Manufacturing, commerce and personal-consumption sectors experienced a significant increase in non-performing loans (NPLs) in the second quarter of this year, according to the Bank of Thailand (BOT).

NPLs in the manufacturing sector rose by Bt29 billion from the previous quarter, the biggest increase in all sectors. Re-entry NPLs accounted for Bt11.7 billion. Bad loans increased by only Bt16.1 billion in the first quarter.

In the second quarter, the manufacturing sector restructured some debts and transferred others to asset-management companies. This accounted for Bt15.2 billion of NPLs, lower than the Bt22.5 billion in the first quarter.

NPLs in the manufacturing sector rose by 7.3 per cent from the first quarter to Bt157.4 billion, accelerating the 2.5-per-cent growth of overall NPLs.

Manufacturing NPLs accounted for almost 10 per cent of total loans, compared with 9.5 per cent in the previous quarter. In terms of total NPLs, the sector represented 32.5 per cent, up from 31 per cent.

NPLs in financial institutions jumped in the second quarter by Bt71.7 billion, of which Bt42.2 billion were new NPLs. After restructuring, bad loans dropped by Bt58.4 billion, leaving the net increase in NPLs at Bt13.3 billion.

Krirk Vanikkul, BOT assistant governor, said the increase in NPLs was due to the economy being in the doldrums. However, debt restructuring and transfers had helped the situation.

A central bank source said rising interest rates, oil-price hikes and the economic slowdown were reasons for the acceleration of NPLs. The slowdown in the global economy also caused foreign debtors difficulties in paying their loans.

In addition, the central bank's regulation on qualitative NPLs has caused banks to classify loans more strictly.

The commerce sector also saw its bad loans rise by Bt13.4 billion in the second quarter, up from Bt11.2 billion. But it succeeded in restructuring loans of Bt12.3 billion, higher than the Bt9.9 billion of the previous quarter.

NPLs in the commerce sector amounted to Bt89.6 billion, up 0.6 per cent. Its NPLs accounted for 9.1 per cent of total loans, down from 9.2 per cent.

NPLs in the personal-consumption sector also increased by Bt10.7 billion. Most were new NPLs. Bad loans rose by Bt9.9 billion in the first quarter.

But restructuring and transfers accounted for Bt9.6 billion of NPLs in the sector, up from Bt7.9 billion. The sector's net NPLs in the second quarter rose by Bt1.1 billion.

The sector's total NPLs were Bt67.8 billion in the second quarter, or 6 per cent of total loans, up from 5.98 per cent in the previous quarter.

Anoma Srisukkasem

The Nation