Bank of Thailand to meet banks on debt rejig

Bank of Thailand to meet banks on debt rejig

Measures for new outbreaks prepared

A sign at Victory Monument reads 'Fight Covid'. The household debt ratio spiked in the third quarter. (Photo by Pornprom Satrabhaya)
A sign at Victory Monument reads 'Fight Covid'. The household debt ratio spiked in the third quarter. (Photo by Pornprom Satrabhaya)

The Bank of Thailand is set to discuss surging infections with the Thai Bankers Association (TBA) concerning the continuity of business operations and assistance for borrowers.

The central bank and the TBA were set to meet near the end of last year to discuss banks' debt restructuring progress, but the meeting was postponed due to a fresh round of outbreaks in Thailand.

Thaweelarp Rittapirom, executive vice-president at Bangkok Bank (BBL), said the bank prepared measures for the new outbreak based on its business continuity plan under the central bank's regulations.

BBL plans to abide by the results of the upcoming discussion between the central bank and the TBA, said Mr Thaweelarp.

Pipatpong Poshyanonda, co-president at Kasikornbank (KBank), said the bank discussed updated measures to cope with the new round of domestic infections.

For financial assistance measures, KBank is deliberating on detailed measures to help affected customers on a case-by-case basis.

For TMB-Thanachart Bank, the bank is considering helping borrowers based on the data of retail clients and companies, said chief executive Piti Tantakasem.

For instance, the bank will assess an individual customer living in Samut Sakhon province based on the type of loan received, profession and the financial impact incurred from the outbreak in order to provide a suitable financial solution.

Apiphan Charoenanusorn, co-president at Siam Commercial Bank, said the bank has continued to provide debt restructuring measures to customers on a case-by-case basis to help them cope.

Thailand's household debt-to-GDP ratio could spike to beyond 91% this year if economic growth dips below the estimated baseline of 2.6% because of the protracted pandemic, said Kasikorn Research Center (K-Research).

Given rising downside risks to the growth outlook coming from the new round of infections, this could weaken the economic recovery momentum, said the think tank.

Thailand's household debt ratio rose to an 18-year high in the third quarter of 13.8 trillion baht or 86.6% of GDP, rising from 13.6 trillion or 83.8% of GDP in the previous quarter.

New mortgage growth amounted to 160 billion baht in the third quarter of 2020, accounting for 88% of the increased household debt ratio, according to K-Research.

On average, households' debt servicing ratio (DSR) is at 27%. But the DSR ratio of lower-income households, whose earnings are no more than 10,000 baht per month, is higher than the median.

Households with monthly income below 5,000 baht have a high DSR ratio at 84%, while households with a monthly income of 5,000-10,000 baht are around 40%, said K-Research.

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