Banks’ NPLs edge up in Q1 amid slow loan growth

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Banks’ non-performing loans (NPLs) at the end of March had risen to 2.94 per cent from 2.83 per cent in the previous quarter, said Daranee Saeju, the central bank’s senior director in charge of supervising the Financial Institutions Strategy Department. 
The increase in bad debt has in large part been caused by deteriorating loan quality in regard to lending to both large companies and small and medium-sized enterprises in some business sectors, according to a report on banking performance in the first quarter released by the central bank.
The deteriorating quality of housing loans also attributed to rising NPLs, while previously slower economic growth had an impact on loan quality, the report said.
Moreover, the rate of loan growth among the country’s banks was just 2.8 per cent higher than in the corresponding period last year, with such a modest growth rate being in line with the early stage of economic recovery and the fact that household debt remained high, she said. 
However, the banking system remains strong as it has solid capital funds worth Bt2.3 trillion and a high capital-adequacy ratio, with its Bank for International Settlements ratio at 17.8 per cent, the central bank said.