FRIDAY, February 23, 2024

Thai banks speed up debt restructuring as assistance measures expire

Thai banks speed up debt restructuring as assistance measures expire

Thai banks are accelerating debt restructuring efforts to assist borrowers before Bank of Thailand assistance measures expire at the end of the year.

The move comes amid concerns about rising household debt and the potential for increased defaults.

Krungthai Bank said it is now prioritising debt restructuring for vulnerable borrowers, especially those in the “special mention loan” (SML) category who are vulnerable to the Thai economy’s slowdown. Thailand’s economic growth has faltered this year amid slowing exports, disappointing tourist numbers, and falling investment.

SMLs show potential weaknesses but are not yet classified as non-performing. Vulnerable groups include small and medium enterprises (SMEs) and household debtors.

TMBThanachart Bank Plc (TTB) reports increased requests for debt assistance from retail customers, particularly those seeking urgent restructuring.

Most debtors seeking assistance come from the same groups that have already been aided by various measures and restructuring. Notable among them are customers struggling to repay vehicle loans in the wake of the COVID-19 pandemic, and those with deteriorating credit quality.

National Credit Bureau data also shows non-performing loans (NPLs) rose to 7.7% of the country’s 13.5-trillion-baht household debt – up 500 billion baht from the second quarter.

The expiry of assistance measures at year-end could spark a surge in debt restructuring requests surpassing 1 trillion baht.

Another concern is delinquent loans or those nearing delinquency (overdue by less than 90 days), which have risen 21.4% from the same period last year and 3.7% from the previous quarter to nearly 490 billion baht.

Moreover, accounts on the brink of delinquency have increased by 22.2% to 86,291 of the total 105,461 accounts. Most of these are middle-income customers of state banks with home loans of below 3 million baht that are showing increased signs of default.

Next in line are car loans, where debts on the brink of default have increased by 17.5% to 213 billion baht from the previous year's 181 billion baht.

The number of accounts on the verge of delinquency is up 15% from the same period last year, to 560,427.

Total home and car loans nearing delinquency stand at nearly 350 billion baht.