The Bank for Agriculture and Agricultural Cooperatives (BAAC) has revealed it has around 300 billion baht in debt which requires close monitoring in order to prevent bad debt, said president Chatchai Sirilai.
From monitoring and evaluating the bank's loans, it was found that there was 300 billion baht's worth of debt which needs to be closely monitored and, of this amount, 10 billion baht is considered to be bad debt or non-performing loans (NPLs), he said.
Meanwhile, the bank is prioritising solving bad debt by targeting NPLs to be at 4-5% of the outstanding loan balance as of March 31, 2023, compared to 7.68% at the end of the last accounting year.
The bank's NPLs stem from the fact that farmers are severely affected by natural disasters, such as floods and drought, as well as the declining prices of agricultural products, which can impede their ability to pay debt.
As a result, the bank is focusing on solving bad debts sustainably by providing a debt restructuring service, promoting professional development, adjusting debt repayment plans in line with the customers' capabilities and income, including recommending new and potential markets.
"I have to admit that the bank's loans are different from other banks. BAAC's accounting year begins in April of each year while the debtor will pay the debt once a year. For example, a 100,000-baht loan for the planting of cassava will be subject to a repayment of 10,000 baht per year plus interest," he said.
"Some debtors are eligible for a higher credit limit while others get a lower credit limit depending on the value of the collateral and the ability of the customer to repay debts. Therefore, the bank must adjust the debt repayment plan in accordance with the debtor's income to contain bad debts."
In the 2022 accounting year (April 1, 2022 to March 31, 2023), the bank recorded farming loans of 8.78 billion baht, with total loans of 1.63 trillion baht, up 3.05 billion baht or 1.90% from the previous year.
Cumulative deposits tallied 1.82 trillion baht, total assets were 2.26 trillion baht, up 1.15%, total liabilities were 2.10 trillion baht, a gain of 1.08%, while owners' equity stood at 153 billion baht, up 2.15%.
Net profit in 2022 was 7.98 billion baht with a return on assets of 0.36% and return on equity of 5.38%. The Bank for International Settlements ratio was 12.6%, higher than the requirement set by the Bank of Thailand.