SET-listed Bangkok Commercial Asset Management (BAM) expects banks to see lower auction prices for bad debt sales this year because of higher supply amid a sluggish economy.
BAM expects financial institutions to face more challenges as distressed debts rise, pressured by lower auction prices for both non-performing loans (NPLs) and non-performing assets (NPAs).
As a result, banks should consider asset sales prudently this year, balancing between profit and writing off bad debt, said BAM chief executive Bundit Anantamongkol.
Banks will continue to sell bad debt to asset management companies (AMCs) this year, but the total amount is likely to decline after a massive volume last year, said Mr Bundit.
In 2023, bad asset sales by the banking industry totalled roughly 170 billion baht.
"However, banks cancelled asset sales worth around 50 billion baht last year because of lower than expected auction prices," he said.
With a fragile economy and weaker debt repayment among clients, BAM expects more challenges with debt collection this year, said Mr Bundit.
The company targets debt collection valued at 20 billion baht in 2024, rising to 23.3 billion by 2026.
For the first nine months of 2023, total debt collection tallied 11.2 billion baht, down by 2.8% year-on-year.
NPL collection declined significantly by 12.4%, according to the company's financial statement to the Stock Exchange of Thailand.
Total debt collection in 2022 was around 17 billion baht.
As a result of the pandemic and the economy, NPLs in the banking industry totalled 500 billion baht in 2023, while special mention loans, defined as loans overdue from 30 to 90 days, tallied nearly 1 trillion baht, according to BAM.
Mr Bundit said the company targets bad asset purchases worth 70 billion baht this year, of which 40 billion are in due process and some of the amount was delayed from last year.
BAM, the country's largest AMC, has total NPLs under management of 474 billion baht and total NPAs under management of 69.8 billion.
In 2024, he said the company plans to increase revenue by expanding the three new businesses under its new AMC models, comprising clean loan management, the establishment of a consortium for NPA management, and the expansion the property appraisal service.
Bundit Anantamongkol