Bangkok Bank (BBL) expects non-performing loans (NPLs) for small and medium-sized enterprises (SMEs) to decline this quarter thanks to its proactive customer assistance and the Bank of Thailand's debt relief measures.
While the Bank of Thailand's debt relief measures for SME businesses expired on Oct 22, BBL has provided financial aid to SME customers with a credit line below 100 million baht on a case-by-case basis, in line with the central bank's requirement.
BBL has also offered pre-emptive debt restriction instruments to SME clients. The bank has been able to adequately contain bad debts from SME businesses, said Virasak Sutanthavibul, senior executive vice-president.
With this scenario, BBL expects SME NPLs to decline this quarter from the third quarter.
The bank, however, needs to continue monitoring the situation closely amid the uneven economic recovery, with the majority of SME clients' business conditions still fragile, said Mr Virasak.
As of September, the bank's NPL ratio stood at 4.1% of total outstanding debts.
"Distressed loans from SME businesses remain in an upward trend in line with fragile economic conditions and vulnerable SME customers. The bank will continue helping them [SME clients] with debt restructuring next year," he said.
The majority of SME customers that applied for the Bank of Thailand's debt relief measures managed to exit the programme following the Oct 22 expiration.
But some still remain as recipients of the debt relief measures, while others have closed their businesses permanently, especially tourism-related businesses that have been reeling from the pandemic.
BBL, the country's second largest commercial lender by total assets, offers several debt restructuring instruments to SME customers on a case-by-case basis.
These include interest rate cuts, loan maturity extension, a suspension of either principal or interest, and additional liquidity offerings. Using a case-by-case consideration, the bank provides a debt relief period for clients of up to 3-4 years.
Mr Virasak said the bank expects to book SME loan growth of around 3-4% this year, slightly lower than the existing target.
The positive SME loan expansion partly comes from additional credit line offerings under the debt restructuring measures, he said.
Given economic recovery momentum is anticipated in 2021, BBL expects to maintain SME loan growth at around 3-4%.