TBank to enhance staff expertise, IT in pursuit of maximum yields

“Before moving to high-yield credit, we have to reinforce quick service and processing by training staff as financial experts and hiring an outsourcing company to evaluate the satisfaction of customers with our employees. We have improved the IT system to ensure that what we’re moving into will succeed,” chief executive officer and president Somjate Moosirilert said recently. 

As the market leader in instalment loans, the bank knows well that lending for new cars is not a high-yield activity, but the four-to-five-year terms of such hire-purchase loans give time to cross-sell products, he said.

Hire-purchase in the past was 90 per cent of TBank’s loan portfolio, but after its merger with Siam City Bank, the product’s share declined to 50-55 per cent.

Used-car and cash-for-car loans are high-yield segments for TBank, as they generate returns of 8-10 per cent. Small business is a new high-yield segment. The bank will assign new sales and marketing teams at its branches to oversee small-business customers with credit lines of less than Bt10 million.

The minimum lending rate plus 1-2 percentage points is a healthy yield for loans to small and medium-sized enterprises. 

Credit-card and personal loans are high-yield products but competition is furious. Whether banks will realise acceptable yields depends on the communication skills of each bank with customers, Somjate said.

Expert bankers will not hard-sell customers, but they must offer useful products and services for a customer’s consideration, he said. The conversation between bankers and customers will lead to a relationship.

 

Quicker loan approval 

When the IT upgrade is completed next year, loan approvals should be quicker than one to two days. The bank can pre-approve home and SME loans in one to two days with the existing system. 

TBank will probably not be very active in the corporate-loan segment but the bank will continue to join loan syndicates. 

Even though the bank is boosting the expertise of its staff, it may require experienced bankers from elsewhere to help strengthen its corporate lending. It recently appointed a new head of corporate banking from Standard Chartered Bank (Thai).

The government’s Bt2-trillion infrastructure mega-project will open up opportunities for economic growth but the bank does not think that their effects will be felt quickly.

TBank targets loan growth of 8-10 per cent next year, with hire-purchase especially cash-for-car products as the key driver. 

The economy in the past few years was driven by consumer spending and the bank still believes retail banking will keep growing, but loan expansion will be more selective by considering debt service coverage ratios.

Even though the bank has increased new loans from other segments, either mortgage or unsecured loans, the portfolio breakdown is unchanged.

Hire-purchase including home and unsecured loans accounts for 65 per cent, while 35 per cent is corporate and SME loans. Hire-purchase alone was Bt400 billion of the portfolio of Bt800 billion.

The bank’s non-performing-loan ratio next year should drop below 4 per cent after setting up a team to handle the bad debt of Bt30 billion to Bt40 billion and developing IT to aid debt collection, Somjate said.