Economic slowdown leads to strict control on bank loans

By The Nation

 

Tharit Panpiamrat

 

The Bank of Thailand has reported that data from commercial banks in the second quarter has revealed a spike in overdue debts, and that SME loans are on the rise and have the potential of becoming non-performing loans (NPLs).

 

Tharit Panpiamrat, senior vice president of the central bank’s risk assessment and analysis department, said data from commercial banks indicates that “special mention” status given to loans with payments overdue for less than 90 days stood at 2.74 per cent, compared to 2.56 per cent in the previous quarter.

 

“There’s also a rise across all categories of loans,” he said. “For instance, business loans have jumped from 2.35 to 2.53 per cent, large business loans have risen from 1.71 to 1.97 per cent, while SME loans have moved up from 3.05 to 3.11 per cent.”

 

Consumer loans have also risen from 3.05 to 3.23 per cent.

 

A closer look at each category has revealed increases in several key sectors, namely automotive from 6.90 to 7.30 per cent, property from 1.67 to 1.78 per cent, credit cards from 1.80 to 1.91 per cent, and personal loans from 2.26 to 2.31 per cent.

 

Tharit said the two factors behind overdue debts being given an SM status are a deceleration in the economy and a stricter classification of clients by commercial banks.

 

“Banks are now more careful about granting loans to small borrowers,” he said. “Some may have stricter criteria than others, resulting in some borrowers being given the SM status even though they have no history of overdue payments.”

 

Despite the rise in special-mention status given to loans, NPLs have hovered at 2.95 per cent, roughly the same level as 2.94 per cent in the previous quarter. However, in monetary terms the Bt450.6-billion worth of NPLs have dropped by Bt3.3 billion from the last quarter thanks to debt restructuring among financial institutes. “NPLs can, however, go up if the economy continues to decelerate, especially among the SMEs,” Tharit said.

 

Source: https://www.nationthailand.com/news/30374568

 

-- © Copyright The Nation Thailand 2019-08-10

Follow Thaivisa on LINE for breaking Thailand news and visa info

51 minutes ago, rooster59 said:

“Banks are now more careful about granting loans to small borrowers,”

No problem, always some generous loan shark out there ready to help.

 

5 hours ago, rooster59 said:

NPLs have hovered at 2.95 per cent, roughly the same level as 2.94 per cent in the previous quarter.

I really think that figure had been altered significantly

Loan to Asset ratio in Thailand is poor to say the least.

The banks are starting to get a Squeeky Bum due to all the NPL that is on the increase.

Nearly 7% NPL was quoted about 3 weeks ago from One Bane.