K-Leasing shifts focus to lending for pickups

The shift in emphasis is being made amid the expectation that auto lending in the second half will be highly competitive because of the end of deliveries under the government’s first-car tax-rebate scheme.

Deliveries of the vast majority of vehicles under that programme are forecast to end by midyear, which is expected to result in lenders aggressively marketing their products with car dealers to continue loan growth and auto sales, K-Leasing managing director Akaranant Thitasirivit said yesterday.

Intense competition in the second half will pressure NIM and, if the central bank slashes the policy interest rate by 25 basis points to 2.5 per cent at the Monetary Policy Committee’s meeting on May 29, leasing companies will take two months to cut their own rates by at least 10 basis points, he said.

K-Leasing has already adjusted its strategy since the first quarter by focusing more on financing pickup-truck purchases, as a result of which the lending proportion for this type of vehicle increased to 25 per cent from 10 per cent at the end of last year.

The company’s hire-purchase (lease to own) lending for pickups this year is projected at 50 per cent of the overall leasing portfolio, as it will expand business in the segment through small and medium-sized enterprises that are customers of its parent, Kasikornbank, he said. Many of the bank’s SME clients will require pickups for commercial purposes.

K-Leasing’s flat interest rate for pickup lending is higher than for passenger vehicles by around 70-80 basis points. The flat rate for new passenger cars is 2.55 per cent. 

 

HIGHER NIM

The lender’s NIM in the first three months of the year was 1.67 per cent, slightly higher than the level expected at the start of the year. Akaranant said the margin should remain at 1.67 per cent over the course of the year.

K-Leasing also plans to become more active in lending, including cash-for-car loans, for certified used cars sold by dealers such as Toyota Sure and Terrace Honda, to generate higher yields.

The company’s flat rate for used-car loans starts at 3.75 per cent for vehicles up to five years old, while the interest rate for cash-car loans starts at nearly 20 per cent.

K-Leasing yesterday announced its financial results for the first quarter, during which it had net income of Bt123 million, some 43.7 per cent higher than in the same period last year. 

The rate of non-performing loans improved to 0.79 per cent from 0.81 per cent, year on year.

New loan bookings in the first three months grew by 20.49 per cent to Bt21.11 billion, while outstanding lending rose to Bt84.32 billion from Bt66.82 billion. 

The company projects outstanding lending of Bt97 billion by the end of this year.