Bureau sounds alarm on bad loans
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Bureau sounds alarm on bad loans

Bank staff provide financial services at Money Expo 2023. (Photo: Money Expo)
Bank staff provide financial services at Money Expo 2023. (Photo: Money Expo)

The National Credit Bureau (NCB) said there is unease regarding rising non-performing loans (NPLs) and special mention (SM) loans in the housing and auto segments as living costs and interest rates are elevated.

NPLs of member financial institutions tallied 1.05 trillion baht in the third quarter of 2023, down from 1.09 trillion baht by 3.6% year-on-year, but up by 1.7% quarter-on-quarter.

NCB chief executive Surapol Opasatien said rising NPLs and SMs among housing and auto hire-purchase loans are a major concern attributed to the higher cost of living and rising interest rates.

Debt repayment of auto loans began to show negative signs from the first quarter, and NPLs have increased from the second quarter, he said.

Despite the debt restructuring programme for auto loan borrowers offered by financial institutions, NPLs remained steady in the third quarter, according to the NCB.

In the third quarter, auto NPLs tallied 207 billion baht, up 5.8% quarter-on-quarter.

SM loans, defined as loans overdue from 30 to 90 days, for auto loan products totalled 213 billion baht for the period, declining by 4% quarter-on-quarter.

Even though financial institutions extended the maturity of auto loans under debt restructuring, the loan period is not in line with the business nature of the loan product, said Mr Surapol.

Normally, the average new car loan maturity is four years. When the maturity is extended, it is not in line with the loan period, he said.

Under this scenario, SM loans in the auto sector did not significantly decline under the debt restructuring programme, according to the bureau.

In the third quarter, SM auto loans tallied 213 billion baht, down 4% quarter-on-quarter.

Housing NPLs amounted to 182 billion baht for the period, up 2.3% quarter-on-quarter, while housing SM loans tallied 137 billion baht, up 6.6%, according to the NCB.

Mr Surapol said 70% of mortgage NPLs belong to specialised financial institutions (SFIs), with a maximum credit line of 3 million baht, based on bureau data.

While customers received comprehensive debt restructuring schemes from SFIs, the rising cost of living is a key factor hampering the debt repayment ability of many borrowers.

"Though the pandemic ended, we are still facing its impact regarding debt. The data shows a steady amount of NPLs and SM loans for both housing and auto loans, quarter-on-quarter, so it is a major concern," Mr Surapol said.

According to the NCB, household debt tallied 13.6 trillion baht in the third quarter, up 3.8% year-on-year and 0.7% quarter-on-quarter, compared with household debt of 16 trillion as reported by the Bank of Thailand.

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