Thai banks will not be materially affected by the recent earthquake due to limited damage, low disruption and minimal exposure to Myanmar and domestic insurers, according to Moody’s Ratings.

On 28 March, a strong earthquake hit Myanmar and Thailand (Baa1 stable). The strain from the earthquake on Thai banks is unlikely to be significant because of limited property damage and business disruption in Thailand. Additionally, Thai banks do not have material exposures to Myanmar, the epicentre of the earthquake, and domestic property and casualty (P&C) insurers, which are likely to be experiencing increased claims.

Business activities in Thailand, especially the capital city of Bangkok, have largely normalised following the earthquake. On 31 March, six major Thai organisations, comprising industry bodies, financial regulators and the local stock exchange, declared that most of the assessed buildings remain structurally sound and a majority of companies have fully resumed operations, including banks. Key financial infrastructure, particularly those related to payments, were uninterrupted.

Thai banks do not have a significant exposure to Myanmar, which experienced severe destruction of properties and loss of lives. The banks also do not have a material exposure to domestic P&C insurers. Most of the major Thai banks we rate, namely Bangkok Bank Public Company Limited (BBL, Baa1 stable, baa11), Bank of Ayudhya Public Company Limited (A3 stable, baa2), KASIKORNBANK Public Company Limited (Baa1 stable, baa2) and Krung Thai Bank Public Company Limited (Baa1 stable, baa3) hold strategic equity investments in P&C insurers. However, the stakes mostly amount to minority ownerships and account for a very small percentage of the banks' assets. Further, Thai P&C insurers tend to transfer property collapse risks to their overseas peers through reinsurance. BKI Holdings Public Company Limited (BKIH), in which BBL holds a roughly 10% stake, is one of the insurers that will face a claim associated with the collapse of an incomplete government building. However, the claim amount will be manageable for BKIH partly because of syndication and reinsurance.

Nevertheless, lingering economic effects of the earthquake could still affect Thai banks. A further recovery in Thailand's tourism sector, which is a major driver of the economy, could be hindered as foreign visitors delay or cancel their trips. Concerns over the structural integrity of some high-rise buildings in Bangkok could weigh down on the city's condo prices. As of 31 December 2024, condo mortgages made up about 5% of total banking system loans while pre-finance loans for condo projects accounted for around 1%. Thai banks will also provide debt relief to borrowers who were adversely affected by the earthquake, although we do not expect the amount of restructured loans to be sizable.