NPL ratio seen peaking at 4%
Rate attributed to new viral outbreak
Krungsri Consumer, an unsecured loan unit under Bank of Ayudhya, expects the non-performing loan (NPL) ratio for personal loans to peak at 4% this year attributed to the second-wave outbreak.
NPLs have been rising since the beginning of this year because of the latest outbreak emerged since late last year. The company, however, has paid attention mainly to helping customers with debt restructuring through several measures based on borrowers' requirements on a case-by-case basis.
Under this scenario, Krungsri Consumer expects the NPL ratio for personal loans to peak at 4% in the first quarter as the bad debt ratio rose to 3.4% of total outstanding personal loans at year-end 2020, surging from 2.7% registered at year-end 2019, said Nayanee Peaugkham, head of Krungsri Consumer Group.
The second-wave virus outbreak has dampened customers' capability to service their debt liabilities since early this year, said Ms Nayanee.
There are 102,980 borrower accounts that have applied for the debt relief measures following the emergence of the second-wave outbreak. These accounts are identified under the credit card and personal loan segments, accounting for a total loan amount of 4.79 billion baht.
"The NPL ratio for personal loans is expected to peak at 4% in the first quarter, and it is expected to gradually decline [afterward] because of the debt restructuring measures. We plan to offer the debt-aid programme, on a case-by-case basis, to affected customers until the end of the year," she said.
Initially supported by the Bank of Thailand's first-phase debt relief measures, the company's NPL ratio in the personal loan segment fell to 2.6% in last year's second quarter before climbing to 3% and 3.4% in the third and fourth quarters, respectively.
Krungsri Consumer still managed to control the NPL ratio for the credit card segment at 1.2% at year-end 2020, aligned with the same threshold seen at year-end 2019, although the bad debt ratio rose slightly to 1.4% in the first quarter of 2020. The firm's debt restructuring programme helped to contain a surge in credit card NPLs, said Ms Nayanee.
Krungsri Consumer has been providing debt assistance to clients via several methods in line with their risk profile and requirement of each customer. The measures cover minimum debt repayment, debt instalment period extension to 99 months at a maximum and interest rate cut, among others.
Despite how the company's business operations endured a substantial impact last year due to the Covid-19 pandemic, the company still set a business growth target for this year. For the credit card business, Krungsri Consumer aims to rack up total spending of 305 billion baht or a 9% growth compared to last year's 11% contraction.
For the personal loan segment, the company targets a new personal loan booking of 88 billion baht or a 11% growth compared to a 4% contraction registered last year.
Total outstanding loans are expected at 148 billion baht or a 3% growth from last year's 4% decline.
Krungsri Consumer plans to expand its new customer base by 583,000 people or a 19% growth this year following last year's 51% contraction.
Online channel, new digital loan products and new customer segments are the key areas for this year's business expansion plan, said Ms Nayanee.