Banks’ bad loans may rise gradually amid outbreak - BoT

Banks’ bad loans may rise gradually amid outbreak - BoT

(Bangkok Post file photo)
(Bangkok Post file photo)

Commercial banks' bad loans might rise further but lenders should be able to manage them, a senior bank of Thailand (BoT) said on Monday, as the economy deals with the impacts of the recent coronavirus outbreak.

The banking system remained strong with high capital buffers and liquidity, Suwannee Jatsadasak told reporters.

Non-performing loans (NPLs) rose to 3.12% of total lending at the end of last year from 2.98% at the end of 2019, she said.

"Overall NPLs rose slightly as Covid-hit debtors received assistance from banks, she said.

However, loans with a significant increase in credit risk jumped to 6.62% of total lending at end-2020 from 2.79% in 2019, Ms Suwannee said.

"That's what we have to monitor. If banks continue to help them, they won't become NPLs. If not, they might," she added.

Banks' lent about 400 billion baht to the hardest-hit sector, tourism, which largely needs continued support, she said.

The outstanding Thai debt under financial relief programmes stood at about 4.84 trillion, or 28.8% of total lending, at the end of December, down from 7.2 trillion at the end of July, the BoT said.

In 2020, overall banks' lending rose 5.1%, after a 2% increase in 2019, led by large business loans.

Having got its first coronavirus outbreak under control within a few months last year, the country is dealing with a second wave of infections that has slowed activity.

Ms Suwannee said about 126 billion baht of the BoT's 500 billion baht soft loan programme to help smaller businesses had been approved as of Feb 8.

The scheme is part of a government 1.9 trillion baht package to mitigate the impact of the coronavirus pandemic the economy, which suffered its deepest slump in over two decades last year. 

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