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Secure footing challenged
Thai banks are expected to post generally stronger profits for 2008, thanks to lower provisioning expenses and higher net profit margins.
But rising inflation, fuel prices and domestic political uncertainties remain key risk factors, and many banks have already begun warning that loan growth could slow in the second half.
First-quarter bank profits rose an impressive 23.9% from the same period last year, led by Siam Commercial Bank, Bangkok Bank and Kasikornbank.
Two second-tier banks - TMB and Siam City Bank - showed the highest rebounds in percentage terms, with first quarter earnings up five to six-fold from last year due to lower provisioning expenses.
The banking system is poised to undergo its largest change in years this August with the launch of the new Deposit Insurance Agency.
Since 1997, depositors have had their funds fully guaranteed with the backing of the Bank of Thailand's Financial Institutions Development Fund.
But the launch of Deposit Insurance Agency will replace the blanket guarantee with a limited insurance programme that will cap coverage to just one million baht within five years, a limit authorities say is sufficient to cover up to 97% of all deposit accounts in the system.
At the same time, the programme will help introduce market discipline into the financial system, as banks will no longer have the blanket state guarantee to rely upon in competing for deposits.
Secure footing challenged 
Thai banks are expected to post generally stronger profits for 2008, thanks to lower provisioning expenses and higher net profit margins.
The banking system is poised to undergo its largest change in years this August with the launch of the new Deposit Insurance Agency.