BBL expects NPL rise as economic struggles add up

BBL expects NPL rise as economic struggles add up

Overall non-performing loans (NPL) are expected to continue their rise this year as the downbeat outlook for the local and global economies persists, compounded by potential drought and the baht's strength, says a senior executive at Bangkok Bank (BBL).

Suvarn Thansathit, senior executive vice-president, voiced concern that bad loans would edge up as the difficult conditions deal a blow to Thailand's economy and have a ripple effect on the banking industry.

Some of the bank's farm customers have been affected by drought, he said, and the bank is cautious about extending loans.

BBL has assisted cash-strapped customers by rescheduling and suspending debt payments for a certain period and cutting interest rates, Mr Suvarn said.

Even so, the bank aims to cap NPLs at 3% of loans outstanding in 2020.

The NPL ratio of the banking sector climbed to 3.01% at the end of September from 2.95% in the previous quarter, largely due to contributions from small and medium-sized enterprises (SMEs), who saw their soured loans rise to 4.75% of loans outstanding in the period from 4.25% in the second quarter, according to Bank of Thailand data.

For special mention loans, defined as loans overdue for 1-3 months, the ratio fell to 2.59% at the end of September from 2.74% in the preceding quarter.

BBL's NPLs amounted to 86.2 billion baht as of Sept 30, 2019, up 7.6% from the end of last year. The NPLs represented 3.6% of loans outstanding.

BBL president Chartsiri Sophonpanich said the bank is untroubled by SME debt and will throw support behind small businesses, particularly through debt restructuring and the government's aid schemes.

SMEs account for a quarter of BBL's lending portfolio. The bank aims for higher SME loan growth in 2020, Mr Chartsiri said without revealing a precise figure.

BBL has set an initial loan growth target of 3-5% for the year while putting together a 2020 business plan.

The government's big-ticket infrastructure investment will trigger spending and generate income to business operators, which will result in economic expansion, Mr Chartsiri said.

The bank will provide full support to the government's investment projects, he said.

Meanwhile, the country's third-largest lender by assets has joined forces with parcel courier Kerry Express to offer a full array of financial services to keep pace with customer demand and play a role in making Thailand a cashless society.

Under the collaboration, the bank plans to offer SME loans of up to 2 million baht per borrower to shops using Kerry's service. BBL will charge 8% interest for the loans.

BBL will provide QR code payment services at Kerry's outlets and for cash-on-delivery, and both parties plan to jointly develop an e-wallet in the future.

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