According to the experts Commercial banks continue to be cautious in advancing housing loans as they have concerns about the repaying ability of customers, and this is reflected in the fact that loan rejection is up to 40 per cent in the first four months of this year.
Not only has the real estate sector been affected by the reluctance of commercial banks on mortgages, small and medium enterprises (SMEs) also faced a hard time getting loans from the banks due to rising non-performing loans (NPLs) to the SME sector.
Thai Credit Guarantee Corporation (TCG) president Nitid Manoonporn explained recently that its loan guarantee faced NPLs up to 12 per cent in the first four months of this year, up from the average 10 per cent in the last year, when most SMEs faced a hard time generating income for debt servicing. However, TCG has tried to help them to restructure their debt and held their businesses tide over financial problems from high competition in the market, he said.
The Bank of Thailand reported recently that the level of bad debt in the banking sector had increased in the first quarter amid modest loan growth. Banks’ non-performing loans (NPLs) at the end of March had risen to 2.94 per cent from 2.83 per cent in the previous quarter. Moreover, the rate of loan growth among the country’s banks was just 2.8 per cent higher than in the corresponding period last year, with such a modest growth rate being in line with the early stage of economic recovery and the fact that household debt remained high.
According to a report on banking performance in the first quarter released by the central bank, the deteriorating quality of housing loans was also attributed to rising NPLs, while previously slower economic growth had an impact on loan quality.
Source : The Nation