TBank seeks more small loans as auto lending slip

“Amid the slowdown in car sales, which has hit new-car lending, the bank acknowledges that it cannot pursue this segment as much as before, as a lot of these debts have been repaid. We should further develop lending by offering other products to small-business operators from our branches nationwide,” said Somjate Moosirilert, president and chief executive officer.

Almost 60 per cent of TBank’s hire-purchase customers are business operators, and a credit line of up to Bt10 million is affordable for this category. The bank’s branches can tap small enterprises with a speedy loan-approval process, he said.

He said businesses of all sizes would become more active under the government’s policy, so the bank should move into this area and grow in parallel with the economy.

Net interest and non-interest income will both be expanded by diversifying into small-enterprise loans, and the bank’s financial results for next year will improve significantly, TBank hopes.

Somjate noted that yield from loans to small enterprises was higher than the 2-3 per cent from new-auto loans and also higher than the 1 per cent from used-car loan. The loan spread at the bank is 2.7 per cent.

Executive vice president Sanong Kumnuch, who oversees the bank’s branch network, added that yield from small-business loans was 7 per cent. 

TBank has 20,000 customers in the small-enterprise category with outstanding loans of Bt10 billion, Sanong said. Though it has not been very active in this segment, under its new policy, its branches will play an important role in acquiring new small and medium-sized business clients, as well as catering to its existing hire-purchase borrowers.

“We have to understand the nature of small businesses, that they only want to know the amount of credit they will get and when they will get it,” he said. 

“We have set out a plan of action for sales staff at the branches. On the first day, they will talk with the client without asking for any documents. On the second day, the bank will decide whether the customer is qualified. If the customer is qualified, the bank will ask for the documents and the process of giving the loan will be complete within seven days,” he explained.

Of TBank’s 1 million hire-purchase customers, 60 per cent are entrepreneurs, and half of those are small business operators. 

The bank targets new loans of Bt5 billion to small enterprises next year, and outstanding loans will grow to Bt15 billion.

Somjate noted that instalment lending remained the bank’s major loan portfolio at 55 per cent of the total, even though that is down from more 60 per cent in the past. He said the proportion next year was expected to be less than 50 per cent, while business loans would account for 30-40 per cent.

Praphan Anupongongarch, an executive vice president who oversees hire-purchase business, said the bank would push its cash-for-car refinancing product to help sustain its loan spread, as new-car lending is not expected to grow much next year. Carmakers estimate that sales next year will grow by only 5 per cent, he added.

Currently TBank’s cash-for-car product accounts for 10 per cent of its total auto-loan portfolio. Praphan said the goal next year was to raise that proportion to 15 per cent.