The Islamic Bank of Thailand aims to cut its non-performing loans by more than half to 17 per cent of total outstanding loans through Bt10 billion worth of write-offs and debt restructuring this year.
Kunchit Singsuwan, acting manager of IBank, said it would slash its NPL rate from the current 36 per cent. Currently, outstanding loans total Bt106 billion. The bank’s NPL rate peaked at 43 per cent last year.
The bank is negotiating with Sukhumvit Asset Management, and plans to write off about Bt10 billion worth of bad debts. It is also discussing debt restructuring with its borrowers, he said.
Of total bad debts, about Bt30 billion belong to 137 large borrowers, most of whom operate property businesses in such places as Phuket, Koh Samui, Hat Yai and Chiang Mai.
He said that some of the bad debts arose from irregular lending practices such as failing to request collateral. The bank has investigated such cases and fired six staff and executives allegedly involved in these, and both civil and criminal charges have been brought against them.
Kunchit said the bank targeted a capital adequacy ratio of 8.5 per cent, as required by the Bank of Thailand. The current ratio is 1.43 per cent, and was minus-10 per cent last year.
Increased capital from the bank’s shareholders, new loan extensions and the reduction of bad debts are cited for the expected rise in the capital adequacy ratio. Its main shareholder, the Ministry of Finance, will inject Bt2.5 billion into IBank, Bt2 billion into Government Savings Bank and Bt1 billion into Krungthai Bank.
IBank targets Bt15 billion in new loans this year. Of that total, Bt11 billion worth are credit request applications awaiting approval, Bt2 billion is for halal food producers, Bt800 million for individuals and Bt1 billion for government projects.
Kunchit said that this year, the bank expected to earn 4 per cent of its total income from fees. In the past, its fee-based income has been small.