NPLs among rice farmers likely to rise

With rice farmers facing late payment from the rice-pledging scheme and general debtors earning less due to the stuttering economy, bad loans look likely to increase among leasing businesses.

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Thitikorn Plc (TK), a listed hire-purchase firm for motorcycles and automobiles, has seen signs of tight liquidity among its debtors since last year's third quarter, said deputy managing director Prapol Phornprapha.

He said its non-performing loans stood at 4% at the end of that quarter.

But the ratio will likely show a further increase in the fourth quarter, as rice farmers' liquidity has dried up since the caretaker government has delayed payments to them, said Mr Prapol.

Some 75% of the company's motorcycle leasing portfolio has been extended to upcountry residents, particularly farmers.

Thus, late payments from the rice-pledging scheme is also hurting the company, said Mr Prapol.

He said this has prompted TK to cut its 2014 loan target to flat growth from a 5% forecast previously.

Outstanding loans as of last Sept 30 stood at 9.12 billion baht.

The company's annual loan growth rate in normal times is 10-15%, said Mr Prapol.

Piyasak Ukritnukun, the managing director CFG Services Co, best known for its Srisawad Ngern Tid Lor (Money on Wheels) car loans, said some of the company's tractor leasing customers have requested debt restructuring.

A liquidity crunch following the late payments in the government's rice-pledging scheme is again the reason.

However, the number of farmers who have entered into debt restructuring remains minimal, said Mr Piyasak.

TK provides one-year leases on tractors, and these loans now stand at 500 million baht or 5% of the total loan portfolio.

"Some farmers expect rice-pledging payments will be delayed for another three months, so they're asking the company for late payments to us in turn during the period as well," said Mr Piyasak.

He said CFG provides financial assistance to existing customers on a case-by-case basis, and debt payment extensions to relieve the monthly burden of borrowers is one measure.

Late payment for the company's motorcycle leasing customers has not become a problem yet, said Mr Piyasak.

TK shares closed on the Stock Exchange of Thailand on Friday at nine baht, down 10 satang, in trade worth 1.93 million baht.

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