Thai Banks’ Non-Performing Loans Rise to 2.97% of Outstanding Loans
Thai banks’ non-performing loans (NPLs) rose to 2.97 per cent of outstanding loans at the end of September, the highest level in nearly three years, the central bank said on Tuesday (Nov 26).
Reasons for the Increase
The increase, from 2.84 per cent at the end of June, was partly due to a decline in the loan base and higher NPLs from business and consumer loans, but banks continued to manage their portfolios and provide support to debtors, the Bank of Thailand (BOT) said.
Concerns and Measures
There was a need to monitor the debt serviceability of smaller businesses and households with slower income recovery and elevated debt burden, as well as businesses hit by structural issues and declining competitiveness, it said in a statement.
“These could cause a gradual increase in NPLs but remain well manageable,” the BOT said, adding the banking system remained resilient.
Rising NPLs among vulnerable groups were a concern, assistant governor Suwannee Jatsadasak told a press conference.
Government Efforts and Economic Growth
Thailand’s government has been urging banks to increase credit access amid tepid growth of an economy that expanded just 1.9 per cent last year, held back by high levels of household debt.
Suwannee said the ratio of household debt to gross domestic product likely dropped slightly at the end of the third quarter, from 89.6 per cent at the end of the second quarter. The ratio is one of the highest in Asia.
Bank lending is expected to rise slightly in the final quarter of 2024, she added.
Lending and Economy
Banks’ loans dropped 2 per cent in the September quarter from a year earlier, the biggest fall since 2010, due mainly to debt repayments, particularly from the government and large companies, the BOT said.
Conclusion
Thai banks’ non-performing loans have risen to 2.97 per cent of outstanding loans, the highest level in nearly three years. While the increase is partly due to a decline in the loan base and higher NPLs from business and consumer loans, banks continue to manage their portfolios and provide support to debtors. The central bank has expressed concerns over rising NPLs among vulnerable groups and has urged banks to increase credit access to support economic growth.
FAQs
Q: What is the current non-performing loan ratio for Thai banks?
A: The current non-performing loan ratio for Thai banks is 2.97 per cent of outstanding loans, the highest level in nearly three years.
Q: What are the reasons for the increase in non-performing loans?
A: The increase is partly due to a decline in the loan base and higher non-performing loans from business and consumer loans.
Q: What is the impact of high household debt on the economy?
A: High household debt has held back economic growth, with Thailand’s economy expanding just 1.9 per cent last year.
Q: What is the expected direction of bank lending in the final quarter of 2024?
A: Bank lending is expected to rise slightly in the final quarter of 2024.
Q: What is the current ratio of household debt to gross domestic product in Thailand?
A: The current ratio of household debt to gross domestic product in Thailand is 89.6 per cent, one of the highest in Asia.
