CFG turns to commercial vehicle refinancing

CFG Services managing director Tanyapong Thamavaranukupt said yesterday that the company plans to double the company’s proportion of commercial-vehicle refinancing to 40 per cent, while motorcycle and passenger-car refinancing would be reduced to 10 per cent and 50 per cent from the current 20 per cent and 60 per cent, respectively.

SMEs that own trucks and tractors in upcountry provinces can refinance their commercial vehicles to increase the liquidity of their businesses, he said.

Auto refinancing has gained popularity among vehicle owners, with the amount of truck and tractor refinancing higher than that for motorcycles, making SMEs a market segment with good potential.

People in the provinces recognise the Srisawad Ngern Tid Lor brand as one that provides loans with a fast and easy process, he added.

The company invested Bt100 million on brand-building through TV advertising over the past two years, with brand recognition of Srisawad Ngern Tid Lor having jumped to 86 per cent last year from 24 per cent in

2010. Brand recognition is a key factor attracting customers and driving loan growth, said Tanyapong.

The company has 100,000 customers in its portfolio, which it targets increasing to 150,000 this year. Upcountry customers represent 70 per cent of the total.

CFG Services’ managing director said Bank of Ayudhya (BAY) wants the company to penetrate the mass market much more, not least by trying to encourage shark-loan borrowers to enter the formal loan system. Non-finance companies run by locals are CFG’s main rivals, and such businesses have the advantage of offering rapid approval. However, the company will improve its approval process to make its own turnaround time quicker, he said.

BAY will also support CFG Services with cross-selling of the company’s products through the bank’s branches. The company has 200 of its own outlets nationwide and will add 40 to the total this year.

BAY acquired the company in 2010 after CFG Services experienced a huge loss. With the bank behind it, the subsidiary then turned its fortunes around and made a profit last year.

Tanyapong said the BAY branch network was a good potential channel for boosting loan growth. Of the company’s loan-growth target of 40 per cent this year, 10 per cent is expected to come from bank branches.

CFG Services this year projects new loan growth of 33 per cent to Bt5.66 billion, with outstanding loans expected to grow by 40 per cent to Bt6 billion by year-end.

The company wants to accelerate loan growth across all segments – motorcycles, trucks and tractors through bank referrals and its own outlets – with targeted growth over the next three years of no less than 30 per cent annually. It hopes that outstanding loans will reach Bt10 billion by the end of 2014.