Thailand grappling with ballooning NPLs

Now stands at US$8.3 billion.

Non-performing loans in the first half of the year rose by 3.5% or by US$281 million, said Anupap Kuvinichkul, senior director for financial institutions strategy department of the Bank of Thailand. He said the NPLs mostly involved consumer goods with the largest number relating to car purchases.

The NPL level had previously been stable at 2.2%. BoT has instructed commercial banks have been instructed to apply stricter measures in offering loans and be prepared for economic risk and uncertainty.

Most commercial banks are aware of the importance of loan quality and their reserves in Q2 increased to US$927 million, strengthening their reserves to 15.7%.

Loans this year will be 13% to14% higher following growth at 12.8% in Q2 and 13.2% in Q1, Anupap said. Loans for consumer products fell 19.5% as the first-car purchase scheme ended and most cars were delivered to first-time buyers.

Loans for small and medium-size businesses were down by 14.9% while loans for major businesses were 10.1% higher.

Outstanding loans of financial institutes in Q2 stood at US$323 billion, a US$307 billion rise from 2012. Commercial banks’ profits in Q2 came to US$1.5 billion, down from Q1 by US$211 million or 12.5%.