Thai banks introduce measures to deal with bad debts

Thai banks introduce measures to deal with bad debts, illustrative image (photo: nationthailand.com)

Bangkok – Thailand’s major financial institutions are bracing for a difficult second half of 2024 as a struggling economy and high household debt force banks to take a more conservative approach to lending.

Kasikorn Bank (KBANK) has announced a more selective approach to lending, focusing on top-tier clients in low-risk categories to mitigate potential loan losses. While maintaining its overall lending focus, the bank will closely monitor developments in various sectors.

Kiatnakin Phatra Bank (KKP) also adopted a cautious stance, limiting its exposure to risky lending segments such as mortgages, auto loans and installment loans.

The bank has tightened its criteria for granting mortgage loans, with particular emphasis on those seeking loans exceeding THB 5 million (USD 140,000).

Aphinant Klewpatinond, CEO of KKP, said that while some segments had grown in the past, they were now seeing a decline and the bank needed to be more cautious. KKP had adjusted its growth target.

Bank of Ayudhya (Krungsri) has admitted that there is increased risk across its entire loan portfolio, including in the previously resilient large corporate segment. The prolonged economic slowdown and evolving business challenges have dampened investment appetite for many companies.

Siam Commercial Bank (SCB) prioritizes risk management over growth by carefully selecting new clients and closely monitoring existing loan portfolios. The bank aims for double-digit return on equity (ROE) by focusing on lower-risk business segments.

Bangkok Bank (BBL) maintained a cautious approach, supporting businesses with liquidity and investment opportunities. The bank expects to maintain bad debt provisions at a high level in the second half of the year.

This collective tightening of lending practices by Thai banks reflects the financial sector’s response to growing economic uncertainty and the need to protect itself against a potential rise in nonperforming loans. As the situation unfolds, questions remain about how these measures will impact Thailand’s broader recovery efforts.

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