Thai banks' bad loans may rise gradually amid outbreak - central bank

[snoop1130]

Thai banks' bad loans may rise gradually amid outbreak - central bank

By Orathai Sriring and Satawasin Staporncharnchai

 

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva

 

BANGKOK (Reuters) - Thai commercial banks' bad loans might rise further but lenders should be able to manage them, a senior central bank director said on Monday, as the economy deals with the impacts of a recent coronavirus outbreak.

 

The banking system remained strong with high capital buffers and liquidity, Suwannee Jatsadasak told reporters.

 

Non-performing loans (NPLs) rose to 3.12% of total lending at the end of last year from 2.98% at the end of 2019, she said.

 

"Overall NPLs rose slightly as COVID-hit debtors received assistance from banks, she said.

 

However, loans with a significant increase in credit risk jumped to 6.62% of total lending at end-2020 from 2.79% in 2019, Suwannee said.

 

"That's what we have to monitor. If banks continue to help them, they won't become NPLs. If not, they might," she added.

 

Banks' lent about 400 billion baht ($13.3 billion) to the hardest-hit sector, tourism, which largely needs continued support, she said.

 

The outstanding Thai debt under financial relief programmes stood at about 4.84 trillion, or 28.8% of total lending, at the end of December, down from 7.2 trillion at the end of July, the Bank of Thailand (BOT) said.

 

In 2020, overall banks' lending rose 5.1%, after a 2% increase in 2019, led by large business loans.

 

Having got its first coronavirus outbreak under control within a few months last year, Thailand is dealing with a second wave of infections that has slowed activity.

 

Suwannee said about 126 billion baht of the BOT's 500 billion baht soft loan programme to help smaller businesses had been approved as of Feb. 8.

 

The scheme is part of a government 1.9 trillion baht package to mitigate the impact of the coronavirus pandemic on Southeast Asia's second-largest economy, which suffered its deepest slump in over two decades last year.

 

-- © Copyright Reuters 2021-02-22

 

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[AlfHuy]

Seems very low number of non performing loans. Given the situation and many people have loans for all kind of stuff.

[worgeordie]

20 minutes ago, snoop1130 said:

Thai commercial banks' bad loans might rise further

Might...I would say that's a given, lots of the general public

are up to the eyes in debt, while tourists and service industries

incomes have been next to nothing,all the unsold property......

regards worgeordie

 

[AlfHuy]

And all money "borrowed" from loan sharks.

[itsari]

My thoughts are that any bank that is holding too many non performing loans will not advertise the fact until it is too late . 

I am considering gold or a crypto currency for safety . 

The Thai economy is  expected to improve in 2021 say's the Bank of Thailand . 2021 has not started too well for that to be reality .

 

[Isaan sailor]

Central Bank thinks everything will work out just fine in 2021.  Did anyone tell them their currency might be a negative factor?

[itsari]

1 hour ago, Isaan sailor said:

Central Bank thinks everything will work out just fine in 2021.  Did anyone tell them their currency might be a negative factor?

It has been said that the Central Bank is content with the present tight range of 30 Thai baht to the US dollar . I just wonder who is content in that range and why . I understand Thailand made rules to control foreign loans to avoid the same situation that occurred in the Asian financial crisis of 1997. But it seems that many rules are not adhered to in Thailand so why not the foreign loan rule too .

[Cake Monster]

16 hours ago, snoop1130 said:

However, loans with a significant increase in credit risk jumped to 6.62% of total lending at end-2020 from 2.79% in 2019, Suwannee said.

 

"That's what we have to monitor. If banks continue to help them, they won't become NPLs. If not, they might," she added.

Loans with a higher risk of default ( credit risk ) jumped a huge 3.83% ( over 125 % )in 2020.

This is a massive rise, and the Banks are having to shore these Accounts up to prevent defaults by the Borrowers.

The policy of shoring up these accounts will only go on so long before the Loans become delinquent, and even if only 50% of the 6.6% increase becomes NPL, that number added to the already 3.12 % of existing NPL will give a NPL default of 6.42 % of Loan Values.

Thats a lot of Money

[itsari]

11 hours ago, AlfHuy said:

And all money "borrowed" from loan sharks.

All lenders are sharks when the tide turns against them .