Less BoT . hotels
Re-opening the door to reduce the need for debt relief
A sign reminds visitors to wear masks at the reception of Clover Patong Phuket Hotel. Bloomberg
A central bank executive said the rate of hotel operators joining the Bank of Thailand’s (BoT) asset storage program – a debt relief measure – has been eased by the improvement in domestic tourism after the country reopens. .
A total of 168 hotel business owners have applied for the central bank’s asset storage scheme, which represents a total asset value of 24.37 billion baht, as of November 8 this year. The figure reflects a marginal increase from 106 operators, with a total asset value of about 15 billion baht, in September.
BoT’s senior manager, Suwannee Jatsadasak, said hotel business operators have resumed operations and their occupancy rate is improving. After the country reopened on November 1, domestic economic activities, consumption and tourism have begun to recover.
With this, it added, some hotel business operators have canceled their applications to join the asset warehousing system.
Creditors and borrowers entering the House Asset Storage Scheme need more time amid the complex process of equity over movable assets. As a result, the debt restructuring program has progressed gradually compared to the rapid progress of the central bank’s soft loan program.
As of November 8, 39,095 business operators have received concessional loan approvals for a total of 124.83 billion baht.
The BoT’s Hotel Business Operator Sentiment Index released last month found that 67% of respondents have resumed reopening their businesses, up from 51% in September. Meanwhile, hotel occupancy rates nationwide rose to an average of 23.5% in October, compared to 15.5% in the previous month.
With the uneven economic recovery, the central bank sees tourism-related industries such as hotels, transportation and property as fragile sectors that will take longer to recover.
On a related matter, Ms Suwannee said the central bank has been monitoring the demand for mortgage loans after the BoT eased the loan-to-value (LTV) ratio for mortgage lending.
This temporary relief, effective from October 20 of this year until the end of 2022, allows banks to approve home loans to borrowers of up to 100% of the total home value for all types of mortgage loan contracts.
The Central Bank expects the demand for housing loans to improve gradually by the end of this year in line with the increasing economic trends and seasonal factors in the last quarter of the year.
Despite the relaxation of the LTV rule, financial institutions are expected to maintain strong standards on housing loan approvals in accordance with the increased credit risk of borrowers. Regarding the analysis of mortgage loans, Ms Suwannee said that financial institutions need to consider the debt service ratio in line with the debt repayment capabilities of borrowers.
According to data from the House of Representatives, the total outstanding mortgage loans in the commercial banking sector in the third quarter of this year showed a positive growth rate of 5.7% year on year, although it decreased from 6.8% in the previous quarter. The NPL ratio was 3.62% in the third quarter, down from 3.66% in the second quarter.