Credit history checks by banks at the National Credit Bureau (NCB) almost tripled during the first quarter in a sign that lenders have become more prudent as bad loans rise amid the gloomy economy.
A customer makes her choice at a shop in a department store. Banks are now worried about the rising bad loans. THANARAK KHONTON
Credit checks aimed at reviewing credit of debtors reached 8.86 million, up from 2.97 million over the same period last year and accounted for more than a half of 16 million credit checks for the whole of last year.
The significant rise could be attributed to banks’ stringent risk management in the wake of the stuttering economy and the political deadlock, said NCB chief executive Surapol Opasatien.
Banks’ credit reviews began rising in the second quarter last year when the Bank of Thailand warned about swelling household debt, which climbed to 82% of gross domestic product (GDP) at the end of last year from 77% at the end of 2012.
The Pheu Thai-led government’s excise tax refund scheme for first-time car buyers has been blamed for increasing higher household debt.
Months of political turmoil have deepened the economic slowdown. Last month, the Bank of Thailand cut its 2014 economic growth forecast to 2.7% from 3%, while the Fiscal Policy Office slashed its projection to 2.6% from 3.1% and warned of further downside risks to growth.
Mr Surapol said banks have tightened their scrutiny by increasing the frequency of checks on debtors’ credit records to a monthly basis from biannual or even yearly.
“Banks are concerned about the debt-servicing ability and repayment willingness of borrowers amid the economic environment. As a result, more frequent checking is a safeguard to maintain asset quality,” he said.
Overall credit checks of individual customers at the country’s sole credit-reporting agency for the first three months increased by 87% over the same period last year to 11.93 million.
Banks’ checks on institutional customers were 150,000, up 87.5%.
Credit checks by consumers and corporate for the first quarter increased by 10.72% to 119,397.
Commercial bank’s non-performing loans (NPLs) had increased by 11.4 billion baht to 266 billion baht as of Dec 31.
But the ratios of gross NPLs and net NPLs to total loans at the end of 2013 lowered to 2.2% and 1%, respectively, from 2.3% and 1.1% recorded in 2012.
Meanwhile, the number of newly established companies registered at the Commerce Ministry in the first quarter fell 22% over the same period last year to 15,400, while those of shutdown companies rose 7% to 2,894.
The Commerce Ministry forecast that the country’s economic growth will expand 2.7% this year, below 2.9% last year