SCIB delays NPL sale in hope of better prices

Siam City Bank has resisted selling bad assets as it waits for a better price as the economy improves.

Executive vice-president Parinya Patanaphakdee said the bank had cancelled non-performing loan (NPL) sales with a combined value of around 9 billion baht due to unsatisfactory prices.

Though several investors joined the NPL auction, bids were lower than the bank expected. It plans to resell the bad debts next year.

SCIB, a mid-sized bank with total assets of 398.5 billion baht, wanted to reduce gross NPLs to 5% by the end of this year from 7.98% as of October. Its net NPLs stand at 4.22%.

Mr Parinya said the quality of bad assets had improved in line with a better economic climate and the bank's management. In particular, the Wangkanai Group, a large NPL customer in the sugar industry, has shown significant improvement because of higher commodity prices. Loan repayments of 4 billion baht have proceeded as normal under a debt restructuring process.

"This case signals a good trend for other large NPL customers. We hope to decrease NPLs significantly next year by both sales and prudent management despite a hefty loan growth target," he said.

The bank plans to make new loans of 18 billion baht in 2010, a growth rate of 6% year-on-year, in line with the industry's expected loan growth of 5-6%. The bank forecast Thai gross domestic product growth of 3.5% next year.

However, the bank expects to book zero loan growth this year due to a contraction in corporate loans in the sluggish economy. It will also pay less attention to state-owned enterprise loans because of marginal yields.

source: bangkokpost