KBank selling Bt8 bn of its housing loans to SMC

KBank, which previously sold a similar portfolio worth Bt2.4 billion to the SMC, will offer customers who join the transfer programme an interest rate 25 basis points lower than the general fixed rate for the first three years, and a floating rate in the following years.
Bank president Preedee Daochai yesterday said the portfolio being sold to the SMC comprised good customers, as the bank aimed to enhance the growth of the secondary housing market through the cooperation.
KBank estimates that the banking industry will see new housing loans of Bt200 billion this year. If the primary market gradually transfers some portfolios to the secondary market, the secondary market will grow as well, he said, adding that the bank also receives fee income from selling some of its portfolio.

NO NEED FOR NEW CAPITAL
KBank executive vice president Chatchai Payuhanaveechai said the bank was targeting new housing loans of Bt58 billion this year, of which Bt8 billion would be sold to |the SMC. The sale will, therefore, give it more room to expand mortgage lending.
KBank has an outstanding mortgage portfolio of Bt220 billion, which gives it a third-place ranking among commercial banks in the housing-loan market, he said.
The value of mortgages in Thailand equates to 18 per cent of gross domestic product. This is far lower than in Singapore and Malaysia, where housing loans are 70 per cent and 30 per cent of GDP respectively, he added.
The executive said the model with the SMC meant the bank had no need to find additional capital or reserve provision, because when the portfolio transfers to SMC management, KBank can attract new lending to the existing portfolio.
Mortgage customers, however, will have the option of using the SMC or KBank.
SMC president Pornnipa Han-chaiyaphum said the corporation served as an intermediary in mobilising funds to finance the primary market via securitisation, and it was now expanding its assets because of the stability of its portfolio.
The quality of the assets must have potential, she said, because the portfolio will be securitised mortgages, which must be rated by rating firms before submitting a filing to the |regulator.
The purchase of the Bt8-billion portfolio from KBank will help boost the assets of the SMC this year to beyond Bt20 billion, compared with Bt5 billion at the end of last year, she added.
Kiatnakin Bank and Tisco Bank are also partners of the SMC, which will seek further banking partners to join the programme, she said.
The SMC will require more capital and financial resources to serve its asset expansion, and has asked the Finance Ministry to approve an increase in capital from the current Bt700 million to Bt2 billion.
However, the corporation expects to be granted Bt1 billion, with the new capital expected to be in place in the first quarter of next year, Pornnipa said.
It will issue short-term bonds worth Bt3 billion and mortgage-backed securities worth Bt10 billion to match the funding requirements.
The SMC’s rate of non-performing loans is expected to fall to 3 per cent from 5.5 per cent after acquiring the new portfolio from KBank, she said.