NPLs cross 1.09 trillion baht as household debts hit 16.3 trillion

TUESDAY, MAY 14, 2024

Thailand’s household debts at the end of first quarter of 2024 amounted to 16.3 trillion baht, with 1.09 trillion baht classified as non-performing loans (NPLs) from having defaulted for more than 90 days, the National Credit Bureau (NCB) reported on Monday.

Total household debts have been growing continually and are now accountable for 91.03% of the country’s gross domestic product (GDP), said Surapol Opastien, NCB chief executive.

He added that the NPLs in Q1 rose from 1.05 trillion baht in the previous quarter and now represented about 8% of total household debts, signifying a continued upward trend.

Surapol said that among the most concerning NPLs are auto loans, which grew 32% year on year to 238 billion baht. Meanwhile, personal loans grew 12% to 266 billion baht, housing loans grew 18.2% to 199 billion baht, and credit-card loans grew 14.6% to 63 billion baht.

Meanwhile, debts in the special mention (SM) category (default from 30 to 90 days) in Q1 grew 7% year on year to 640 billion baht, he said.

Surapol attributed the 14.6% rise in NPLs from credit cards to the increase of minimum monthly payments from 5% to 8% of the amount owed on January 1.

The Bank of Thailand imposed the 8% rate for one year, and the minimum payment rate will be increased to 10% on January 1, 2025.

The instalment amount had been reduced to 5% during the Covid crisis to help lower people’s financial burden. The central bank is paving the way for 10% minimum repayment, which prevailed before the pandemic.

The NCB advised the central bank to come up with measures to decelerate the growth of NPLs, especially among credit-card users, who are estimated to default even more once the 10% minimum payment rate kicks in.

“Currently about 1 million credit cards and 5 million accounts of personal loans have become NPLs, signifying an increasingly serious problem,” Surapol said. “Default rates have been rising among earners of less than 30,000 baht per month. If this trend keeps up, there will be more legal problems related to consumers in the near future.”

The NCB also reported that in the first quarter of this year there were 458,005 civil cases and some 184,000 criminal cases filed against borrowers. Most of these cases are related to general borrowing (about 52,000), credit cards (44,000), personal loans (42,000), auto loans (29,000), and guarantors (11,000).