Household borrowers are likely to be more severely affected by ongoing flooding than businesses, while banks have strengthened their business continuity plans (BCPs) to prepare for a wider range of unexpected events.
Kattiya Indaravijaya, chief executive of Kasikornbank (KBank), said an initial assessment indicated the bank's individual customers, particularly mortgage and auto loan borrowers, were more affected by the flooding than business customers. Business operators experienced disruptions confined to limited areas and lasting around 1-2 weeks, making the impact manageable, she noted.
However, mortgage and auto loan borrowers, particularly those in the low- to middle-income brackets, are more vulnerable to the effects of flooding, which could undermine their ability to meet debt repayment obligations.
KBank is ready to provide financial assistance to flood-affected customers through various debt relief programmes.
As natural disasters vary in nature from year to year, Ms Kattiya said KBank needs to make its BCP simulations more sophisticated and comprehensive to cover a wider range of scenarios, enabling the bank to better assess potential impacts and prepare appropriate response measures. Such preparedness would also help the bank determine appropriate loan-loss provisions.
"We set aside adequate provisions to prepare for potentially greater shocks, both locally and globally. With this solid buffer, the bank does not need to set aside additional reserves for the rest of this year," she said.
Although flooding in several areas has caused damage to households and businesses, the economic impact remains significantly smaller than that of the major floods in 2011.
Sakchai Peechapat, chief executive of Tisco Financial Group, said several hundred customers had sought debt assistance from the bank, although the number remained relatively small compared with its overall customer base.
Auto lending is Tisco's core business, with vehicle-related loans accounting for one-third of its total loan portfolio. Around 70-80% of customers affected by the flooding have vehicle insurance coverage.
"Fewer than 10 auto loan customers have requested debt relief. As vehicles are mobile assets, many customers were able to move them to safe areas before the flooding," he said.
Through additional overlay provisions for loan losses, Tisco has proactively built up its reserves to cushion against anticipated risks over the next 3-6 months, said Mr Sakchai. As a result, its provisions are expected to be sufficient for the remainder of this year.
The bank plans to strengthen and expand its BCP framework to address natural disasters, he noted.
"We maintain an updated operational playbook designed to handle various extreme natural disaster scenarios, drawing on lessons learned from past crises, including the major floods of 2011, earthquakes and tsunamis," Mr Sakchai said.