NPL crisis due to Covid-19 'worse than 1997 meltdown'

[webfact]

NPL crisis due to Covid-19 'worse than 1997 meltdown'

By THE NATION

 

 

The present Covid-19 crisis was worse than the Tom Yam Kung crisis of 1997, the Bangkok Commercial Asset Management (BAM) has said, adding that non-performing loans (NPL) was of concern for Thailand’s economic system.

 

BAM explained that financial institutions in 1997 had a low rate fund to deal with NPLs in the economic system. Moreover, the household debt at that time was low, and small businesses were not affected by the crisis.

 

The Coivd-19 crisis has affected everyone, whether large or small businesses. However, financial institutions have a reserve fund to deal with economic problems of the future. BAM added that they will not bankrupt easily as in 1997.

 

BAM chairman Bunyong Visatemongkolchai said that NPLs this time were one of most worrying issues. He said that total NPLs in the system were now around Bt500 billion, or 3.05 per cent of total credit in the system. However, these NPLs will increase, after banks' measure to suspend people’s debt payment that ended recently.

 

The chairman explained that total debt registered in this suspension was around 40 per cent of total credit in the system, and this was too much.

 

Further, an estimation previously pointed out that 20 per cent of registered debt would become NPL in the future. This will increase the total NPL from Bt500 billion to Bt2 trillion, which will be like the total NPL in 1997.

 

However, the chairman thought that the NPL would not totally emerge in the credit system, since banks have a procedure for tackling this predictable problem. Besides, the government’s measures would help or support banks in dealing with the NPL problem, he said.

 

Source: https://www.nationthailand.com/news/30396036

 

-- © Copyright The Nation Thailand 2020-10-12

 

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[lkv]

1 hour ago, webfact said:

BAM added that they will not bankrupt easily as in 1997.

But this being worse than 1997.....

 

Time to take the money out guys. 

[ourmanflint]

The mask is starting to fall, all is not well in the Land of Smiles

[Pattaya Spotter]

The "sky is falling" crowd will have a field day with this one.

[Lunchbob]

What happened to people's bank deposits in 1997?

[holy cow cm]

OH REALLY! Nothing I couldn't tell on Saturday from the a-rsehole bank sicking a debt collector on me the other day made on a secured multi thousand dollar credit card that the wife had paid 2 weeks earlier. They texted me to pay delinquent piddly little newly accrued 6000 baht. These were new purchases for a trip made after the earlier payment was made, but they say you have cannot pay beforehand but have to pay 2-3 days before due date of invoice. After angrily going to the payment center to complain and pay yet again, they said no problem as you are not 3 days late and it will not have any effect to you. Now balance is back at zero again. Watch out boys and girls, they will be out to get every foreigner that they can now that their sky has fallen. Funny also is that they have several thousands of put upfront money for this card and over a million baht in one of their accounts but they still went for the jugular from ultimate rudeness. State owned bank.

Edited October 12, 2020 by holy cow cm

[robblok]

20 minutes ago, holy cow cm said:

OH REALLY! Nothing I couldn't tell on Saturday from the a-rsehole bank sicking a debt collector on me the other day made on a secured multi thousand dollar credit card that the wife had paid 2 weeks earlier. They texted me to pay delinquent piddly little newly accrued 6000 baht. These were new purchases for a trip made after the earlier payment was made, but they say you have cannot pay beforehand but have to pay 2-3 days before due date of invoice. After angrily going to the payment center to complain and pay yet again, they said no problem as you are not 3 days late and it will not have any effect to you. Now balance is back at zero again. Watch out boys and girls, they will be out to get every foreigner that they can now that their sky has fallen. Funny also is that they have several thousands of put upfront money for this card and over a million baht in one of their accounts but they still went for the jugular from ultimate rudeness. State owned bank.

So you had collected debt on a creditcard, made a payment on it before its date (so was not accepted) and then accrued more debt ?

 

Seen that happen with clients too (in my home country) as often the creditcard cant be paid before and they collect themselves.

 

Does not seem so strange to me it happens. But your response seems a bit over the top. <deleted> happens things go wrong. But you sound really self entitled. Like how dare you ask me for money. 

 

I would not have worried that much about it things like this happen they are annoying but that is about it. 

[Chassa]

5 hours ago, webfact said:

non-performing loans (NPL)

 

5 hours ago, webfact said:

NPL crisis due to Covid-19 'worse than 1997 meltdown'

Now I understand!

[ThailandRyan]

1 hour ago, Pattaya Spotter said:

The "sky is falling" crowd will have a field day with this one.

It is not that the Sky is falling, but that the governments hiding behind fake statistics and numbers, and continued lies is now slowly coming into the light.  No one ever wants this stuff to happen, but when it does you can not keep kicking the can down the road as this Government has been doing, and instead of taking true measures to shore up the country they instead waste money on unnecessary projects and purchases for the Military.   But hey the Baht is still flying high.

Edited October 12, 2020 by ThailandRyan

[hotchilli]

6 hours ago, webfact said:

The present Covid-19 crisis was worse than the Tom Yam Kung crisis of 1997, the Bangkok Commercial Asset Management (BAM) has said, adding that non-performing loans (NPL) was of concern for Thailand’s economic system

Everything is of concern, the tourism bubble has burst, the economy was struggling with the baht value and the shine has gone from Thailands image.

Yet Prayut says all is well in the land.

[holy cow cm]

1 hour ago, robblok said:

So you had collected debt on a creditcard, made a payment on it before its date (so was not accepted) and then accrued more debt ?

 

Seen that happen with clients too (in my home country) as often the creditcard cant be paid before and they collect themselves.

 

Does not seem so strange to me it happens. But your response seems a bit over the top. <deleted> happens things go wrong. But you sound really self entitled. Like how dare you ask me for money. 

 

I would not have worried that much about it things like this happen they are annoying but that is about it. 

sorry robblok. Not entitled so - "watch your words with me". Their stipulation is cannot be paid more than 3 days earlier from due date. Get it? The invoice was also sent 5 days earlier than the due date.

 

The biggest thing was how they went about it with their new watch hired debt collector dog and so everyone is going to see this in their faces now. The card always is paid off every month at any one (1) given time and never ever ever before has the beforehand payment been a factor or even mentioned to be only 2-3 days before the due date. ONLY this time! One of the main things they were pushing for is wanting the interest only and for that I did not mention in the post, and I don't ever care about or will ever give them. I have payed one time per month at my disposal and timing and now it is their push to have it at no less than 2-3 days prior to due date. They really want the interest and the other 2 things mentioned are they want now to be able to take direct payment out of the bank account automatically ( NO WAY IN H e ..) or I think they want to have only the interest paid by tacking it on to the debt as paid (money maker). The money is piddly and insignificant and the payment was maid not 1 month before but in the same term.

 

Anyway, now I know the game it is not big deal but just a hoop to jump abiding their 3 day period before due date. I actually see this as a sign of the financial crash times here for most all of their institutions.

Edited October 12, 2020 by holy cow cm

[tomazbodner]

2 hours ago, Lunchbob said:

What happened to people's bank deposits in 1997?

Bangkok Bank had withdrawals frozen for a short while with system error, after that it went back to normal, all the money (OK, I didn't have much at that time) was on the account and could be withdrawn again normally, just wasn't worth anywhere near as much as a few days earlier. I don't know up to what amount was guaranteed at that time. I only had one bank account at that time so I don't know if other banks were the having same issues or not. But more or less all was back to normal a couple of days from the meltdown, at least for a little guy. Despite value crash of the mighty Baht, the prices of local products and food, transport, etc. didn't change. Only imported items shot up (obviously).

 

I'm sure some people got badly affected, but at least for me it was a minor inconvenience. Then again, I was in the early 20's with no outstanding loans, etc. Others might have different memory of that crisis.

[Pattaya Spotter]

2 hours ago, ThailandRyan said:

But hey the Baht is still flying high.

As a resident with 80% of my assets Thai denominated, I prefer a strong baht as it makes the imported foods I like to buy cheaper and my foreign vacations (remember those) cheaper.

Edited October 12, 2020 by Pattaya Spotter

[Pattaya Spotter]

3 hours ago, Lunchbob said:

What happened to people's bank deposits in 1997?

Nothing. 

[Caldera]

Thai banks have been absolutely irresponsible with regards to handing out credit cards to members of the "middle class" who already had trouble servicing those loans (plus consumer credits at something like 25-28% interest) before the pandemic hit. Someone will have to pay the bill for that eventually, and it won't be pretty.

[Banana7]

Bank of Thailand’s automatic debt suspension program ends on October 22 so this means there will be lots of new NPLs in the coming months.

 

One of the banks has revealed that loans 1-3 months behind in payment are at 7-8 per cent of their loan portfolio. Banks will start to issue bonds, to get more tier 1 capital as the NPLs start to pile up.

 

Has anyone seen any lower prices on cars? Number of cars for sale hasn't increased in the last few months.

[86Tiger]

1 hour ago, Caldera said:

Thai banks have been absolutely irresponsible with regards to handing out credit cards to members of the "middle class" who already had trouble servicing those loans (plus consumer credits at something like 25-28% interest) before the pandemic hit. Someone will have to pay the bill for that eventually, and it won't be pretty.

This is not unique to Thailand.

 

Hardly a week can go by without receiving a grand new 'offer' for credit card in mail in US.  Way back in 80's while at University I started receiving "free" credit cards in the mail.  Nothing new.

[connda]

10 hours ago, webfact said:

NPL crisis due to Covid-19 'worse than 1997 meltdown'

Not yet it isn't.  The wealthy are keeping their heads above the water by standing on the heads and shoulders of the plebs.

 

Give it some more time.  You'll know the goose is cooked when you hear the Bank of Thailand and member banks start to scream.  Like all tasty dinners, this one won't be complete until the equivalent of a pound of Soros has been added to the mix.  Stir well and watch the over-inflated cake collapse.

Edited October 12, 2020 by connda

[HiSoLowSoNoSo]

4 hours ago, ThailandRyan said:

It is not that the Sky is falling, but that the governments hiding behind fake statistics and numbers, and continued lies is now slowly coming into the light.  No one ever wants this stuff to happen, but when it does you can not keep kicking the can down the road as this Government has been doing, and instead of taking true measures to shore up the country they instead waste money on unnecessary projects and purchases for the Military.   But hey the Baht is still flying high.

I don't trust their statistics at all, especially their unemployment statistics. Sweden is one of the countries that have so far done well through this crisis, still the unemployment is now at 9 % in Sweden.

[2 is 1]

10 hours ago, webfact said:

The present Covid-19 crisis was worse than the Tom Yam Kung crisis of 1997

So start to eat Tom Yam Moo then!

[spidermike007]

No question it is worse. And few in a position of authority are facing the music. Courageous of BAM chairman Bunyong Visatemongkolchai to state the truth. The pain will be felt for many years to come. I anticipate condo prices to drop by half. A friend of mine recently moved to Pattaya. He looked at condos in Jomtien. He walked into one of the nicest towers, looked at a 36th floor unit with panoramic views, and when he was quoted 26,000 a month, he offered 10,000. They settled on 13,000. He said the agent more or less admitted the building was nearly empty, and they could not rent to sell anything, at this time. 

 

Demand is way down. The Chinese market is nearly gone, Russians and others are very hesitant to commit. And the long term tourists are gone too. So, who does that leave? Wealthy Thais, many of whom see the market collapsing, and would rather wait and see how all of this shakes out, and ex-pats, many of whom are smart enough to be shopping for bargains right now. 

 

So, we have about 3 trillion baht missing from the economy, minus the little bit of domestic travel going on. 20%! Millions of jobs. How long will that vacuum remain? Will the army develop some guts, courage, creativity and stop the panic mongering? It is unlikely. And what about the people? They are not really a consideration. If you are not rich or connected, you do not factor in. Woe is the average Thai, who worked in tourism. 
 
What can one say? Desperation is setting in. Heads are going to roll. Just returned from Samui. Utter devastation. 90% of the businesses on the beach road were closed, and hundreds of hotels are closed and for sale, at half price. Trillions of baht are going to be lost here. Annually. Tourism will NEVER recover. Not in our lifetimes. Too much timidity. Too much cowardice. Too little juice and creativity. Such small minds. 
 

 

 

[ExpatOilWorker]

Manufacturing, Retail and Housing each are about 20% of all NPLs.

 

https://www.bot.or.th/App/BTWS_STAT/statistics/BOTWEBSTAT.aspx?reportID=794&language=ENG

[ThailandRyan]

3 minutes ago, 86Tiger said:

All of this is well and good.

 

But fact is it only delays or adds to the problem of debt that can not be paid. There must be revenue, i.e. profit generated, to pay debt.

 

More debt is never a solution to bad debt, but it does kick the can little further down the road.

Exactly as I said, kicking the can down the road, and it needs to be stopped and stopgap measures put in place.  However, the way to do it is not the way they are doing it.  It is no wonder the last Finance minister bailed out before he needed a parachute.

[Surelynot]

4 minutes ago, ThailandRyan said:

Exactly as I said, kicking the can down the road, and it needs to be stopped and stopgap measures put in place.  However, the way to do it is not the way they are doing it.  It is no wonder the last Finance minister bailed out before he needed a parachute.

Got a strong feeling they are not kicking the can down the road, but a short cul-de-sac.

 

It is all going to go pear-shaped very soon.

 

Got my condo rent down from 26,000B to 17,000B, only to find my neighbor got his for 14,000B........and we are the only tenants on a floor with 14 rooms!!!!!! 

 

Time to take my money out and hold as cash me thinks.

[ThailandRyan]

2 minutes ago, Surelynot said:

Got a strong feeling they are not kicking the can down the road, but a short cul-de-sac.

 

It is all going to go pear-shaped very soon.

 

Got my condo rent down from 26,000B to 17,000B, only to find my neighbor got his for 14,000B........and we are the only tenants on a floor with 14 rooms!!!!!! 

 

Time to take my money out and hold as cash me thinks.

I agree, and wish I did not have the 800,000k THB tied up for my Extension of stay, but then it is what it is.

[Banana7]

39 minutes ago, spidermike007 said:

No question it is worse. And few in a position of authority are facing the music. Courageous of BAM chairman Bunyong Visatemongkolchai to state the truth. The pain will be felt for many years to come. I anticipate condo prices to drop by half. A friend of mine recently moved to Pattaya. He looked at condos in Jomtien. He walked into one of the nicest towers, looked at a 36th floor unit with panoramic views, and when he was quoted 26,000 a month, he offered 10,000. They settled on 13,000. He said the agent more or less admitted the building was nearly empty, and they could not rent to sell anything, at this time. 

 

Demand is way down. The Chinese market is nearly gone, Russians and others are very hesitant to commit. And the long term tourists are gone too. So, who does that leave? Wealthy Thais, many of whom see the market collapsing, and would rather wait and see how all of this shakes out, and ex-pats, many of whom are smart enough to be shopping for bargains right now. 

 

So, we have about 3 trillion baht missing from the economy, minus the little bit of domestic travel going on. 20%! Millions of jobs. How long will that vacuum remain? Will the army develop some guts, courage, creativity and stop the panic mongering? It is unlikely. And what about the people? They are not really a consideration. If you are not rich or connected, you do not factor in. Woe is the average Thai, who worked in tourism. 
 
What can one say? Desperation is setting in. Heads are going to roll. Just returned from Samui. Utter devastation. 90% of the businesses on the beach road were closed, and hundreds of hotels are closed and for sale, at half price. Trillions of baht are going to be lost here. Annually. Tourism will NEVER recover. Not in our lifetimes. Too much timidity. Too much cowardice. Too little juice and creativity. Such small minds. 
 

 

 

As you indicate, tourism is affected. But the rest of country is doing well, as normal. Overall 2020 GDP is forecast to be down about 8%, which is not bad overall. However, that 8% is focused on the tourist areas like Pattaya, Phuket, inner Chiang Mai, etc. Bangkok is as busy as ever. I returned from Isaan, and nobody seems financially affected because tourists rarely go to that part of the country.

[ExpatOilWorker]

7 minutes ago, Surelynot said:

Got a strong feeling they are not kicking the can down the road, but a short cul-de-sac.

 

It is all going to go pear-shaped very soon.

 

Got my condo rent down from 26,000B to 17,000B, only to find my neighbor got his for 14,000B........and we are the only tenants on a floor with 14 rooms!!!!!! 

 

Time to take my money out and hold as cash me thinks.

May I ask, where in the country are you?

[Surelynot]

8 minutes ago, ExpatOilWorker said:

May I ask, where in the country are you?

Currently central Bangkok after a 4 month stint in a back of beyond part of Isan

Edited October 12, 2020 by Surelynot

[Surelynot]

On 10/12/2020 at 1:10 PM, Banana7 said:

As you indicate, tourism is affected. But the rest of country is doing well, as normal. Overall 2020 GDP is forecast to be down about 8%, which is not bad overall. However, that 8% is focused on the tourist areas like Pattaya, Phuket, inner Chiang Mai, etc. Bangkok is as busy as ever. I returned from Isaan, and nobody seems financially affected because tourists rarely go to that part of the country.

Regarding "Bangkok is as busy as ever"...I agree it appears like that.....but take a walk down any of the Sukhumvit sois and you realize how bad it is......shops, bars, restaurants, massage parlors all shuttered. 

 

In Isan the old adage holds........ half of <deleted> is still <deleted>......so they don't notice the effects like Phuket etc.

Edited October 13, 2020 by metisdead
Profane acronym removed.

[86Tiger]

18 minutes ago, Surelynot said:

Got a strong feeling they are not kicking the can down the road, but a short cul-de-sac.

 

It is all going to go pear-shaped very soon.

 

Got my condo rent down from 26,000B to 17,000B, only to find my neighbor got his for 14,000B........and we are the only tenants on a floor with 14 rooms!!!!!! 

 

Time to take my money out and hold as cash me thinks.

This party has not even started, yet.

 

Only 6 months in with looming 'high season' lost if borders not opened within next couple weeks soon.  By spring next year they will be renting for half what you paying now and that is if the building can remain open for lack of tenants.

 

I truly hate to see it happen, but I fear it to be so.