Thai banks report they can handle the impacts of the virus

As the Covid-19 coronavirus continues to spread in Thailand, authorities have temporarily shut off shopping malls, entertainment and sporting venues while allowing food stalls and restaurants to open, but only for take-out and delivery services. The measures have led to social disruption, unemployment, leave without pay and salary cuts.

However, a senior official at the Bank of Thailand reports, “Thailand’s banking sector is strong enough to defend against a potential upsurge in bad debt as well as debt restructuring cases stemming from the ongoing Coronavirus outbreak and official measures to contain the spread.”

Senior director for the economic and policy department Don Nakornthab says that banks have a sufficient capital buffer in the event of higher past-due payments and debt restructuring. Unlike the 1997 Tom Yum Kung (Asian financial crisis in Thailand) crisis, the banking system’s financial position is much more solid now.”

“At the end of 2019, the banking system’s capital funds totalled to 2.85 trillion baht, with a capital adequacy ratio of 19.6% and loan-loss provision of 701.2 billion baht, according to central bank data.”

“The non-performing loan coverage ratio was stable at 149.9% at the end of last year, and the liquidity coverage ratio remained high at 187.5%.”

“The banking system delivered a 30.8% rise in net profit to 270.9 billion baht in 2019.”

Siam Commercial Bank ‘s co-president Apiphan Charoenanusorn says that more than 100,000 clients with over 150 billion baht worth of total loans have requested financial aid to ease their burden after the bank launched the scheme in February.

Last week The central bank has set guidelines for the minimum assistance that financial institutions must offer to debtors to ease their financial burden amid the pandemic, which is effective from April 1st. All lenders, comprising commercial banks, specialised financial institutions, and non-bank and leasing companies, are required to comply with the guidelines covering 6 types of loan product…

• Credit cards
• Personal and car title loans
• Auto and motorcycle loans
• Machinery leasing
• mortgages
• SME – Nanofinance and Microfinance loans

Krungthai Bank data shows that the bank has already provided financial aid to 1,500 customers with combined loans of 30 billion baht, while another 70,000 clients with total loans of 250 billion baht are in the process.

The strongest demand for debt restructuring is seen in the bank’s mortgage and personal loans.

At the state-owned Government Savings Bank, President and chief executive, Chatchai Payuhanaveechai says that the GSB has offered a three-month grace period on principal and interest for all debtors who still service debt and miss payment for less than three months as of the end of March.

“The scheme, will run until June 30 and is automatically applied to qualified debtors without any registration requirement, adding that those who do not want to participate in the scheme can honor their debt as usual.”

SOURCE: Bangkok Post