Thai banks eye expansion in Southeast Asia

Thailand's large banks are likely to see significant opportunities to expand their regional business and enhance their revenue prospects, given the growth potential of ASEAN economies, according to Fitch Ratings.

Jindarat Sirisithichote, associate director for financial institutions at Fitch Ratings Thailand, said regional business expansion of large local banks rose markedly in 2023 after multiple cross-border acquisitions led to substantial overseas loan growth during 2020-2022.

The international loan portfolio of domestic systemically important banks (D-SIBs) escalated to 10% of the total outstanding loans, a rise from 6% in 2020.

There are six D-SIBs in Thailand, namely Bangkok Bank (BBL), Kasikornbank (KBank), Krungthai Bank (KTB), Siam Commercial Bank (SCB), Bank of Ayudhya (Krungsri), and TMBThanachart Bank. Among these, BBL, KBank, SCB, and Krungsri have notably increased their operations in neighbouring countries.

The official noted that with the strong growth in Southeast Asian economies, particularly in Vietnam, Indonesia, and the Philippines, Thai banks have substantial opportunities for regional expansion.

In February 2024, the SCB announced its agreement to acquire a 100% share of consumer finance lender Home Credit Vietnam. The acquisition is expected to be finalised in the first half of 2025, and will likely support the bank’s international banking business in the long term.

Jindarat Sirisithichote said the growth in regional business opportunities has encouraged the Thai corporate sector to expand offshore. Over the past decade, overseas direct investment has seen a remarkable increase of 223%.