Commercial banks set aside more money for rising bad loans over the first nine months in a prudent move, while more provisions are expected in the final quarter amid the anaemic economic turnaround.
The 11 SET-listed banks set aside loan-loss provisions of 60.64 billion baht as of September, rising 11.14% from the end of 2013.
Only TMB Bank and Kiatnakin Bank had lower provisions. TMB added provisions of 825.14 million baht, down 30.95% from the end of December, while Kiatnakin Bank decreased its provisions by 0.84% to 1.67 billion baht.
TMB, the country's seventh-largest lender by assets, divested 3.3 billion baht worth of its non-performing loans (NPLs) in the second quarter.
At the other end of the scale, CIMB Thai Bank (CIMBT) set aside the highest provisions in terms of percentage. It used 1.41 billion baht for bad loans, a 67.45% surge from the end of December.
Bank of Ayudhya set aside the highest amount among its industry peers at 13.23 billion baht or 8.99% up from the end of last year.
For the first nine months, commercial banks' outstanding NPLs jumped 10.66% from the end of last year to 309.09 billion baht. The ratio also rose to 3.09% of the industry's total credit from 2.7%.
Kiatnakin Bank showed the largest percentage increase in outstanding NPLs, which soared 43.94% to 10.48 billion baht, while Krungthai Bank saw the biggest rise in its NPL amount of 67.46 billion, up by 11 billion baht or 19.50%.
Narongchai Wongthanavimok, CIMBT's chief financial officer, said the bank was set to introduce additional loan-loss provisions this quarter in line with the rising NPL trend.
The bank's provisions for the full-year will certainly be higher than last year, as its provisions at the end of September of 6 billion baht had already outpaced the 5.2 billion baht at the end of last year.
CIMBT's higher bad loans largely comprised unsecured retail loans and auto hire purchase. Economic uncertainty has taken a toll on borrowers' ability to repay debts, but NPLs have stabilised over the past two months.
Mr Narongchai said the bank aimed to keep its NPL ratio at about 3% by the end of this year and may sell off its bad loans. CIMBT disposed of some NPLs in 2012 but has since managed distressed loans by itself to retain its customer base.
"Potential resumption of NPL divestment is under consideration regarding business expansion opportunities, capital savings and reserve burden reduction," he said.
Jesada Techahusdin, an analyst at Maybank Kim Eng Securities (Thailand), said banks were expected to set aside additional loan-loss provisions in the final quarter. However, bad loans are expected to be stable this quarter, while lending could improve from the previous quarter on the back of better signs of economic recovery.