Tisco seeks end to fall in outstanding loans

Tisco’s outstanding loans dropped by 8.3 per cent in 2014, and although the group has not announced its 2015 results yet, in the first nine months total loans plunged by 9.7 per cent from the end of 2014.

Oranuch Apisaksirikul, group chief executive, pointed out that new auto loans in 2015 did in fact grow, but not enough to outpace loan repayments, a result of the skyrocketing loan growth driven by the previous elected government’s first-car-buyer scheme from 2012-2014.

She believes that if new lending can match loan repayment in 2016, outstanding loans should end their two-year decline.

Auto loans are the major contributor to Tisco Bank’s loan portfolio at 70 per cent of total lending.

Even though new loans in this category are expected to resume growth, other loan categories are not showing positive signs yet, in Oranuch’s view.

“Apart from the global economic uncertainty, we don’t see the beginning of [state] mega-projects yet. Tourism alone is likely not enough to carry on the Kingdom’s economic growth. Amid this circumstance, flat growth [in outstanding loans] is acceptable for the group,” she said.

Corporate clients’ loan demand has been slowly recovering. Unlike other banks, Tisco policy is to support only project financing, not working capital, so it is not easy to build outstanding loans from this sector.

“What we can do is to offer financial restructuring to increase the cycle of repayment and new loan requirements,” she said.

Oranuch said lower loan-loss provisions in 2016 would help sustain profits. The group set aside full provisions for Sahaviriya Steel Industries in the third quarter of last year, and this eased worries.To support profitability, fee income from bancassurance and mutual funds offered to affluent clients are the focus. Moreover, Hi-Way, the group’s auto-refinance and microfinance subsidiary under the Somwang Ngern Sang Dai brand, is another profit contributor, Oranuch said.

“Somwang might not create scale for the group because this company offers loans to low-income earners, and the loan amounts are small, but this business can build significant profit for us,” she said.

The rising number of ageing people and the reduction of people in the labour market are obliging the group to adjust its processes.

It is transforming its information technology to deal with these factors, which will help shorten the working process and mitigate labour shortages.

The IT transformation is expected to be completed in two years, she said.