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Cautious lenders increasingly banking on credit bureau information 

Apr 16. 2019
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BANK and non-bank financial institutions are getting cautious about the quality of loans to borrowers as they request increased information, according to the National Credit Bureau (NCB).

Thailand’s household debt has accelerated with the outstanding amount at Bt12.82 trillion, or 78.6 per cent of the nation’s gross domestic product (GDP), at the end of 2018.

In the meantime, loan quality has deteriorated, prompting financial institutions and financial service providers to ask for more credit information about both new and existing customers.

In the first quarter of this year, requests for checking new customers’ credit information from NCB hit 4.36 million times. In 2018, the requests reached 16 million times, up from 14.29 million times in the previous year.

Requests for checking existing customers’ credit information jumped to 53.97 million times last year from 43.85 million times the previous year. In the first quarter of this year, the requests touched 12.59 million times, mirroring lenders’ concerns over loan extensions and their lack of confidence in loan quality.

Surapol Opasatien, NCB chief executive officer, said the International Monetary Fund (IMF) had previously questioning the quality of information about household debt accumulating from personal loans, auto hire purchases, mortgages and credit-card loans with restructuring loans.

So far, restructuring loans have increased to Bt810-Bt820 billion, compared to Bt800 billion late last year, indicating increased fragility in the quality of loans. Statistically, about 40 per cent of this group became indebted again after loan restructuring.

“Restructuring loans continue to increase. This is what the IMF was asking about a lot and paid very close attention to. Most of the restructuring loans consist of mortgages and personal loans,” Surapol said.

Non-performing loans (NPL) in the financial system remain high at 6.0 per cent of total outstanding loans, at nearly Bt800 billion.

The number of mortgage accounts rose to about 430,000 last year from 360,000 a year ago. People aged 22-39 years old (Generation Y) received the most loans, some of which extend more than 30 years. 

Three groups (baby boomers, generations X and Y) registered overdue loans reaching as high as 220,000 accounts or about Bt240 billion. Last year, the overdue amount was Bt220 billion. Most overdue loans were from generations X and Y. 

All groups’ combined overdue auto hire purchases amounted to nearly 1 million accounts, about 850,000 of which came from generations X and Y.

About 60 per cent of 2.4 million approved credit-card loan accounts went to Generation Y in the previous year. Last year, about 1. 7 million accounts were approved.

Of the total 20 million credit cards, about 14 million are active and one million face financial troubles or are overdue, most of which come from generations X and Y.

Personal loans overdue by more than 30 days reached 2.8 million accounts. Over 1.5 million accounts or Bt260,000 were owned by Generation Y.

This information on overdue loans is in line with the Bank of Thailand, which could result in it continuing to rise.

Based on the information, people aged over 40 average five loan accounts, compared to a typical 20-year-old’s one account borrowed for a car, motorcycle or a personal loan.

The way to eliminate household debt is to cease taking out personal loans that play a role in the lives of people in every age range.

Non-bank financial institutions loaned Generation Y people a relatively large amount for auto-hire purchases and personal loans. If indebtedness is controlled, non-bank financial institutions’ loan extensions may need to be further controlled.


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