The Small and Medium Enterprise Development Bank of Thailand (SME D Bank) has expressed concern that outstanding debt of up to 30 billion baht (US$866 million) will become non-performing loans (NPLs), with an additional 2 billion baht potentially turning to bad debt in the second half of this year.

According to Nartnaree Rattapat from SME D Bank, the bank provided capital support to SMEs amounting to approximately 1.58 billion baht between 2020 and 2022 alone to assist them during the pandemic. period.

Of the total outstanding 30 billion baht, debts classified in the yellow category, meaning some are partially repaid or cannot be fully repaid, come to approximately 16 billion baht. There is a genuine concern regarding an estimated 2 billion baht that will not be able to be repaid and will continue to be problematic in the second half of this year, Nartnaree said.

The bank’s current credit portfolio stands at around 100 billion baht, with approximately 11 billion baht classified as bad debt. This includes approximately 7 billion baht of bad debt accumulated before 2015.

The bank has seen an increase in bad debt by billions of baht, compared to the initial release of approximately 600 billion baht. Unfortunately, SMEs are still vulnerable, and the bank will need to continue managing the situation, Nartnaree said. 

Overall credit release in the first half of this year is slightly better than in the same period of 2022, when total loans extended amounted to 31 billion baht. The bank expects to release approximately 70 billion baht this year, an increase from the previous year’s 68 billion baht.

Most of the newly released credit is for working capital rather than investment loans. “We would like to see more investment loans, and if there is political clarity, new investments will improve. We must manage the liquidity well to prevent disruptions. Otherwise, businesses will face difficulties,” Nartnaree said.

The bank has already conducted surveys to gather customer feedback on the assistance they needed upon closing their accounts with the bank. The majority of customers expressed a desire for consolidated debt to reduce the complexity of debt management. “However, this is challenging to manage. Moreover, the bank is unable to refinance certain types of loans, such as home loans and credit card debt,” Nartnaree concluded.

Source: The Nation