Banks poised to extend assistance
Prolonged relief measures likely
Banks are set to extend the deadline for their relief measures to virus-affected customers after the three-month blanket debt holiday lapses at the end of this month.
Pandemic relief measures, which cover all customer segments from retail and small and medium-sized enterprises to corporations, will be extended on a case-by-case basis, said Sarut Rattanaporn, co-president at Siam Commercial Bank (SCB).
Given the central bank's policy to encourage lenders to provide assistance to customers in return for a relaxation of loan-loss provisions until the end of 2021, the bank's debt holiday and other relief measures including interest rate cuts and debt rescheduling could be extended, he said.
"SCB is considering extending the debt payment break and the bank's interest income accounting on an accrual basis will not be affected if that's the case. For this year, helping clients overcome the crisis is our focus, not loan growth as in a normal situation," said Mr Sarut.
He said corporate loans would be the key driver in the second quarter to help the bank sustain loan growth momentum from the first three months, as lending demand peaked with companies shunning bond issuance.
Loan demand, particularly from corporations, remains strong as they want to lock in cheap financial costs, said Mr Sarut.
Pipat Luengnaruemitchai, assistant managing director and co-chief information officer at Phatra Securities, flagged concerns over the debt-servicing ability of 15 million debtors with a combined debt of up to 6.8 trillion baht after the debt holiday ends. The tally of their debts accounts for one-third of the banking industry's loans outstanding.
The debt relief package appears to be a win-win for both debtors and lenders amid virus-induced economic shocks as it helps avoid massive defaults, he said.
Thakorn Piyapan, head of Krungsri Consumer, the unsecured loan unit under Bank of Ayudhya, said the company would extend interest rate cuts rather than debt payment breaks to its customers as this better serves their needs.
He said 85% of customers are salaried workers and lowering the interest rate matches their demand.
"Our interest rate decrease will lapse at the end of this month, and the company is initially considering extending the programme for another three months. We can offer such scheme until year-end, but we need to monitor economic circumstances before making a final decision," said Mr Thakorn.
Thailand has managed to contain the outbreak faster than previously estimated and some customers prefer repaying debt based on their ability to a debt holiday because they do not want to delay financial burdens, he said, though some customers are unable to service debt.
Mr Thakorn said spending in some categories, in particular online shopping, shows positive growth, while spending at malls and restaurants would take more time to recover. Krungsri Consumer maintains its business contraction outlook this year.
Piti Tantakasem, chief executive at TMB-Thanachart Bank, said the bank would extend its debt relief measures in line with economic circumstances and debt payment capability per borrower.