Bandid Nijathaworn: Financial developments and the Thai banking sector Keynote address by Dr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at the Third Euromoney Thailand Investment Forum, Bangkok, 10 June 2009. *  *  *  Thank you and Good morning First let me thank Euromoney for the invitation. It is an honour to be speaking to you today. For the last few years that I have been coming to this forum to speak, I find the session to be very useful as it provides an excellent opportunity for us at the Bank of Thailand to interact and share our views with investors on Thailand’s current issues, including our policies. So, it is a pleasure to be here this morning. My topic today is about financial developments and the Thai banking sector. Given the limitations of time, I want to focus my remark today on two issues. The first is the short-term issue about the current economic and financial conditions, and the policy response that we have had in trying to strengthen the process of recovery. Next, I will speak on the mediumterm issue of financial sector reform, beginning with how we see the new or the post-crisis financial landscape emerging and our plan to respond to these changes in the context of our financial sector Master Plan. First, the current conditions. Latest economic data in Thailand continues to show deterioration in economic activities as evidenced by the estimated decline of 7.1 percent in this year’s first quarter GDP growth.
Additionally, quantitative objectives for reducing the level of non-performing loans should be included in your institution’s annual work plans for 2014;  b)  Evaluating and selecting new loan applications in a professional fashion. Indeed, credit demand remains weak; however, this exists and must be viewed in terms of its potential for growth in the future. In this regard, the banking industry should  BIS central bankers’ speeches  1  strengthen its analysis to steer lending toward those sectors of the economy with high development potentials. Priority should also be given to launching banking products that boost credit demand from small and medium-sized enterprises, mitigating credit risk through portfolio diversification and improving the stable return on bank lending; c)  Reducing lending costs. I refer to the interest rate applied to lek loans. To our opinion, it has inadequately reflected both the key interest rate trend and our expectations. From the decrease in the interest rates applied to government borrowing, we understand that the inert moves in the cost of lending reflect the risk premia the banking industry imposes when lending to the private sector.