Business

Thai Families Struggle to Survive as Household Debt Continues to Mount

Thai People Struggling Under a Mountain of Household Debt

The Bank of Thailand has raised concerns over the mounting household debt as Thai people are among the biggest borrowers in Asia. Racking up a debt mountain of 14 trillion baht, or 89.3% of gross domestic product (GDP) by the end of December.

The level of household debt is the highest since the central bank began keeping records in 2003 and people are finding it increasingly difficult to keep up with payments.

Whereas during the previous recession, Thai leadership advocated mixed crop farming as a solution to remain afloat, a more appropriate solution these days, would be rapid startup tips that can help families diversify and re-orientate rapidly away from the tourism industry.

Thai rice farmer Jamras Kongchai says shes struggling to pay off 500,000 baht ($16,082) of debt because money from the sale of her crops is not enough to make payments.

Adding to the strain, the coronavirus outbreak has shut a small construction firm where she worked for $10 a day for much needed extra income.

“I’m so heavily indebted and don’t know what to do,” said the 51-year-old, single mother of two. She travelled from the northern province of Kamphaeng Phet to join a demonstration of indebted rice growers in Bangkok late last month, asking the government to help reduce their debt burden.

Jamras has only repaid some of the interest since 2013, and hasn’t put a dent in the principle. This year, she has to pay 40,000 baht in interest, but she has no money. “I hope to get some help”.

Such protests have put further pressure on the the government of Prime Minister Prayut Chan-o-cha. His military backed government is already grappling with mounting pro-democracy demonstrations and failing to revive the pandemic-hit economy.

The growing debt burden

High debt also poses a risk to financial stability and restrains consumer spending in Southeast Asia’s second-largest economy, impeding a recovery from the coronavirus crisis. The economy suffered its deepest slump in over two decades last year as exports shrank and the vital tourism sector reeled from the absence of foreign visitors.

New COVID-19 outbreaks have added to the pressure on some businesses and households, the central bank said last month, when it cut its 2021 gross domestic product (GDP) growth outlook to 3% from 3.2%, noting the economy would not return to pre-pandemic levels until mid-2022.

While the latest flareup in infections has been largely contained, it has reinforced fears that an economic rebound will be slow and patchy, prolonging the pain.

“Even before COVID, our debt to GDP was already the highest among emerging markets,” said Yunyong Thaicharoen, chief economist at Siam Commercial bank.

“It’s above a level that has quite an impact on GDP and household spending,” he said, adding the debt ratio could peak at 90-91% of GDP in the first quarter.

The government has promised 1 trillion baht in relief to ease the impact of the outbreak, but some say relief is not being rolled out fast enough for many Thais. Last year, a woman took rat poison outside the finance ministry to protest the slow response. She survived and was promised her payment days later.

The growing debt burden is likely to curb private consumption, which accounts for half of Thailand’s $502 billion GDP, and will hurt lenders’ earnings if more loans turn sour.

To be sure, the pandemic slowed down loan demand last year, but the slumping economy also made it more difficult for people to repay their loans.

Dangers of rising household debt

Consumer loans rose 4.6% last year, slowing from a 7.5% rise in 2019 as the outbreak cut household purchasing power, according to the central bank. But loans with a significant increase in credit risk jumped, with autos loans hitting 9.5% of lending, the highest in at least three years.

Still, lender Muangthai Capital, remains upbeat, targeting annual loan growth of 20-25% over the next four years.

“The industry still has ample room to grow”, said deputy managing director Parithad Petampai, noting the firm’s lending increased 10-fold to 70 billion baht last year from 2014.

For years, easy credit for consumers and businesses has prompted many warnings about the dangers of rising household debt in Thailand, and now the pandemic has left millions of people out of work.

About 4.7 million workers are at risk of being affected by the outbreak, of which 1.2 million workers might become unemployed or underemployed, the central bank said in January. Even after the economy has recovered and more jobs are available, the debt overhang will take a long time to tackle.

“We may earn more but that will go to debt servicing, not much left to spend,” said Aree Onkloi, 22, worker from the northern province of Phitsanulok, whose family owes nearly a million baht.

“We will have to keep borrowing and never get out of it”.

Source: Reuters

Business

PepsiCo Reduces Revenue Projections As North American Snacks And Key International Markets Underperform.

(VOR News) – In the third quarter of this year, Pepsi’s net income was $2.93 billion, which is equivalent to $2.13 per share. This was attributed to the company.

This is in stark contrast to net income of $3.09 billion, which is equivalent to $2.24 per share, during the same period in the previous year. The company’s earnings per share were $2.31 when expenses were excluded.

Net sales decreased by 0.6%, totaling $23.32 billion. Organic sales increased by 1.3% during the quarter when the effects of acquisitions, divestitures, and currency changes are excluded.

Pepsi’s beverage sales fell this quarter.

The most recent report indicates that the beverage and food sectors of the organization experienced a 2% decline in volume. Consumers of all income levels are demonstrating a change in their purchasing habits, as indicated by CEOs’ statements from the previous quarter.

Pepsi’s entire volume was adversely affected by the lackluster demand they encountered in North America. An increasing number of Americans are becoming more frugal, reducing the number of snacks they ingest, and reducing the number of times they purchase at convenience stores.

Furthermore, Laguarta observed that the increase in sales was partially attributed to the election that occurred in Mexico during the month of June.

The most significant decrease in volume was experienced by Quaker Foods North America, which was 13%. In December, the company announced its initial recall in response to a potential salmonella infection.

Due to the probability of an illness, the recall was extended in January. Pepsi officially closed a plant that was implicated in the recalls in June, despite the fact that manufacturing had already been halted.

Jamie Caulfield, the Chief Financial Officer of Pepsi and Laguarta, has indicated that the recalls are beginning to have a lessening effect.

Frito-Lay experienced a 1.5% decline in volume in North America. The company has been striving to improve the value it offers to consumers and the accessibility of its snack line, which includes SunChips, Cheetos, and Stacy’s pita chips, in the retail establishments where it is sold.

Despite the fact that the category as a whole has slowed down in comparison to the results of previous years, the level of activity within the division is progressively increasing.

Pepsi executives issued a statement in which they stated that “Salty and savory snacks have underperformed year-to-date after outperforming packaged food categories in previous years.”

Pepsi will spend more on Doritos and Tostitos in the fall and winter before football season.

The company is currently promoting incentive packets for Tostitos and Ruffles, which contain twenty percent more chips than the standard package.

Pepsi is expanding its product line in order to more effectively target individuals who are health-conscious. The business announced its intention to acquire Siete Foods for a total of $1.2 billion approximately one week ago. The restaurant serves Mexican-American cuisine, which is typically modified to meet the dietary needs of a diverse clientele.

The beverage segment of Pepsi in North America experienced a three percent decrease in volume. Despite the fact that the demand for energy drinks, such as Pepsi’s Rockstar, has decreased as a result of consumers visiting convenience stores, the sales of well-known brands such as Gatorade and Pepsi have seen an increase throughout the quarter.

Laguarta expressed his opinion to the analysts during the company’s conference call, asserting, “I am of the opinion that it is a component of the economic cycle that we are currently experiencing, and that it will reverse itself in the future, once consumers feel better.”

Additionally, it has been noted that the food and beverage markets of South Asia, the Middle East, Latin America, and Africa have experienced a decline in sales volume. The company cut its forecast for organic revenue for the entire year on Tuesday due to the business’s second consecutive quarter of lower-than-anticipated sales.

The company’s performance during the quarter was adversely affected by the Quaker Foods North America recalls, the decrease in demand in the United States, and the interruptions that occurred in specific international markets, as per the statements made by Chief Executive Officer Ramon Laguarta.

Pepsi has revised its forecast for organic sales in 2024, shifting from a 4% growth rate to a low single-digit growth rate. The company reiterated its expectation that the core constant currency profitability per share will increase by a minimum of 8% in comparison to the previous year.

The company’s shares declined by less than one percent during premarket trading. The following discrepancies between the company’s report and the projections of Wall Street were identified by LSEG in a survey of analysts:

SOURCE: CNBC

Business

Old National Bank And Infosys Broaden Their Strategic Partnership.

(VOR News) – Old National Bank, a commercial bank with its headquarters in the Midwest, and Infosys, a firm that specializes in information technology, have recently entered into a strategic expansion of their link, which has been in place for the past four years.

This expansion is more likely to take place sooner rather than later, with the likelihood being higher.

For the purpose of making it possible for Old National Bank to make use of the services, solutions, and platforms that are offered by Infosys, the objective of this expansion is to make it possible for the bank to transform its operations and processes through the application of automation and GenAI, as well as to change significant business areas.

This lets the bank leverage Infosys’ services, solutions, and platforms.

Old National Bank Chairman and CEO Jim Ryan said, “At Old National, we are committed to creating exceptional experiences for both our customers and our fellow employees.”

This statement is applicable to Old National Bank. Infosys is carefully managing the business process innovations that it is putting us through, putting a strong emphasis on efficiency and value growth throughout the process to ensure that it is carried out efficiently.

This is a routine occurrence throughout the entire operation. Because of Infosys’ dedication to our development and success, we are incredibly appreciative of the assistance they have provided.

Old National has been receiving assistance from Infosys in the process of updating its digital environment since the year 2020, according to the aforementioned company.

Ever since that time, the company has been providing assistance. The provision of this assistance has been accomplished through the utilization of a model that is not only powerful but also capable of functioning on its own power.

Infosys currently ranks Old National thirty-first out of the top thirty US banks.

This ranking is based on the fact that Old National is the nation’s largest banking corporation.

It is estimated that the total value of the company’s assets is approximately fifty-three billion dollars, while the assets that are currently being managed by the organization are valued at thirty billion dollars.

Dennis Gada, the Executive Vice President and Global Head of Banking and Financial Services, stated that “Old National Bank and Infosys possess a robust cultural and strategic alignment in the development, management, and enhancement of enterprise-scale solutions to transform the bank’s operations and facilitate growth.”

This remark referenced the exceptional cultural and strategic synergy between the two organizations. Dennis Gada is the one who asserted this claim. This was articulated explicitly concerning the exceptional cultural congruence and strategy alignment of the two organizations.

We are pleased to announce that the implementation of Infosys Topaz will substantially expedite the transformation of Old National Bank’s business processes and customer service protocols. We are exceedingly enthusiastic about this matter. We are quite thrilled about this specific component of the scenario.

Medium-sized banks operating regionally will continue to benefit from our substantial expertise in the sector, technology, and operations. This specific market segment of Infosys will persist in benefiting from our extensive experience. This phenomenon will enable this market sector to sustain substantial growth and efficiency benefits.

SOURCE: THBL

Business

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

The largest regulated water and wastewater utility company in the United States stated Monday that it had been the target of a cyberattack, forcing the company to halt invoicing to consumers.

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

American Water, based in New Jersey and serving over 14 million people in 14 states and 18 military facilities, said it learned of the unauthorized activity on Thursday and quickly took precautions, including shutting down certain systems. The business does not believe the attack had an impact on its facilities or operations and said employees were working “around the clock” to determine the origin and scale of the attack.

water

The corporation stated that it has alerted legal enforcement and is cooperating with them. It also stated that consumers will not be charged late fees while its systems are unavailable.

According to their website, American Water operates over 500 water and wastewater systems in around 1,700 communities across California, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Maryland, Missouri, New Jersey, Pennsylvania, Tennessee, Virginia, and West Virginia.

SOURCE | AP