By The Nation
The retail and wholesale businesses for small and medium-sized enterprises (SMEs) are in a worrisome situation in terms of debt, said Naris Sathapholdeja, head of TMB Analytics.
This is as a result of the technological disruption in businesses and the increasing popularity of online trading, leading traditional SMEs to shrink and NPLs to increase.
In the first quarter, wholesale business and SME loans contracted by 1.2 per cent year on year, but NPLs increased by 7.4 per cent. Businesses in the wholesaling of construction material saw an increase in NPLs by 6.8 per cent.
Furthermore, agricultural wholesalers also saw NPL increases, of 11.8 per cent year on year with normal loans contracting by 11 per cent. Food wholesalers saw NPLs grow by 7.7 per cent and loans contracted by 6 per cent. Small retail businesses’ NPLs grew by 6.8 per cent and loans grew by only 0.8 per cent.
New NPL formation during the first quarter of this year was valued at around Bt25 billion – some 53 per cent of which are from the retail and wholesale sectors, valued at Bt12 billion.
Naris said that wholesale businesses are more worrisome than retail businesses. This is because wholesalers are directly affected by large businesses that can offer cheaper products.
As for retail businesses, even if they are negatively impacted by e-commerce, entrepreneurs still have the opportunity to start trading their goods online.
Kasikornbank has been cautious on releasing new loans amid rising NPL levels in the retail, wholesale and agricultural sectors. NPLs are an economic indicator that the stability of these businesses has decreased and thus, financial institutions must be more careful when giving out loans, said Preedee Daochai, president of Kasikornbank.
Apiphan Charoenansusorn, president of Siam Commercial Bank, said: “Industries that are at risk must be monitored closely. For instance, banks have to take more caution on giving out loans to the agricultural and retail sectors.”