BAY clamps down on NPLs, lays plans for 'mini boom'

BAY clamps down on NPLs, lays plans for 'mini boom'

Bank of Ayudhya (BAY) expects to maintain its stringent loan requirements, especially for unsecured loans, over the next 6-12 months to prevent non-performing loans (NPLs) from rising further.

Thailand's fifth-biggest lender has tightened approvals for unsecured loans including credit cards and personal loans in order to cope with the sluggish economy and surging household debt amid prolonged political uncertainty, president Philip Tan said.

What he calls "prudent management" is aimed at retaining BAY's asset quality as consumer NPLs increase.

Retail NPLs exceed 3% of the bank's consumer loan portfolio of 466 billion baht, which represents about half of outstanding loans totalling 940 billion baht.

BAY's bad-loan ratio inched up to 2.97% of total credit at the end of March from 2.67% at the end of December.

With the tougher stance, approvals of unsecured loans fell to 35% from 40% previously.

The leading retail lender plans to keep NPLs at the current level throughout 2014.

Banks are upping their guard against bad loans. The Bank of Thailand recently said retail loan approval rates fell to 50% in the first quarter as consumer NPLs rose in all segments, especially credit cards, where NPLs swelled to 3.3% from 2.6%.

Mr Tan said BAY is maintaining its full-year loan growth target of 7-9%, based on the assumption that the country's economic growth will come in between 2.5% and 3%.

GDP growth in that range would be well above the National Economic and Social Development Board's revised forecast of 1.5% to 2.5%.

Political turbulence is the key risk factor. Consumer confidence could be restored and loan demand stimulated if the crisis is resolved.

"Under the positive scenario, a 'mini boom' in consumer finance will be seen in 3-6 months after the political problems end, the same as it was after the flood crisis" in late 2011, Mr Tan said.

BAY's well-known Krungsri brand, meanwhile, has joined with two new partners — Kerry Logistics Network Thailand and Kangzen-Kenko — to expand its mobile payment services.

Shares of BAY closed yesterday on the Stock Exchange of Thailand at 37.75 baht, down 25 satang, in trade worth 23.6 million baht.

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