Banks Still Strong, Problem Loan Ratio Unchanged in Q2

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The banking system remained strong in the second quarter, with high levels of capital funding and loan loss provisions to cope with the fallout from the Covid-19 pandemic, while problem loans were stable, the Bank of Thailand (BoT) said on Monday.

The country’s largest coronavirus outbreak to date has hit economic activity, with stricter containment measures expanded and areas expanded.

In the June quarter, capital financing of the banking sector is equivalent to a capital adequacy ratio (BIS ratio) of 20%, and a non-performing loan coverage ratio (NPL) of 152.2%, the Bank of Thailand said in a statement https://www.bot.or.th/ English / PressandSpeeches / Press / 2021 / Pages / n6364.aspx.

NPLs accounted for 3.09% of total loans as of June, down slightly from 3.10% in March, boosted by financial support measures and a softening of loan classification, the report said.

“With the aid measures, we do not expect NPLs to rise, rather, they will gradually appear as loans deteriorate in line with a long and difficult situation,” BoT Senior Director Suwanni Jatsadasake said at a briefing.

The central bank last week approved additional financial measures to help debtors hit by the outbreak, including providing liquidity and easing lending rules.

In the June quarter, overall bank lending growth slowed to 3.7% year-on-year from 3.8% in the previous quarter as some firms switched to issuing bonds from bank loans, BoT said.

However, lending to small and medium-sized businesses rose marginally in the second quarter over five years, Ms Suvanni said.

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