Tisco shifts lending focus amid low demand for new-car financing

Chalit Silpsrikul, executive vice president, said new-car sales were expected to improve in the second quarter of next year, with a consequent decline in loans in that sector in the meantime.
The demand for vehicles upcountry is higher than in the capital because Bangkokians are in no mood to buy new vehicles, focusing instead on repairing flood damage to their homes. Lenders including Tisco Bank must have a Plan B to ensure loan growth before sales of new vehicles pick up in a few months.
“Therefore, we must focus on used-car and auto-cash loans. Those two portfolios represent 30 per cent of our total outstanding loans of Bt130 billion,” he said, adding that the new focus would raise that proportion to 35 per cent next year.
Demand for loans under cash-for-car programmes is expected to surge after the flood recedes because clients need money to repair homes. The interest rate under the auto-cash scheme is lower than for credit cards and personal loans, and the auto-cash grace period offered by hire-purchase lenders to help flood-affected customers will attract them to use this product, he said.
Chalit said Tisco’s auto-cash product this year jumped to Bt10 billion in loan value from Bt5 billion last year, and the bank believes it will grow dramatically in 2012.
Thanachart Bank senior vice president Anuchart Deeprasert agreed that the auto-cash product was an option for lenders during the shortage of new vehicle loans. However, he does not expect this sector to grow much as flood-affected clients are able to use personal loans or credit cards for emergency money.
Cash-for-car lending accounts for 5-6 per cent of Thanachart’s portfolio, while used-car loans account for 30 per cent.