Lender tightens criteria for First Choice borrowers
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Minimum income of applicants hiked to Bt10,000/month
Ayudhya Capital Services, more commonly known as Krungsri Consumer – the unsecured-loan unit of Bank of Ayudhya – has adjusted the qualifying criteria for Krungsri First Choice borrowers by increasing the minimum monthly income for new customers from Bt8,000 to Bt10,000, in a move aimed at minimising the possibility of bad debt.
Thakorn Piyapan, managing director of Krungsri Consumer, yesterday said the company had made the change for new customers on October 1 after finding there was a rising debt-service ratio among borrowers with a monthly income of no more than Bt8,000.
“The expenses of this kind of customer are increasing, while their incomes are unchanged. We inquired about the credit records of people who have a monthly income of Bt8,000 from the National Credit Bureau, and found that their average debt-service ratio had increased to 60-70 per cent from 50-60 per cent.
“We decided, therefore, to stop acquiring customers with a monthly income of Bt8,000 until the debt-service ratio of this segment improves,” he said.
Krungsri First Choice is well-known as an instalment-loan provider, which until last week allowed customers with a minimum income of Bt8,000 to have a credit-card loan or personal loan.
At the end of last month, there were 2.2 million Krungsri First Choice cards with outstanding credit of Bt30.5 billion. Krungsri Consumer projects outstanding lending of Bt32billion-Bt33 billion by the end of this year.
Krungsri Consumer chairman Sukdee Chongmankhong said customers with a monthly income below Bt10,000 represented 10-12 per cent of monthly new clients.
Following last week’s adjustment of the qualifying criteria, First Choice expects to acquire 18,000 customers per month, against the previous average of 20,000, he said.
Krungsri Consumer has in recent months witnessed a higher delinquency rate, mostly among First Choice customers, Sukdee said. The company’s non-performing loans (NPLs) had climbed to 2.6 per cent as end-June, from 2.3 per cent at the end of last year.
In the first six months, NPLs in the unsecured-loan industry increased by 0.2 percentage points to 3.2 per cent.
900 debt collectors
The company has also increased the number of debt collectors from 800 to 900, as well increasing the frequency of debt collection. This and the loan-criteria adjustment should lead to a fall in its NPL rate to 2.5 per cent by year-end, said the chairman.
Thakorn said the company was also concerned about customers’ slower spending on credit cards.
Krungsri credit-card spending in the first eight months of the year totalled Bt130 billion, representing year-on-year growth of 14 per cent but well short of the target of Bt220 billion-Bt230 billion.
The company has, therefore, this quarter teamed up with insurance and retail partners to drive customers’ credit-card spending.
Krungsri Consumer next month will also launch an instalment programme for shopping online after discussions with merchants on its website channel, he said.
The online channel is another segment through which spending volumes can be increased in the remaining months of the year, he added.
