Thailand’s household non-performing loans (NPLs) increased 2.8%, from 1.16 trillion baht in June to 1.19 trillion baht in July, and will rise to 1.2 trillion baht in the foreseeable future, said Surapol Opasatien, CEO of the National Credit Bureau.
He said that, although total household debt in June and July remained unchanged, at about 13.6 trillion baht, the NPLs for July increased to 1.19 trillion baht, accounting for 8.76% of all household debt.
The NPLs for July comprise 228,447 million baht in mortgages, a 4.5% increase from June, 262,985 million baht in car loans, an increase of 3.3%, and 69,471 million baht in credit card debt, a 2% increase.
He also said that “SM” debt (repayments overdue by 30-90 days but not yet classified as an NPL) for the first six months of the year amounted to 500 billion baht, a sharp drop from the previous quarter.
Within just a month, however, SM debt jumped from 500 billion baht to 670 billion baht, mainly in mortgages.
Meanwhile, Padet Pachernsivakorn, deputy CEO of National Credit Bureau, noted that an increase in SM debt is cause for concern, because of the tendency for the debt to ultimately become NPLs.
Credit cards account for most of the SM debt, followed by mortgages and car leasing, because the borrowers were willing to pay high interest rates to obtain cash to improve their liquidity.
He said that the mountain of debt is concentrated among “Gen Y” people, who have accumulated debt from personal loans, car loans, mortgages and credit card borrowing.
This “Gen Y” debt problem will expand to affect “Gen X”, making it very difficult for them to obtain a mortgage, with the bank rejection rate of home loan applications skyrocketing to about 80%.
Padet said there is no short-term solution to the problem of household debt, other than the government enabling people to earn more income sustainably.
