The NPLs posted Bt484.3 billion in July, a 17-per-cent increase from the same period last year.

This was 8.22 per cent of total loans, compared to 10.34 per cent last July.

Krirk Vanikkul, the BOT's assistant governor, said the sharp decline of the bad loans was also helped by strenuous attempts by the banks in the past four years, as they launched many measures to fight against NPLs.

He said Bangkok Asset Management's extended authority to buy NPLs and non-performing assets would help reduce bad loans in the banking system. The central bank also facilitated banks to easily transfer their NPLs to the asset-management cooperation.

He insisted that debtors' ability to finance their debts remained high despite increasing interest rates. Commercial banks had already taken into account the interest-rate trend before approving the credits.

However, some banks had complained that there were signs that small and mediumsized enterprises may not be able repay their debts in the future due to slowing sales affected by the more sluggish economy.

According to the BOT, the NPLs at Thai banks declined by 13.4 per cent to Bt470.3 billion as of July, with 9.04 per cent of total loans, compared to 11.42 per cent in July last year.

Foreign full branches' NPLs also contracted by 9.4 per cent from the same period last year, to Bt9.2billion. They accounted for 1.5 per cent of their total loans, slightly down from 1.85 per cent in July last year.

In addition, the finance companies' NPLs declined by 75.7 per cent over the year to Bt4.8 billion in July. They posted 6.37 per cent of total loans, compared to 8.03 per cent over the year. The sharp reduction was partly due to the finance companies upgrading to banks.

Anoma Srisukkasem

The Nation