Bike loan lender eyes new product amid slide
Summit Capital Leasing, a motorcycle-loan subsidiary of Tokyo-based Sumitomo Corporation, will add another retail loan to its product portfolio next quarter to help strengthen its loan growth amid weak motorbike sales.
Wichit Phayuhanaveechai, chief executive officer, said yesterday that the company needed to grow even though the market situation is not supportive of the instalment-lending business.
The poor sales are an indicator of how the domestic economy is faring.
To overcome this challenge, the firm has to keep its existing dealers and seek new ones while expanding branches to 40-45 this year from 24 currently.
The new credit product will help the company compete with banks.
The company will reveal what the new financial product is next quarter, but it is expected to be a motorcycle-refinancing loan, or "motorcycles for cash".
The company expects motorcycle sales to stay flat at 1.68 million units this year, but it targets 100,000 contracts, up from 78,000 last year.
Last year, the company’s outstanding loans grew by 37 per cent to Bt4.42 billion.
However, Wichit did not give an estimate of outstanding loans this year, saying that based on the new contract target of 100,000, Bt5 billion in new loans would be created.
The economic uncertainty has undermined loan quality, with the default rate at the company climbing to 12.25 per cent from 10.32 per cent as of the end of 2014.
Under Sumitomo’s policy, it will count a loan as defaulting from the first day a payment is late, so its default rate is likely to be high.
