Five of 11 SET-listed banks saw their gross bad loan ratios continue to rise in the third quarter, further reflecting the country's uneven economic recovery.
The five lenders were Bangkok Bank (BBL), Krungthai Bank (KTB), Siam Commercial Bank (SCB), CIMBT Thai Bank (CIMBT) and Land and Houses Financial Group, according to filings with the Stock Exchange of Thailand (SET).
BBL's gross NPLs rose to 3.8% of its outstanding loans at the end of September from 3.7% at the end of June, 3.5% at the end of March and 3.2% at the end of 2016.
KTB's gross NPL ratio jumped to 4.51% at the end of the third quarter from 4.33% in the previous three months, 4.36% at the end of March and 3.97% at the end of last year. Higher bad loans were attributable to large corporate and small and medium-sized enterprise (SME) loans in some sectors, the bank said.
SCB's gross NPL ratio stood at 2.75% at the end of September, compared with 2.65% at the end of June, 2.7% at the end of March and 2.67% at the end of 2016.
Kasikornbank (KBANK) was the only large lender for which its gross bad loan ratio inched down to 3.3% at the end of September from 3.31% at the end of June and March and 3.32% at the end of last year.
For auto loan-oriented lenders , Kiatnakin Bank (KK), Tisco Bank and Thanachart Bank (TBanK) all showed improved asset quality.
Among the 11 banks, CIMBT had the highest gross NPL ratio at 5.7% at the end of September. The small bank's bad loan ratio rose from 5.4% at the end of June and 5.3% at the end of March, but dropped from 6.1% at the end of last year.
CIMBT said in its filing that the lower gross NPL ratio was due to NPL disposal in the third quarter, efficient asset quality management and improvements in its debt collection process.
Maybank Kim Eng Securities' vice-president Wijit Arayapisit said rising bad loans, particularly from SMEs, had pressured banks' NPLs, forcing them to continue raising loan-loss reserves.
The higher NPLs suggested fragile economic circumstances, he said.
"We don't think NPLs for the banking industry peaked out in the third quarter. The NPL level is expected to be steady this quarter, so the economic situation needs to be monitored," said Mr Wijit.
Weakening SME business remains the negative factor pressuring capital reserves and NPLs of the banking industry. Even though KBank, the country's largest SME lender, managed to keep its gross NPL ratio steady, it set aside a larger credit loss provision due to its uptick in soured SME loans.
Mr Wijit's comments echoed concerns from the Bank of Thailand's rate-setting committee, which warned of rising bad loans in the short term. The minutes of the Monetary Policy Committee from its Sept 27 meeting recently released said that the committee had expressed concerns over the high level of NPLs remaining elevated in the short term.
Meanwhile, auto lenders including KK, Tisco, and TBank booked lower NPLs in line with auto industry growth, after the lock-up period of the first-time car buyer scheme lapsed.
Such banks showed higher loan growth and net interest margins, but lower loan loss provisions, he said, adding that auto loans are expected to further improve in the fourth quarter.
Recently, Kasikorn Research Center forecast that the banking industry's NPLs would peak in the third quarter at 3.06%, and then declining to 2.98% in the fourth quarter, in accordance with improving economic momentum. The research house covers both the SET-listed and the SET-non-listed banks.
Both listed and non-listed commercial banks' gross NPL ratios at the end of June stood at 2.95%, edging up from 2.94% at the end of March, according to central bank data.
The research house projects the industry's total loan growth in a range of 3-5% throughout this year, led by large corporations, which will be supported by public spending.
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