(Nov 26): Thai banks’ non-performing loans last quarter jumped to their highest level in three years as troubled corporate and individual borrowers continued to struggle to repay debt, though the Bank of Thailand announced progress in talks with the finance ministry on relief measures.

Some 2.97% of commercial banks’ outstanding loans were non-performing at the end of September, up from 2.84% in the previous quarter, Bank of Thailand assistant governor Suwannee Jatsadasak told a press conference Tuesday. That was the highest ratio since the third quarter of 2021, she said.

Prime Minister Paetongtarn Shinawatra has pledged measures to help reduce high household debt levels that are fueling bad loans and making banks reluctant to extend more credit on everything from cars to homes. The government last week discussed plans to restructure as much as 1.3 trillion baht (US$37 billion or RM165.3 billion) of housing, car and personal loans, potentially including longer repayment periods and interest suspensions.

“We still have to closely monitor the debt payment ability of some small- and medium-sized businesses and householders with slow earnings recovery and high borrowings,” said Suwannee. “Some businesses are also facing structural issues and lower competitiveness.”

The central bank and finance ministry are working with banks on new measures to help restructure the debt of some vulnerable groups, she said. They have agreed to a 50% cut in the fee that banks pay into a bailout fund, she said, while full details of new steps are being finalised and should be set by the end of this year.

Banks’ outstanding loans fell 2% from a year earlier, the first quarterly decline since 2010, as the government and large companies paid back debts, according to Suwannee. She added that loans to some sectors losing competitiveness continue to decline.

The Bank of Thailand last month unexpectedly cut its benchmark interest rate for the first time in more than four years, warning that credit quality had deteriorated, partly due to the struggles of small- and medium-sized enterprises and “vulnerable” households.

Southeast Asia’s second-biggest economy is weighed down with high levels of household debt, a burden which is making people reluctant to spend, invest in new businesses, or hire more staff. That’s made Thailand an economic laggard compared to its neighbors, with gross domestic product expanding 3% in the third quarter from a year earlier, trailing Indonesia’s 4.95% pace and Malaysia’s 5.3% expansion.

Uploaded by Magessan Varatharaja