Lenders ready to shift focus to higher earners

AEON Thana Sinsap Thailand will this year focus its attention |on government officials and customers whose monthly income is more than Bt8,000 to reduce its exposure to bad debts, the company’s director of marketing said.

Nuntawat Chotvijit said the company had earlier tapped customers with monthly incomes lower than Bt8,000, but those customers were less likely to meet their instalments during the economic slowdown.

The company, which relies on instalments and cash advances, believes it should focus on customers who are able to pay their instalments and customer segments such as government official, whose salaries were recently adjusted as part of a government initiative.

Demand for lending, especially cash advances, remains high as customers want to make sure they have cash on hand for emergencies, he said, adding that the firm’s personal loan portfolio stands at Bt50 billion.

According to the company’s third-quarter report, ending on November 20, 2014, to the Stock Exchange of Thailand, NPLs of total loan portfolio declined to 3.29 per cent from 3.31 per cent in the second quarter. As of the end of the third quarter, AEON has total assets of Bt64.72 billion, a slight increase from the Bt63.54 billion in the second quarter.

Onanong Udomkantong, executive vice-president of CIMB Thai Bank, said personal loans remain the focus of CIMBT’s retail banking. Last year, the bank launched refinance loans with competitive rates for customers with good financial discipline who should pay lower interest rates. After the launch, the bank received positive feedback from customers, prompting it to extend the programme for another year.

She said its personal loans for refinance customers offers a rate of 15 per cent for customers who have a monthly income of Bt30,000 and an interest rate of 18 per cent for customers who have a monthly income of Bt20,000.

The interest rate for the personal loan market is currently at 28 per cent per annum.

She said that NPLs from personal loans at CIMBT is 4 per cent, regarded as a high level, but the bank believes its NPLs this year will fall to 2 per cent when it expands loan growth and attracts quality customers from the refinance programme.

CIMBT targets new personal loans of Bt10 billion. The outstanding loan of personal loans is currently was at Bt10 billion.

The bank recently launched a new personal loan programme to test a new segment by offering an interest rate of 20 per cent per annum to consumers who have a monthly income of below Bt20,000. However, the bank has an approval rate of only 20 per cent for applications, as the objective of this loan programme is to encourage people who usually don’t take out loans to enter the financial loan system. Therefore, the credit scoring needs to be tighter than other loan programmes.

Mingkwan Pattanawong, head of Retail Marketing at TMB Bank, said the bank will this year give priority to personal loan refinance, targeting company employees, government officers and state enterprise officer, who are a considered a low-risk customer segment.

In the first 12 months, refinance customers whose monthly income is Bt15,000 will get an interest rate of 10 per cent and the rate will be increased to between 20 per cent and 27 per cent in the 13th month depending on the monthly income of the customers.

For self-employed people and business owners, the bank will charge an interest rate of 12.5 per cent in the first 12 months and the rates will increase to between 22 per cent and 28 per cent in the 13th month onwards.