Thailand's Bad Loan Ratio Is Worse Than China's

[webfact]

Thailand's Bad Loan Ratio Is Worse Than China's

By Supunnabul Suwannakij

 

Fitch says nonperforming loans may peak around end of 2017

Bank sector challenges have sapped Thai stock market outlook

 

Nonperforming loans at Thailand’s banks are set to peak toward the end of 2017, according to Fitch Ratings, an outlook that may salve investor sentiment in one of Asia’s worst-performing stock markets this year.

 

Thai economic growth is subdued but relatively stable at about 3 percent, signaling a slower expansion in bad loans in the months ahead and an eventual peak by year’s end or just after, said Parson Singha, senior director for financial institutions at Fitch Ratings in Bangkok.

 

"It depends a lot on how the economic cycle goes," Parson said in an interview Monday. "Growth has been relatively weak for the past several years, but at the same time it does look like the business environment has not been fundamentally poor, and banks have been tightening their underwriting standards."

 

Full story: https://www.bloomberg.com/news/articles/2017-06-20/thailand-s-worse-than-china-bad-loan-ratio-seen-nearing-peak

 

-- Bloombeg 2017-06-21

[Bluespunk]

3 minutes ago, webfact said:

"It depends a lot on how the economic cycle goes," Parson said in an interview Monday. "Growth has been relatively weak for the past several years, but at the same time it does look like the business environment has not been fundamentally poor, and banks have been tightening their underwriting standards."

What?

[LomSak27]

Non Performing Loans

 

The never ending saga, the gopher hole hunt continues.

 

Edited June 21, 2017 by LomSak27

[darksidedog]

I suspect one major reason for poor performing loans is that while Thais are happy to borrow money, not many of them understand the concept of actually repaying it.

[laocowboy2]

There is a difference - you can believe the Thai numbers as the BoT is very rigorous. In China however numbers are more 'flexible' - and depend on what the Party wants reported.

[quadperfect]

And still the bht grows in strength.

 

[hansnl]

2 hours ago, darksidedog said:

I suspect one major reason for poor performing loans is that while Thais are happy to borrow money, not many of them understand the concept of actually repaying it.

They do understand very well, like any nationality would.

But the problem is not being able to pay back.

[trogers]

So, we now know what has been fuelling all those tall structures left basically dark and vacant along main roads...

[kannot]

4 hours ago, darksidedog said:

I suspect one major reason for poor performing loans is that while Thais are happy to borrow money, not many of them understand the concept of actually repaying it.

Not  only  that but the banks seem painfully  slow to take back the assets.

Builder near me has owed the bank money for 6  years, they s till havent  repossessed the empty house he built with that  money  and it just sits there unused.

He also owes local builders merchants hundreds of thousands of baht stretching back at least 5  years......................yet had a  new pick up about 2  years ago. Unfathomable Thailand

[Reigntax]

4 hours ago, darksidedog said:

I suspect one major reason for poor performing loans is that while Thais are happy to borrow money, not many of them understand the concept of actually repaying it.

 

The exact problem associated with subsistance living.  Survive today by whatever means, deal with tomorrows problem tomorrow or leave it until next week.

[Srikcir]

China's economic statistics are considered secrets. So whatever is mentioned with regard to China's own amount of nonperforming  loans is suspect. Same applies to Thailand economic statistics.

 

Both Thai banks and non-banks have allegedly tightened their lending criteria in a bid to keep their nonperforming loans low with loan approval rates standing only at 30%.

• Yet, personal loans are expected to expand 3% to 5% in 2017 because domestic purchasing power has not yet recovered (insufficient income for cost of living, etc. so borrow more?). 50%-60% of household debts in 2016 were from informal loans 
• Household debt has risen to an eight-year high in 2017 an i forncrease of 10.4% from the previous year. 

Government's response not helpful:

• Offered 50 billion baht in soft loans to help residents refinance non-formal debts in 2016
• Recommend that people generate more income, save more money and control their spending - Deputy Secretary General of the NESDB, Chutinart Wongsuban

[Cadbury]

I thought the bad loan problem had been solved with new so called legalised Debt Clinics (code for legal loan sharks) popping up all over the place. For these "benevolent" government approved Debt Clinics read..... "lenders of last resort to borrowers who own saleable property but have no income". 

A mortgage is obtained from the borrower and then the Clinic sits back and waits for the first re-payment default then swoops on the assets.

 

[Shroud]

Thailand's economic conditions are actually very poor. 

 

A developing country should never have interest rates' as low as Thailand has. It's understandable that the Thai baht has increased in value, but low interest rates will not resolve the fundamentals and will further the bad debt spiral while banks will be over-leveraged. However, devaluing the baht could somewhat strengthen the export sector (temporarily) but everything else will raise in prices since Thailand is a major importer of goods that can't be produced inland - this will affect higher prices in general even if people think a lower baht will make their holidays cheaper here. 

 

The eastern block already has stronger economic outlooks than Thailand. If Cambodia, Vietnam and Philippines are growing at their equivalent phases for the next +10 years, we could see salaries in those countries somewhat higher than Thais. 

 

After ww2, many countries geographically below Thailand experienced an economic miracle but Thailand never had those same effects and we're talking about decades of lost opportunities. 

 

In an event of conceivable economic spiral; the households will restructure first. If the banking sector derails, there won't be any new submarines for sure. Perhaps, it will most likely be for sale.

 

But don't worry! TAT will announce 100 million visitors to LOS by 2030 and the economy will stay strong...

 

P.s. this article only mentions nonperforming loans but we all know that Thai's have a culture of lending cash to each other and that bubble will be certainly create a civil war. 

Edited June 21, 2017 by Shroud

[Redline]

There is no incentive to repay loans