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Published on August 14, 2007

He said most credit-card providers faced higher non-performing loans (NPLs) in the first half of the year. This was mainly from the sagging economy affecting cardholders' ability to service their debts.

In July 2006, the central bank introduced a rule requiring borrowers to make a minimum monthly payment of 10 per cent of their balance. The previous requirement was only 5 per cent.

Card issuers have not yet disclosed their official data on NPLs, Shoke said.

Representing Bangkok Bank's senior vice president, Shoke said the bank's bad loans on credit cards had slightly increased during the first half. As of June, they stood at 1.5 per cent, up from 1.25 per cent at the end of last year.

"With a slower economy, it's hard to lower the level of NPLs, but the bank will do it best by controlling bad loans at the existing level," he said.

If NPLs rise, the bank will increase its number of staff responsible for loan collection. It currently has 90 people, excluding an outsource company.

Bangkok Bank's biggest NPLs on credit cards include both existing customers and new cardholders. But the bank has not been affected significantly by the BOT's repayment rule, because it had prepared for the change, Shoke said.

The bank has 750,000 cardholders and plans to increase that number to 830,000 this year. The general election due late in the year is expected to boost people's confidence and increase consumer spending, he said.

Siam Commercial Bank president Kannikar Chalitaporn said the bank's NPLs had increased during the second quarter, partly from retail loans, particularly credit cards.

The increase was also a result of the BOT's stricter measure on minimum payments. The bank's loan quality also decreased, because customers were holding several cards. As a result, the bank will concentrate on reducing NPLs by the end of the year.

Gross NPLs at the Kingdom's third-largest bank totalled Bt56.99 billion, or 7.76 per cent, in the second quarter, up from Bt54.51 billion, or 7.61 per cent, in the first quarter.

Somruedi Banchongduang

The Nation