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Published on October 23, 2007

Bad loans escalated to 8 per cent of all lending, thanks to a Bank of Thailand qualitative loan-review requirement.

The net loss compared with a Bt1.35-billion net profit in the same period last year.

The quarterly loan-loss provision was Bt3.82 billion, up Bt3.62 billion year on year, president and CEO Chaiwat Utaiwan said in a statement to the Stock Exchange of Thailand.

"Consultations with the Bank of Thailand and a more stringent internal qualitative-loan review resulted in an increase in the bank's non-performing loans [NPLs] of Bt8.76 billion during the quarter, of which Bt8.54 billion were qualitative NPLs, whereby debtors are able to follow loan-repayment schedules," the bank said.

It said the increase in bad debt led to larger reserves for bad and doubtful debts of Bt3.26 billion. The bank took a conservative approach and set aside an additional reserve of Bt558 million to accommodate any future impact of economic fluctuations on debtors' credit risk. The bank set aside Bt206 million in allowances for losses on loan restructuring, it added.

At the end of the third quarter, gross NPLs totalled Bt20.88 billion, or 8.06 per cent of all loans, including interbank and money-market items and a loan-loss coverage ratio of 76 per cent.

Gross bad debt rose from Bt12.06 billion (4.74 per cent) of total loans in the second quarter and Bt12.93 billion (5.08 per cent) in the first quarter.

In the third quarter, the bank set aside an allowance for impairment of properties foreclosed totalling Bt1.19 billion, up Bt924 million from the same period last year. This is to reflect expected proceeds and the market value of assets.

Deposits amounted to Bt364.91 billion and shareholders equity Bt33.58 billion, with a book value of Bt15.89 per share.

Capital to total risk assets and tier-one capital to total risk assets before loss in the first nine months of the year stood at 14.25 per cent and 13.17 per cent, respectively; and after the loss, 12.88 per cent and 11.8 per cent, respectively.

 The Nation