GH Bank tames bad loans

GH Bank tames bad loans

Debt moratorium creates minimal NPLs

The non-performing loans (NPLs) of borrowers from GH Bank entering the debt moratorium stand at 8.5% of loans in the scheme, far below the 25% projection when the programme ended in July.

The debt moratorium programme was the bank's measure to alleviate the Covid-19 impact on borrowers. The scheme included the suspension of principal and interest payments, as well as lowering of interest rates.

The number of customers entering the scheme totalled 511,000 accounts, representing 430 billion baht worth of loans, said president Chatchai Sirilai.

Borrowers who entered the programme to suspend principal and interest payments for four months totalled 236,000 accounts, representing loans worth 179 billion baht, Mr Chatchai said.

NPLs for this borrower segment stood at about 9 billion baht when the programme ended in July, he said.

There is, however, another customer group from the same borrower segment asking for an extension of the suspension of principal and interest payments, Mr Chatchai said.

GH Bank has extended payment suspension for another three months. Borrowers participating in the three-month extension total 39,500 accounts with loans worth a combined 27 billion baht.

The bank has set aside loan-loss reserves worth 3.5 billion baht and aims to increase the reserves to 5.3 billion baht for the rest of the year, Mr Chatchai said.

NPLs stood at 4.28% of outstanding loans as of July, up from 4.09% at year-end 2019.

Total loan disbursement was registered at 143 billion baht as of Sept 16, while the full-year loan disbursement target is set at 215 billion baht.

Net profit is expected to reach 9 billion baht, down from the target of 13.5 billion baht, due to the bank's assistance measures and lower interest in line with the movement of the policy interest rate, Mr Chatchai said.

GH Bank is prepared to roll out mortgage loans under a 70-year instalment plan, with a total credit line of 10 billion baht.

The idea is to formulate a joint loan between family members, such as father and son, during a 70-year period of instalments or shorter.

This will facilitate easier mortgage loan access, since the monthly instalment is 2,500-3,000 baht on average for a loan of 1 million baht under this scheme, lower than a monthly instalment of 5,600 baht based on current market rates.

"In theory, the long-term instalment of up to 70 years will make interest swell over the principal amount," Mr Chatchai said. "But the point is, if a person wants to have a house now, he or she can seek the loan immediately without waiting."

Borrowers with a credit line between 1.5 million and 1.8 million baht are the target group of this loan product, he said.

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