Bank of Thailand closely watching surging bad loans

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BANGKOK, Aug 8 – Non-performing loans (NPLs) in the first half of the year were reported at Bt260 billion, an increase by Bt8.8 billion, a senior Bank of Thailand (BoT) official said today.

 

Anupap Kuvinichkul, BoT senior director for financial institutions strategy department, said the non-performing loans mostly involved consumer goods while the greatest number of outstanding loans relate to auto purchases.

The NPL level had previously been stable at 2.2 per cent and the BoT must accordingly closely monitor the situation, he said, adding that commercial banks have been instructed to apply more stringent measures in offering loans and be prepared for economic risk and uncertainty.

Most commercial banks are aware of the importance of loan quality and their reserves in Q2 increased to Bt29 billion, consequently strengthening their reserves to 15.7 per cent, Mr Anupap said.

He said loans expansion in Q3 will be less active in accord with a slowdown in domestic consumption and export.

This year’s loans will be 13-14 per cent higher as forecast, following growth at 12.8 per cent in Q2 and 13.2 per cent in Q1, he said, adding that loans for consumer products slid by 19.5 per cent as the first-car purchase scheme ended and most cars were delivered to first-time buyers.

Loans for small and medium-size businesses were down to 14.9 per cent while loans for major businesses were 10.1 per cent higher.

Mr Anupap said US and European economic recovery later this year and the government’s 2 trillion investment on infrastructure development will contribute positively to the growth of major businesses and the export sector.

Outstanding loans of financial institutes in Q2 were at Bt10.1 trillion, an increase from Bt9.6 trillion at the end of last year, while commercial banks’ profits in Q2 were at Bt45.8 billion, down from Q1 by Bt6.6 billion or 12.5 per cent, he said. (MCOT online news)