Hi-Way to focus more on motorcycle lending
HI-WAY, which provides auto refinancing under the Somwang Ngern Sang Dai brand, aims to boost its motorcycle portfolio, which currently accounts for only 5 per cent of its business, according to managing director Supachai Boonsiri.
Increasing the two-wheeler contribution to the company’s Bt4-billion loan portfolio could take time, as most Somwang branches are upcountry, where the firm has focused mainly on cars and trucks. However, it could be worth the effort, as the margin from motorbike refinancing is higher than for four-wheel vehicles.
In the past two years, Hi-Way has aggressively expanded Somwang upcountry. Of its more than 100 branches, only 10 are in Bangkok. The company aims to start rebalancing that proportion this year, slowing down its branch openings in the provinces in order to expand the customer base in the capital.
Acquiring more customers in Bangkok should boost its outstanding loans, as Hi-Way wants to double its portfolio to Bt8 billion this year to move into the top three in the auto-refinancing market.
Supachai believes the auto-refinancing market is wide open. There are Bt200 billion worth of vehicles on the country’s roads, but the major players in auto refinancing have loan portfolios of just Bt7-8 billion. With such a large market value, every refinancing provider knows there is a lot of room for growth, so there is a good chance that competition will heat up.
There are plenty of people who need money but are unsure how to find the right source of funds, so a key strategy of Somwang is to create brand awareness, while also educating its customers – who are largely low-income people – in terms of financial discipline.
“We are trying to make our target customers realise that auto refinance is not meant to create more debt but is a choice for those who have vehicles to use those vehicles to help them get money” when they need it, Supachai said.
He said the company had mobile outlets offering loans to customers in remote areas including some communities in Bangkok. Thanks partly to this strategy, Hi-Way met its first-quarter new-loan target of Bt1 billion, while the ratio of non-performing loans was 2 per cent.
Hi-Way is a subsidiary of Tisco Financial Group, and the parent company provides risk management to the company. The Tisco credit-risk team guides Hi-Way on how aggressively it should pursue new lending while preventing bad debt.
