Joint push BAY, top 10 developers go for quality clients
Play
Bank of Ayudhya is partnering with the country's top 10 property developers to offer attractive loan terms, including zero interest on initial repayments, to home-buyers seen as high-quality borrowers.
The move aims to ensure the bank achieves healthy home-loan growth while at the same time minimising the risk of bad debt.
Executive vice president Wichit Phayuhanaveechai said yesterday that relations with developers formed a key strategy for BAY, and would help the bank to achieve its goal of becoming a top-three player in the home-loan market over the next three years.
The bank aims virtually to double its outstanding home loans to Bt200 billion by 2015, from Bt102 billion at present.
Siam Commercial Bank is the housing-loan market leader among the nation’s commercial banks, with a portfolio of Bt400 billion, followed by Krungthai Bank with Bt200 billion and Kasikornbank with nearly Bt200 billion.
The top 10 developer brands form BAY’s focus segment, as buyers of homes in those companies’ projects are seen as high-quality borrowers. The bank will therefore grant special promotions to such buyers, especially zero interest on repayments for the first six to 12 months, Wichit said.
The partnership with the developers of quality projects will help ensure lower non-performing assets and non-performing loans, he added.
Lending to customers this year via the relationship with leading developers will increase to 65 per cent from the current level of 55 per cent of all home-loan channels, while the walk-in channel’s contribution will fall from 28 per cent to 20 per cent, said the executive.
BAY’s walk-in customers are buyers of homes from developers outside the top 10, and the bank will not offer special pricing to those potential borrowers.
With major banks also offering zero-interest terms to the customers of large developers, BAY’s Krungsri service will regularly review its conditions to ensure the pricing strategy remains competitive, he said.
Siam Commercial Bank offers zero interest for 18 months to home-buyers of Asian Property Development.
BAY currently targets new housing loans of Bt30 billion this year, 11 per cent higher than the Bt27 billion achieved last year.
However, Wichit believes an even higher target is achievable, thanks to positive factors such as lower interest rates and mass-transit expansion in the suburbs.
Meanwhile, the sales volume of the property market is still controlled by the larger developers, he said, adding that demand for homes in low-rise projects would resume this year after having fallen sharply because of the severe flooding of late 2011.
Developers will again concentrate on low-rise housing because the rapid construction of such projects means quicker transfers to customers, which in turn benefits companies’ revenue performance, he said.
Condominiums priced between Bt1 million and Bt3 million will also be popular as developers want to capture new-generation consumers, especially first-jobbers, for whom owning a home is more important than having their own vehicle, Wichit said.
Homes in this price range account for 30-40 per cent of all condo sales.
The bank estimates the property market this year will grow by 15-16 per cent, while the housing-loan market is expected to expand by 10-15 per cent.
