"Current uncertainty over the country's economic environment has affected the debt-servicing ability of the bank's customers. Therefore, the GHB is offering several debt-easing schemes to help them," president Khan Prachuabmoh said yesterday.

Three of the measures target borrowers who are likely to become bad debtors, with the other three tailored to those who already have non-performing loans (NPLs).

The first is a loan-period extension to reduce the monthly repayment burden on borrowers, and the second a monthly instalment reduction for one year by only charging interest instead of interest plus principal.

The third is to cut the monthly debt instalment by half for up to one year. However, customers who choose the second and third options must revert to the original payment plan after the relaxation period.

The fourth measure is to suspend interest payments for two years.

The fifth measure is to close the customer's loan account, or allow them to pay instalments at a lower rate of interest for up to two years.

The final measure allows existing borrowers who want to sell their equity (accumulated during the period of repaying a mortgage) on a property to new borrowers as part of a fixed-rate package. Khan said the debt-servicing ability of some of the bank's borrowers was still falling, although they are not yet classified as defaulters. The bank's definition of a borrower with an NPL is a debtor who has failed to service debt for more than 90 days.

However, there are already negative indicators, with many customers in the category of not making payments for 30-60 days.

The bank's NPLs increased from Bt28.91 billion or 5.84 per cent of total outstanding loans in January to Bt30.25 billion or 5.89 per cent at the end of April. The percentage currently stands at 5.93 per cent.

"The increase in the bank's bad loans is mainly from new NPLs, higher debts and unemployment. In April, the total amount of NPLs significantly increased from March, rising from Bt29.37 billion to Bt30.25 billion. This was partly due to the start of the new school semester [and higher expenses]," Khan said.

He added that an acceptable NPL percentage for the GHB was a single digit. The bank has targeted to reduce its distressed loans to 5.06 per cent by the end of the year.

With the six debt-restructuring measures, the bank hopes to achieve its goal. "The bank cannot forecast how many borrowers will participate in this scheme, but the bank is offering solutions for them amid the negative economic environment," he said.

The GHB has 59,343 mortgage accounts, compared to 56,037 at the end of last year.

Somruedi Banchongduang

The Nation