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'NPLs the biggest challenge for banks' as Covid-19 crisis could drag into 2021

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'NPLs the biggest challenge for banks' as Covid-19 crisis could drag into 2021

By The Nation

 

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The Thai economy stares at an uncertain future because the Covid-19 outbreak is likely to prolong until the first half of 2021, Krungthai Bank (KTB) said.

 

KTB president Payong Srivanich said during the bank shareholders' meeting that commercial banks must beware of this factor, as it may cause non-performing loans (NPLs) to increase, adding that commercial banks must set up debt reserves to maintain stability in the long term.

 

"The bank will evaluate the situation periodically by focusing on preventing risks to maintain stability in the long term and adjust the loan portfolio to cope with risks," he said. "In 2019, the bank had adjusted the direction by focusing on maintaining loan growth and reducing NPLs."

 

He said the bank must set up more debt reserves from the second quarter of this year onwards to prevent risks and uncertainties due to the economic slowdown and coronavirus outbreak. He added that the bank had set up 100 per cent debt reserve to cope with risks from granting loans to Thai Airways International (THAI), which will be added in the second-quarter performance report.

 

"Risks from granting loans to THAI will cause less impact on the bank because we granted short-term loans to be used as circulating funds," he said. "We believe that THAI's rehabilitation plan will be approved by the court, while we will cooperate with creditors and debtors closely to maintain the bank's benefits."

 

He said the bank was waiting for the Bank of Thailand (BOT) to issue guidelines for the second phase of measures to help debtors, adding that the guidelines would help commercial banks to assist debtors in the same way.

 

"The bank will take care of customers as much as possible, such as postponing the debt payment, restructuring the debt," he said. "BOT and the Thai Bankers Association will discuss this issue closely."

He added that the meeting haD approved the allocation of net profits of 2019 for interim dividend payment.

 

"The bank's net profit in 2019 was Bt26.325 billion of which Bt4.99 million was dividend for preferred shares, Bt10.523 billion was dividend for common shares, and Bt15.796 was remaining profits to be paid in the next period. Preferred shareholders will receive a dividend of Bt0.9075 per share, while common shareholders will receive a dividend of Bt0.753 per share," he said. "We do not have to allocate net profits in 2019 as reserve funds because the bank has already allocated it."

 

Source: https://www.nationthailand.com/business/30391137

 

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-- © Copyright The Nation Thailand 2020-07-12
 

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NPL and delinquent Loans are really going to be a problem for the Banks (not just in Thailand ), and all because of the gift China bestowed upon us all Globally.

Its ok to to have Debtors restructure their Loans/ stall payments in order to alleviate the Debtors repayments, but a Loan that is going Delinquent will surely turn into an NPL further down the line.

Only a couple of days ago, another Credit Company offset a huge amount of their profits against NPL, which they predicted to rise to at least 10% of the issuance Loans from them.

At present the Loans issued may be serviceable, mainly from the Thai Middle Class, but going forwards the borrowing from Peter to pay Paul will stop, and I can foresee a large problem. 

 

 

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