Bureau fears flood-related spike in NPLs

The National Credit Bureau (NCB) has expressed concern about a likely increase in the level of non-performing loans (NPLs) in the auto-loan sector due to the flood crisis, which comes on the heels of a recent surge in such lending.
Financial institutions have been aggressive in offering auto loans this year, and the agency is worried that customers hit by the flooding might not be able to make their payments, NCB chief executive Surapol Opasatien said.
The agency is asking auto-loan customers to inform their creditors quickly about any flood-related damage and to ask for relief measures to prevent the feared surge in NPLs.
Unaware that some customers might be affected by the floods, lenders might report these cases to the NCB as defaulters, Surapol said.
The NCB is not as worried about NPLs among credit-card, personal-loan and housing-loan customers, because financial institutions are more strict on those customers, he said. The NCB expects that the flooding will result in a slowdown in new lending by banks, but that loans will bounce back at the end of the first quarter of next year.
Chalit Silsrikul, executive vice president of Tisco Bank, said it was normal for NPLs to increase after flooding. Whether the level of bad loans soars or stabilises, however, depends on individual banks’ management of the problem, he said.
For Tisco, even though auto loans represent a major portfolio, the bank’s rate of NPLs to total loans is only 1 per cent. The bank was quick to make contact with flood-affected customers to ease their loan conditions, Chalit said.
“We believe we can control the NPLs. We recommend flood-affected customers restructure their loans, which allows the bank to categorise these customers’ loans as normal debt, not outstanding debt. Defaulting customers affected by the flooding will not be grouped as NPLs when banks inform the status of their customers’ credit to the NCB,” he said.
The NCB reported that credit inquiries by individuals in the first nine months reached 14.2 million, with 150,000 inquiries by juristic persons. The NCB expects inquiries this year to increase by 15-20 per cent from 16 million last year.
However, the bureau believes the number of inquiries might be lower this month and next because of the flooding, and will grow in December as bank customers hit by floods seek loans to repair their homes.