Baker Tilly Thailand, a tax and accounting specialist, urges close monitoring of non-performing loans (NPLs) in the manufacturing, consumer and commerce sectors, as collectively they dominate the bad loan portion of the local banking system.
Baker Tilly’s Mr Kneale (right) and Mr Yundyong held a briefing in Bangkok yesterday to discuss the financial situation in Thailand. PAWAT LAOPAISARNTAKSIN
At the end of last year, the combined NPLs of the three sectors stood at 180.79 billion baht accounting for 71.12% of the total 254.22-billion-baht NPL portfolio of the local banking industry.
Manufacturing sector NPLs represented the largest amount among the three sectors at 89.42 billion baht or 35.18% of the total distressed loans, followed by consumer loans of 56.58 million baht or 35.18%, and commerce sector NPLs of 34.78 billion baht or 13.68%, said managing partner Warwick Kneale.
"We should keep an eye on NPLs of the three sectors based on strong growth and concentration risk, though they have not showed negative signs yet. The banking sector has been controlling the asset quality of the property sector well after the 1997 financial crisis. But each crisis cycle doesn't happen in the same way," he said.
While many new condominium projects are being built and brought to market and prices have increased by an average 14% per year, according to Bank of Thailand data real estate loans accounted for only 6.7% of the total loan portfolio of the local banking system in 2012.
Mr Kneale said that there is no sign of a bubble in the property sector and it would not have a significant impact on Thailand's gross domestic product (GDP) compared to the three business sectors.
Baker Tilly Thailand is a branch of Britain-based Baker Tilly International, an independent accountancy and business represented by 128 firms in 85 countries across the world.
The Thailand branch has been in business for 10 years with expertise in distressed asset management and restructuring.
He said there has been plenty of overseas interest in Thailand for both direct and distressed asset investment, mainly due to the country's strong fundamentals and robust economy, despite concerns over political instability.
Separately, senior partner Yundyong Thantiviramanon said the company partly helps to reduce NPLs of local banks by matching banks and investors on bad-loan sales or restructuring.
The company's debt restructuring portfolio amounted to more than 150 billion baht over the past 10 years.
From the beginning of the year, the company has taken part in restructuring debt of around 6-7 billion baht, including a 2-billion-baht NPL sale-out deal.