2 risks that could drag Thai banks' growth outlook

Moody's tags outlook as 'stable'.

According to Moody's Investors Service, the outlook for Thailand’s banking system remains stable, as it has been since 2010. Economic growth has been slowing moderately, while banks face risks from 1) household indebtedness, which has increased to 79% of GDP as of June from 64% in Q1 2011, and 2) rising property prices.

Here's more from Moody's Investors Service:

However, Thai banks are well positioned to withstand potential asset-quality challenges due to their strong capitalization and increasing provisioning coverage.

A moderation in loan growth will help prevent these imbalances from growing to levels that would present excessive risks for the banks. Furthermore, a more moderate loan growth rate will reverse the recent trend of deterioration in loan-to-deposit ratios (LDRs).