SME bad loans peak in Q4 of 2020

Non-performing loans (NPLs) of small and medium-sized enterprises (SMEs) peaked in last year's final quarter after businesses endured a big impact from the pandemic, especially those associated with the tourism industry, says the Bank of Thailand.

Gross SME NPLs, classified as stage 3 loans under the Thai Financial Reporting Standards 9 implemented since Jan 1 2020, in the commercial banking sector stood at 6.84% of total outstanding SME loans in last year's final quarter.

The SME bad loan ratio saw an uptick from 6.52% in the third quarter and 6.22% registered at year-end 2019.

The SME loan segment is defined as having a total credit line of no more than 500 million baht per company.

Meanwhile, the gross NPL ratio of large corporates, whose total credit line exceeds 500 million baht each, was recorded at 2.58% of total outstanding corporate loans in the final quarter of 2020, down from 2.61% in the third quarter but considered a surge from 2.08% logged at year-end 2019.

Special-mention loans, classified as overdue loans of no more than 90 days or stage 2 loans, stood at 6.62% of total loans at year-end 2020, down from 7.03% logged in the third quarter but a considerable climb compared to 2.79% in 2019, said Suwannee Jatsadasak, senior director of the regulatory policy department.

Gross NPLs in the commercial banking sector stood at 3.12% of total loans at year-end 2020, a slight drop from 3.14% registered in the third quarter but an increase from 2.98% logged at year-end 2019.

The marginal increase of the gross NPL ratio was mainly attributed to how commercial banks had been providing several instruments for debt relief to ease financial burden shouldered by borrowers, said Ms Suwannee.

At the same time, the central bank has relaxed its NPL classification under the debt restructuring programme amid the pandemic crisis.

"With a slight uptick outlook in the NPL ratio, the central bank is not concerned about overall NPLs managed under commercial banks' debt relief measures. The assistance can be prolonged for borrowers who cannot return to service their debts normally on a case-by-case basis," she said.

In December 2020, there were 8.37 million loan accounts in total that underwent debt relief measures from commercial banks, accounting for total outstanding loans of 4.83 trillion baht.

The value was a decline from a peak of 12.52 million accounts, worth a combined 7.19 trillion baht in July 2020.