Tuesday, November 24, 2020

BOT confident despite expected rise to over 3% in banks' NPLs 

Feb 18. 2020
Tharith Panpiemras, senior director at the Bank of Thailand.
Tharith Panpiemras, senior director at the Bank of Thailand.
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By The Nation

The ratio of non-performing loans (NPL) could climb to over 3 per cent of all outstanding debts in the banking system this year from 2.98 per cent year on year in 2019, said Tharith Panpiemras, senior director at the Bank of Thailand.

He attributed the projection to slower economic growth and impact of the coronavirus crisis on tourism and its related businesses.

Tarith, however, expressed confidence that banks could cope with the expected rise in NPLs as they did last year, saying that :" I believes banks have enough buffers to manage risks especially impact from the coronavirus outbreak”.

Banks have stepped in to help clients manage their debts, especially small and medium-sized enterprises facing liquidity problem.  

When the situation improves, bad debts would decline and deterioration of asset quality would be slower, he said.

The Bank of Thailand forecast loan growth at 2 per cent this year as winning telecoms companies at the 5G bandwidth auction on Sunday will need more loans, he said.

Beverage and food manufacturers also require funding through bank loans of up to Bt50 million each. 

Tarith was confident that banks could weather the unfavourable economic conditions, given their high capitals and the combined net profit of Bt270.9 billion last year, up 30.8 per cent from the previous year. 

Overall loan growth stood at 2 per cent last year with business loans contracting 0.8 per cent and large business lending down 1.9 per cent against a 7.5 per cent rise in consumer loans.  

NPLs amounted to 2.98 per cent of total loans last year, totalling Bt465 billion, up from 2.94 per cent in 2018. Special mentioned loans grew 2.79 per cent in 2019 compared to 2.42 per cent for the previous year. 

NPLs among small businesses represented 4.63 per cent of their combined loans last year, up 4.65 per cent year on year. In the consumer segment, bad debt of mortgage loans was 3.71 per cent last year, up from 3.25 per cent in 2018; car loans 1.86 per cent, up 1.66 per cent ; and credit card loans was 2.41 per cent, an increase of 2.34 per cent from the previous year.

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