at www.fitchratings.com or by clicking on the link in this media release.