The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) is at risk of seeing its bad loan ratio surge to as much as 6% if it fails to restructure its special mention loans, worth 30 billion baht.
The bank is confident it can restructure 60% of its special mention loans to bring down its non-performing loan (NPL) ratio to no more than 4% by the end of this financial year, said president Apirom Sukprasert. The BAAC's financial year runs from April 1 to March 31.
The bank's NPL ratio fell to 4.29% from 4.33% in March, thanks largely to its recent disposal of NPLs worth 10 billion baht.
The low price of crops, particularly pineapple, lime, bananas and mangosteen, have been blamed for its customer liquidity crunch and failure to service their debts, he said. Mangosteen growers are suffering from low output, while the high supply of pineapples is weighing on prices, said Mr Apirom.
To help its customers service their debts, BAAC's debt restructuring measures are focused on lowering interest rates, he said.
Mr Apirom said BAAC's new 7% year-on-year loan-growth target to 750 billion baht is within reach this financial year.
For the two months through May, the BAAC managed to lend 90 billion baht, mostly retail loans, while SME farm loans ranged from 3-4 billion.
He said the bank's net deposits totalled 7.8 billion baht, well below this financial year's target of 73 billion, but such a low figure at this stage of the financial year is normal as farmers need money for crop cultivation.
"We aim to raise the ratio of farmers' deposits to help them live more comfortably in retirement. Their deposit proportion accounts for a mere 15-20%, We target 4% growth in total farmer deposits each year. That target was achieved last year," he said.
Typically, farmer deposits increase significantly during the harvesting season from August to September, he said.