Effect of rising debt on Gen Y worrying: Thai NCB

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Effect of rising debt on Gen Y worrying: NCB
SUCHEERA PINIJPARAKARN
THE NATION

BANGKOK: -- THE NATIONAL Credit Bureau has been contacted by many private firms to provide financial health checks and help them resolve the problem of high debt among ‘Generation Y’ workers, as the debt level among this category of borrowers often negatively affects the individual’s work performance.

According to NCB's consumer-credit database, in the first nine months of the year Gen Y consumers took out a rising number of loans - housing, auto and unsecured - while the level of debt delinquency among this generation was also on the rise, the bureau's chief executive officer Surapol Opasatien said.

The NCB is worried about Gen Y individuals, especially those who have been working between one and three years and who have created more debt during that period, as an increasing number are so concerned about their repayment ability they are unable to concentrate fully on their work, he said.

If the income of Gen Y borrowers failed to rise sufficiently next year, their debt-repayment ability would be impacted even further and informal debt would be the solution for this generation, he warned.

"We have organised a road-show at many firms to provide financial planning to Gen Y employees. Yet, we hope the situation of huge Gen Y debt will not intensify in 2016, because financial institutions will tone down consumer lending in the first six months of the year and will shift to people who have a monthly income of Bt30,000-Bt50,000," he explained.

Surapol said in the first nine months, the proportion of Gen Y individuals taking out a housing loan had increased to 46 per cent from 40 per cent in 2014, while the proportion of Gen X individuals doing so had fallen to 44 per cent from 48 per cent.

According to the credit bureau's database, there were 250,978 newly opened mortgage accounts during the first three quarters of the year.

Meanwhile, the NCB's database of delinquent home-loan accounts from 2012 to the end of September this year shows Gen Y consumers have more late payments and a continually higher increase in non-performing loans than either Gen X borrowers - defined as those born after post-World War II baby boom - or baby boomers. The trend for both Gen X and baby boomers is a reduction in debt delinquency and NPLs during the period, the chief executive said.

For auto loans, new accounts are now mainly opened by Gen X and Gen Y consumers, with the latter accounting for 40 per cent of the total as of the end of third quarter, from 38 per cent at the end of 2014.

Auto-loan delinquency among Gen Y consumers from 2012 to September this year showed a continuous rise, while the rate for Gen X borrowers had stabilised since the end of last year.

As of September, the proportion of new credit-card accounts in the Gen Y and first-jobber group had risen to 50 per cent from 47 per cent in 2014, while the Gen Y delinquency rate had risen steadily during the period.

The huge debt level from housing, auto and credit-card lending means the younger generation is increasingly seeking personal loans as the answer to their liquidity problems, Surapol said.

Source: http://www.nationmultimedia.com/business/Effect-of-rising-debt-on-Gen-Y-worrying-NCB-30275321.html


-- The Nation 2015-12-21

[bmore99]

Definition of generational typology:

Baby Boomers: born between 1946 and 1965

Gen X: born between 1966 and 1980

Gen Y: born between 1981 and 2000

Gen Z: born after 2000

[apetley]

One of wifey's friends is Gen Y, a teaching assistant. Recently bought a Toyota Vigo at 7000 bht per month over 7 years. He earns 10000 bht per month. As well as the 30-50k earners this sort of irresponsible lending should be addressed, by legislation if the lenders don't play ball.

[trogers]

Gen Y are suckers for small instalments over a lifetime...

Why? They are pretty poor in math.

[WaiLai]

What a slippery slope!

One pay cheque away from bankruptcy!

Thailand cannot afford anymore contraction of it's economy.

..... and unfortunately for the many in Thailand, along comes ASEAN

[robblok]

On one hand they want people to spend more to help the economy and on the other they don't want people to get too much into debt. If it goes on like this a bomb might burst in the future as the economy is not going well and debt is rising. Rising debt in an good economy is not bad, but in one like this its a problem.

Also there are no good credit checks here because people get loans too easy.

[Searat7]

From what I can see the banks here extend far too much credit to Thais and they are partially responsible for this problem. If credit was not so easy to obtain then the debtors would no be so overextended.

[Ombra]

The behaviour of the British is no different despite the higher level of education. Easy money is irresistible.

[Jeffkp]

Definition of generational typology:

Baby Boomers: born between 1946 and 1965

Gen X: born between 1966 and 1980

Gen Y: born between 1981 and 2000

Gen Z: born after 2000

Thanks for this! I was trying to figure out what the heck they meant!

[Jeffkp]

If they can't handle payments to the banks, they go to the loan sharks...

[elgordo38]

On one hand they want people to spend more to help the economy and on the other they don't want people to get too much into debt. If it goes on like this a bomb might burst in the future as the economy is not going well and debt is rising. Rising debt in an good economy is not bad, but in one like this its a problem.

Also there are no good cecks here because people get loans too easy.redit ch

Quote Also there are no good checks here because people get loans too easy.redit check. unquote. My g/f's sister has a b/f in France who she has never met face to face. He deposits 30,000 or more bahts into her account monthly. She takes her bank book to the bank and wham gets a loan to buy a new car. Solid bank practices hmm. If they have a fight all bets are off.

[chumpy]

The behaviour of the British is no different despite the higher level of education. Easy money is irresistible.

The difference is that the wages in the UK are much higher so the debt can usually be repaid in the end,someone in Thailand with for example with a monthly wage of 10000 baht paying off a car at 7000 baht a month is going to have a much harder time.

[MaiChai]

Inflation is pretty high in Thailand. I am amazed by price hikes in a single year. Only two things that are still cheap are fuel and food. I believe the 300 baht minimum daily wage imposed a couple of years back has had a profound effect. I am seeing some folks with some minor skills demanding 500 baht a day on the basis that they could get 300 baht a day just by turning up for other jobs. I kind of think it should have been set lower thus giving the market a bit of scope to make offers above the minimum wage. What I am seeing is a profound effect on farming; farmers want to mechanize because the don't want to pay the minimum wage plus provide food/ice for workers. Thus farmers are taking out finance on tractors and machinery rather than employing lots of day workers.