Credit bureau rings alarm bells on debt-ridden SMEs failing
65,000 businesses have issues with debt repayment and require urgent intervention
Both Thai households and small and medium-sized enterprises (SMEs) are facing increasing debt problems, the National Credit Bureau said while disclosing figures to a commercial bank board.
The cautious lending policies of Thai banks have led to a decrease in overall credit issuance, particularly to SMEs and legal entities, the bureau revealed. SME credit declined by 8.5% to 3.7 trillion baht in the second quarter compared to the first quarter, reflecting the fragility of SME borrowers through rising non-performing loans (NPLs) and overdue debts, the bureau added.
Currently, 283,000 SME legal entities have received loans totalling 3.7 trillion baht, with 31,000 being non-performing, representing about 10.8% of the total. The total NPL amount stands at 300 billion baht, or approximately 8.1%, showing an increase over the previous year.
Debts overdue within 90 days, or special mention (SM) loans, amount to 162 billion baht, or 4.4% of all credit, the bureau said.
A total of 65,000 businesses having issues with debt repayment, highlighting the urgent need for intervention.
The most affected sectors for NPLs include wholesale and retail trade, manufacturing, construction, and real estate. Similarly, overdue debts are concentrated in these sectors and related industries, including factories and food services, the bureau said.
Assistant managing director at Kasikornbank, Chaiyot Tunpisut, acknowledged that SME clients were showing increased signs of debt problems, reflecting broader industry trends. The bank is actively restructuring debt to prevent them from becoming non-performing, helping clients recover and continue their business, he said.
"There is widespread concern in all industries. SME liquidity issues are affecting other loans, such as credit card and auto loans. The most worrying sector is trading, which faces significant competition. Despite more SMEs encountering problems, overall SME credit still shows growth. This is due to high outstanding loans as SMEs can't repay debt like before, causing total debt to increase from both old and new loans," Chaiyot said.
The deputy managing director of Bangkok Bank, Siridej Aungudomsin, noted a rise in NPLs among SME clients due to the economic slowdown and increased competition from China. The bank is focused on continuing support for clients and maintaining cautious lending practices, Siridej said.
"Debtors who have become non-performing or are in the SM group are mostly existing clients who were assisted during Covid-19 but are still struggling. Continued support is needed," Siridej said.
