Q3 drop for special mention bank loans

Q3 drop for special mention bank loans

Debt relief measure considered effective

Special mention (SM) loans in the commercial banking industry saw a decline in the third quarter, attributed to the debt relief measures for retail borrowers and small enterprises, according to Bank of Thailand data.

The value of outstanding SM loans, defined as loans overdue more than 30 days but not exceeding 90 days, totalled 1.14 trillion baht or 7.1% of total loans outstanding for the commercial banking industry at the end of September.

The outstanding SM loan amount at the end of the third quarter declined from 1.23 trillion baht or 7.5% of total outstanding loans logged in the second quarter.

The reductions covered all industries with commercial loans and all segments of retail loans.

For commercial loans, the manufacturing sector had the largest SM loan value at 274 billion baht in the third quarter, representing 13% of total outstanding loans.

The ratio of SM loans to the agricultural sector was the highest at 19.8% of total outstanding loans, raking up a value of 19.2 billion baht.

For consumer finance businesses, the SM loan amount of mortgage loans had the largest value at 139 billion baht or 5.7% of total outstanding loans, while auto loans represented the highest ratio at 9.2% with a value of 108 billion.

Despite a decline in overall SM loans in the third quarter, loans overdue by more than 30 days for unsecured loan products increased in terms of value and percentage of total outstanding loans.

SM loans for credit cards amounted to 21.5 billion baht, accounting for 8.9% of total outstanding loans, up from 17.6 billion or 7.6% recorded in the second quarter.

SM loans for personal loans were valued at 65.4 billion baht, representing 6% of total outstanding loans, up slightly from 64.7 billion or 6% logged at the end of June.

Thanyalak Vacharachaisurapol, deputy managing director at Kasikorn Research Center (K-Research), said banks have continued helping customers through debt restructuring on a case-by-case basis after the Bank of Thailand's first-phase debt relief measure recently ended on Oct 22.

The central bank has allowed financial institutions to offer debt restructuring measures to small and medium-sized enterprises whose credit line is below 100 million baht on a case-by-case basis until June next year.

Given how the financial assistance has eased the financial burdens of borrowers, the central bank has also relaxed loan classification and loan-loss provision regulations.

Around 60% of borrowers, especially retail loan customers who entered into the central bank's debt relief measures, were able to service their debts after the first-phase measure ended.

As a result, banks were able to contain SM loans and non-performing loans in the third quarter.

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