NPL provisions by 10 commercial banks in 2023 matches their total profit
Ten Thai commercial banks set aside 235.94 billion baht in provisions for bad loans in 2023, a jump of nearly 20% year on year, Krungthep Thurakij Media reported on Wednesday.
The provisions for non-performing loans (NPLs) is roughly the same as the total net profit of these 10 banks in 2023, at around 235 billion baht, said the report.
This trend points to a careful debt management of Thai commercial banks even though the country’s economy has started to bounce back from the impact of Covid-19, the report said.
The 10 banks — SCBX (formerly Siam Commercial Bank), Kasikornbank (KBank), Bangkok Bank (BBL), Krung Thai Bank (KTB), Bank of Ayudhya (BAY), TMBThanachart Bank (TTB), Tisco Bank (TISCO), LH Bank (LHFG), CIMB Thai Bank (CIMBT) and Kiatnakin Phatra Bank (KKP) — reported outstanding NPLs in 2023 of 511.35 billion baht, a slight drop of 0.2% year on year.
KBank tops the chart of highest provisions for NPLs in 2023 at 51.84 billion baht, followed by SCBX at 43 billion baht, KTB at 37.08 billion baht, and BAY at 35.61 billion baht.
Banks that saw the highest jump in NPL reserve year on year were: KTB (52.37%), CIMBT (48.52%), BAY (33.64%), and SCBX (28.88%).
In the case of KTB, the abrupt jump in provisions for bad loans in the fourth quarter of 2023 at 13.07 billion baht, up from 8.157 billion baht in the third quarter, sparked the largest single-day share sell-off in the bank’s history on January 21. The massive exodus wiped out 26 billion baht in KTB’s market capitalisation, causing its stock price to plunge by over 10%.
KTB explained its decision to raise its NPL provisions to the bank's exposure to a large corporate customer that faced financial difficulties.
Thanadet Rangsithananont, director of research at Pi Securities Pcl, said on Wednesday that major banks are increasing their reserve as the debts of giant construction company Italian Thai Developer Plc (ITD) are at risk of declining in quality.
ITD announced on January 8 that it is to request deferment of payment of the principal on its outstanding debentures for two years. The announcement prompted some banks to downgrade ITD’s loans to special mention status.
“Other factors for banks’ increasing reserve were uncertainties of the current economic climate that could affect overall debt quality for vulnerable groups, especially individual clients and SMEs,” he said.
