MUFG upbeat over prospects for Krungsri home loans business
Mitsubishi UFJ Financial Group (MUFG) has high hopes for housing-loan business at Krungsri (Bank of Ayudhya), as this kind of loan is a basic product that ensures a long-term relationship between customer and bank.
Krungsri, a banking member of the Japanese group, is developing a new platform for housing loans via its synergy with MUFG, a corporate banking group, said Nathapol Luepromchai, senior vice president of Krungsri.
Krungsri’s current portfolio makes it Thailand’s fifth-largest lender in the consumer mortgage market.
As the bank’s major shareholder, MUFG wants to see growth in this segment, as housing loans are long-term products and Krungsri can increase the cross-selling of other products via its mortgage customers, he said.
Moreover, long-term loans mean Krungsri can also be the main bank for those clients, he added.
Krungsri might not be very active in acquiring housing-loan customers at the pre-finance stage but from now on, it will be active in finance for property projects in order to make its post-project business more efficient, he said.
Project finance is an area in which MUFG has expertise and is a global leader.
He said residential developers wanted to diversify risk in each of their projects by using lenders to support their projects.
The housing-loan team will, therefore, work with the corporate banking team in offering attractive campaigns to home-buyers in property projects for which Krungsri is providing support finance.
"We will talk with the corporate banking team at the start of project financing to determine which kind of projects will be most suited for post-finance business. Property segmentation is important for designing campaigns. Perhaps luxury projects are not the proper way for Krungsri’s post-finance operations even if the bank supports a project, because buyers at high-end projects prefer paying cash to taking out a mortgage," he explained.
The middle-market segment should therefore be a good match for Krungsri’s mortgages, he said, adding that the bank remained focused on post-project finance for condominium buyers as it was an area in which it had expertise.
Furthermore, units at several condominiums that have been under construction for the past two years will be transferred during the course of this year, said Nathapol.
Krungsri will dispatch staff to targeted property projects, where they will join with the sales person at each project in helping them to close sales by offering special interest rates and premium packages such as electronic appliances, he added.
The bank could then take those customers who cannot make a final purchase decision to visit the project developer’s partners, he said by way of example of the type of the proactive approach it was ready to take to win more home-loan business.
Meanwhile, Krungsri has a strong branch network around the country, which will be the main channel for housing loans.
The bank is also strong in auto loans, so its staff can readily track the repayment record of such customers if they are also seeking a mortgage, said the executive.
Krungsri projects overall loan-portfolio growth of 8-10 per cent this year.
In the first five months, outstanding lending reached Bt137 billion, compared with Bt132 billion as of the end of last year.
Mortgage demand has recovered since the start of the second quarter, and lending growth should pick up towards year-end because some middle-income consumers who have had auto loans from the first-car scheme will be free from further instalment payments, he explained.
Property developers, moreover, are expected to focus more on residential projects serving the middle-to low-end segment for this reason, said the senior vice president.
