Tisco Bank expects the non-performing loan (NPL) ratio to climb to 3-3.5% of total outstanding loans this year under a worst-case scenario where a third-wave of Covid-19 occurs in Thailand.
Given the spate of rising economic uncertainties, especially the second outbreak, the bank has formulated its 2021 business plan based on the worst-case scenario of a prolonged outbreak where a third-round spread of the deadly virus emerges and vaccination is delayed from the government's existing timeline.
Under this scenario, Tisco Bank forecasts the NPL ratio will increase to 3-3.5% this year, but the existing loan loss reserves already provide a buffer for rising bad debts, said Suthas Ruangmanamongkol, chief executive officer of Tisco Financial Group, the bank's holding company.
The bank's gross NPL ratio rose to 2.5% at year-end 2020, with total bad debt valued at 5.61 billion baht. The bad debt ratio stood at 2.4% at year-end 2019, with a total value of 5.83 billion baht.
Expected credit losses based on the Thai Financial Reporting Standards 9 amounted to 3.33 billion baht in 2020, rising significantly from 1.10 billion baht logged in 2019.
The bank has set aside loan loss provision in preparation for heightening downside risks.
Higher provision of loan coverage ratio increased to 210% in 2020 compared to 183% in 2019. Tisco Bank also maintained a strong capital adequacy ratio at 22.8% in 2020, up from 22.1%in 2019 and almost in line with 22.9% in 2018.
"We've maintained and established a solid cushion to manage higher uncertainties from the new round of infections. At present, the bank's capital base and provision are strong enough to cope with the higher NPL outlook," said Mr Suthas.
The bank will concentrate on secured-loan and fee-based income businesses to generate profit this year, with digital infrastructure development as another key strategy to rev up long-term growth prospects, he said.
To help clients cope with the fresh outbreak, the bank has provided financial assistance to around 7,000 clients, accounting for 2% of total loan portfolio.
Tisco Bank offered debt relief measures to around 60,000 clients, accounting for 20% of total loan portfolio, during the first-phase programme which expired in December.
Around 90% of all customers applying for financial remedies managed to exit the programme.