The Bank of Thailand disclosed on Tuesday that non-performing loans (NPLs) within Thai banks experienced a marginal rise to 2.84% of outstanding loans by the end of June, up from 2.80% at the close of March.
The central bank clarified that the second-quarter figures encompassed both banks and their subsidiaries. Excluding the subsidiaries, banks’ NPLs stood at 2.74% at the conclusion of March.
While there has been a gradual uptick in bad loans, the BOT assured that the situation remained within manageable levels. The statement highlighted that banks maintained robust positions with considerable capital reserves, adequate loan loss provisions, and sufficient liquidity.
The BOT further stated that there was a 0.3% increase in banks’ loans during the June quarter compared to the previous year, following a 1.3% annual growth in the first quarter.
Business loans overall remained steady, with SME loans continuing to contract, and consumer loans expanding at a reduced pace due to escalating credit risks, as outlined by the BOT. The central bank emphasized that this trend could lead to a gradual uptick in NPLs but assured that the situation was under control without any immediate risk of a significant NPL spike.
These could cause a gradual increase in NPL, nonetheless well-manageable with no immediate risk of an NPL cliff, the central bank added.
The household debt to GDP ratio in the first quarter of 2024 slightly decreased from the previous quarter due to a slowdown in credit expansion following household debt deleveraging. Meanwhile the corporate debt to GDP ratio slightly increased due to a marginal increase in new debt creation. The overall corporate profitability continued to improve, led by an improvement in manufacturing and tourism-related sectors.
