Krungsri set to launch JV lender in Laos in December
A JOINT venture between Krungsri Group and a company in Laos will begin operating in December, with loans targeted at Bt900 million in the first year of operation.
Krungsri Group has renamed the JV Krungsri Leasing Services, instead of Krungsri Financial Service, to reflect better its role as a leasing and instalment-loan service, said Thakorn Piyapan, managing director of Ayudhya Capital Services or Krungsri Consumer, which has a 35-per-cent stake in the venture.
The Bank of Thailand recently gave its approval for Krungsri Consumer and Ayudhya Capital Auto Lease, better known as Krungsri Auto, which also holds 35 per cent in the JV, to offer personal and auto loans in Laos. The two companies are awaiting the approval of the Laotian government.
The Laotian partner, Unity Capital, holds the remaining 30 per cent of Krungsri Leasing Services.
Thakorn said Krungsri Leasing Services would focus on loans for new four-wheel vehicles and instalment loans for mobile devices and home appliances, with term loans for automobiles set at four years, while the instalment loans are limited to 12 months.
He said Laos was a cash-based society, so to encourage people to try the leasing method, the company would offer them the opportunity to pay a large down-payment in cash at 20-30 per cent of the goods’ value.
“We have chosen mobiles and home appliances as the priority products for instalment loans because of the high demand, and both markets in Laos have high enough value for lenders to design loan programmes for customers,” Thakorn said.
He said Krungsri needed to expand consumer finance into neighbouring countries ahead of the full realisation of the Asean Economic Community in 2015 because foreign lenders were already moving in.
He raised the example of Japan-based Aeon, which will start providing instalment loans in Laos in December at the same time as Krungsri.
For auto financing, Krungsri’s lending will be in US dollars, while instalment loans will be in baht, as Laotians had shown preference for those two currencies, he said.
The required down-payment for an auto loan will be 30 per cent of the vehicle price.
The targeted customers for auto loans are individuals with monthly incomes of Bt10,000, while those targeted for instalment lending will have incomes of Bt6,000-Bt8,000.
In the first year of operation, Krungsri Leasing Services targets auto loans of Bt820 million with more than 1,200 accounts and instalment loans of Bt80 million with about 4,000 accounts.
