BAM excels in bad-loan purchases

Non-performing loan acquisitions by Bangkok Commercial Asset Management Co (BAM) have already exceeded this year’s target due largely to an uptick in NPLs.

BAM had raised its budget for bad-asset acquisitions from financial institutions to 10.5 billion baht this year from 8 billion earlier, but its NPL purchases have still surpassed the revised target, senior executive vice-president Somporn Moonsrikaew said.

He said the acquired NPLs were evenly split between small and medium-sized enterprise loans and mortgages.

BAM, Thailand’s largest asset management company, had bought such NPLs from both commercial and state-owned banks with discounted prices of 30-40% depending on debt collateral, he said, adding that the discount was similar to last year’s despite higher supply.

“Bad-debt management is a key role of BAM, so we offer fair prices for the asset bidding amid tougher competition,” Mr Somporn said.

Despite higher-than-targeted NPL purchases, deals worth 200 million to 1 billion baht each are in the pipeline.

As of Sept 30, overall industry NPLs stood at 2.79%, up from 2.38% in the second quarter.

As loans increasingly turn sour due to the sluggish economic environment, financial institutions prefer to dispose of bad loans rather than collect such debt themselves, fearing the added burden of setting aside provisions.

BAM is poised to set a 2016 budget for NPL acquisitions of 10.5 billion baht, similar to this year’s total.