SCB keen on personal-loan market expansion as ratio of NPLS stays low

Araya Phunphanich, first executive vice president for credit-card and personal loans, said the bank would use its 1,000 branches and telesales as key channels to encourage consumers to use its personal-loan service.

"We consider that the personal-loan market has a steady growth rate, and the low NPL ratio is another positive factor for strongly focusing on this market," she said.

There are 20 million people with the ability to use personal loans, she said. The bank expects aggressive marketing with such people will double SCB's personal-loan approval rate to Bt2 billion per month from Bt870 million currently.

The interest rate for personal loans is 20-24 per cent per annum, depending on the credit risk and monthly salary of borrowers.

"We believe we can handle the NPLs from the personal-loan market. The non-performing personal loans at SCB now are 1.4 per cent, down from 2-3 per cent earlier," she said.

Araya said new SCB personal loans by the end of the year could grow to Bt22 billion from Bt20 billion year-to-date.

She added that SCB had reduced the minimum monthly salary requirement for borrowers to Bt10,000 from Bt12,000 to attract customers away from finance companies. They require minimum salaries ranging from Bt5,000-Bt15,000. However, the bank will not reduce the minimum salary requirement too low, as it wants to enjoy healthy growth while maintaining a low NPL ration.

SCB has set the ambitious goal of increasing its personal-loan portfolio to Bt40 billion by 2013.

In the first half of this year, the overall personal-loan market had a total value of more than Bt200 billion, of which commercial banks held Bt76 billion, foreign banks Bt18 billion and finance companies Bt120 billion.