Islamic Bank expects capital ratio to reach positive position

The state-owned Islamic Bank of Thailand (IBank) believes its capital-adequacy ratio will return to positive territory this year. The expectation stems from applying the Finance Ministry's loan-loss provision requirements, which are less stringent than the Bank of Thailand's. The Finance Ministry requires the bank to set aside only 9-10 billion baht in loan-loss provision reserves based on 2012 performance. However, it reserved 15 billion baht to comply with central bank. According to Thongrob Danampai, chairman of IBank's executive committee, IBank's non-performing loans (NPLs) amounted to 38.5 billion baht as of last Dec 31 or 34.2% of its total lending. IBank's suspension of working-capital loans late last year could be blamed for a 15-billion-baht. IBank expects to resolve 20 billion baht in NPLs this year.