* Bad loans at 3.09% of lending end-June vs 3.04% end-March
* Loans seen growing about 5% this year
* Says banks’ positions strong but risks remain
BANGKOK, Aug 17 (Reuters) – Bad loans at commercial banks in Thailand rose slightly in the second quarter and should steady later the year due to measures to help debtors hit by the coronavirus pandemic, the central bank said on Monday.
Non-performing loans (NPLs) rose to 3.09% of total lending at the end of June from 3.04% as of March, Tharith Panpiemras, a senior Bank of Thailand (BOT) director, told a news briefing.
The BOT has discussed with banks about helping debtors when current relief measures end in October, such as debt moratoria and restructuring, he said.
“There will still be measures to help debtors and businesses but they will be more targeted, not broad-based,” Tharith added.
Despite economic problems, banks’ lending rose 5% in the first half of 2020 as large companies sought loans amid tight liquidity and a volatile bond market, he said, adding that loans should grow about 5% this year.
Financial institutions remain strong with high capital positions, he said, while a preliminary stress test showed they could handle the situation this year.
“But the concern is more likely in the next year,” he said.
In June, the BOT asked banks to prepare capital management plans for the next 1-3 years and suspend 2020 interim dividends and share buybacks to assess their capital levels post-COVID-19.
The 2021-2022 stress test results will be known in October.
Southeast Asia’s second-largest economy shrank 12.2% in April-June from a year earlier, the sharpest since 1998, as the pandemic battered tourism and domestic activity.
The shrinkage was still less than the BOT had expected and the economy should have bottomed, although high uncertainty remains, senior BOT director Don Nakornthab said in a statement.
The BOT has forecast a record economic contraction of 8.1% this year and will review that at its rate meeting next month.
Reporting by Kitiphong Thaichareon and Orathai Sriring;
Editing by Martin Petty