Concerns are mounting over Thailand’s individual and SME borrowers, as their debt leverage ratio and asset quality are seen to be increasingly vulnerable to the sluggish economic growth conditions, says Moody’s Investors Service.
“We do have some concerns around the sectors of the economy that have been exposed to a low-growth environment for a while, which are relatively more vulnerable,” said Gene Fang, Singapore-based associate managing director of the financial institutions group at Moody’s.”
Although we do see household debt topping out or plateauing to some degree, we think that a continued spell of weak macroeconomic growth is going to put continued pressure on some borrowers who may be overleveraged.”
He said non-performing loans (NPLs) in the personal loan segment had recorded the most growth in bad debts, greater than the corporate sector, as the slow economic environment had weakened consumer debt repayment ability.
Thailand’s household debt swelled to 85.9% of GDP or 10.4 trillion baht at the end of last year from 84.7% or 10.2 trillion at the end of the third quarter, the Bank of Thailand reported.