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GH Bank chief expects rise in NPLs
Bangkok Post – 20 November 2008
KANANA KATHARANGSIPORN
The global recession and its impact on the Thai economy may cause a rise in non-performing loans (NPLs) next year due to a possible reduction of income and job losses, according to Khan Prachuabmoh, the president of the Government Housing Bank.
Banks have to manage risk and expenses property as well as monitor and take care of existing borrowers closely to prevent possible increases in NPLs, said the head of the country's largest mortgage lender.
''GH Bank tries to help customers solve problems and restructure debts for them because there is the tendency that more borrowers may face the impact of the recession, resulting in salary cuts or layoffs. Therefore, there is the potential that this group of customers would become NPLs,'' he said.
The bank will also focus on quality borrowers by considering their net income and profile.
According to Kasikornbank research, among six major commercial banks, half of them had rising NPLs while others reported reduced NPL levels as of June 30 compared with the end of last year.
Those with rising NPLs were Krung Thai Bank, up from 2.09% to 2.49% of outstanding credit, Bank of Ayudhya from 5.68% to 6.34%, and TMB Bank from 8.57% to 8.91%. The better performers were Siam Commercial Bank, from 5.61% to 4.36%, Bangkok Bank from 4.65% to 4.05%, and Kasikornbank from 3.27% to 2.87%.
Mr Khan said impacts on the Thai economy next year would come from the fall in the stock market, the slowdown in tourism and exports and shrinking home purchasing power. Property developers would delay real estate investments so new releases of home loans would continue to decrease next year, the same trend as this year.
Chatchai Payuhanaveechai, first senior vice-president of Kasikornbank, said the bank expected its home loan releases would slow down because financial institutions would be more cautious in approving new mortgages.
However, he said KBank still saw some positive factors such as the extension of tax incentives, and higher competition among banks to offer mortgages.
''Current real estate prices are not so high so there is a trend for rising prices in the future, stimulating buyers to make a purchase decision,'' he said.
Samma Kitsin, director-general of the Real Estate Information Center, said that besides sub-prime and related problems overseas, there would be problems from types of credit such as automobile leasing and credit cards next year.
Though the credit card amounts would be low compared with troubled sub-prime debt, the problem would be more severe as credit card loans are unsecured debts with no collateral.
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