Bank of Ayudhya looks to exert pressure on top 4 mortgage lenders

As Krungsri is the fifth-largest bank in Thailand in terms of assets, it should also be in the top five in terms of loan approvals, said Nathapol Luepromchai, Krungsri executive vice president and head of the mortgage loan division.

BTMU is the market leader in housing loans in Japan.

Siam Commercial Bank, Krungthai Bank, Kasikornbank and Bangkok Bank are the top four mortgage lenders in this country.

Last year, the banking industry posted Bt577.846 billion in new housing loans, up 0.4 per cent on the Bt575.637 billion from the year before. New housing loans this year are expected to grow by 1-5 per cent to between Bt585 billion and Bt600 billion.

 Nathapol said Krungsri had become a top-tier bank for housing loans after actively chasing customers since the second quarter of last year by building products to serve the top-10 housing developers.

“Under the three-year plan [2015-2017], we must have [annual] new housing loans worth Bt50 billion by 2017, but we reached the target at the end of last year,” he said.

In terms of outstanding housing loans, Krungsri expects to close the gap with the four segment leaders next year. They each have outstanding loans of more than Bt200 billion, and SCB has more than Bt500 billion.

“BTMU does not expect us to be the leader given our capabilities and our number of branches,” Nathapol said. “Chasing that much lending might pose too much risk as well. Therefore, new-loan bookings of Bt50 billion to Bt70 billion a year is suitable for us.”

He said the bank would adjust its new-loan target by the end of this year after achieving the Bt50-billion three-year target last year.

In a bid to remain a top-tier mortgage lender, Krungsri plans to expand its relationship from working with top-10 developers to top-20 developers and focus on the three leading local developers in major provinces.

“Several banks have toned down their housing-loan [approvals] in the provincial market but we believe we can tap this market if we can leverage what we did with the top-10 developers,” Nathapol said. “However, our steps into the provincial market will be careful and we will send a team from headquarters to work closely with bank branches in the provinces.” 

Top-tier banks give importance to top-10 developers because they dominate the property market with a combined share of up to 38 per cent and are regarded as delivering high-quality housing.

“While we are able to service the customers of top-10 developers well, we should leverage this platform with top-20 developers, because the mixed portfolio will help the bank service customers in all segments from home prices of Bt1 million to above Bt30 million,” Nathapol said.

He said tapping high-quality customers of top-10 developers would ensure a low rate of non-performing loans, which would remain the case even after the bank expanded to top-20 developers.

He said Krungsri’s market share among the top-10 developers in the first quarter increased to 10 per cent from 7 per cent over the past two years, adding that the target market share this year was 11 per cent.

The bank designs exclusive promotions at each residential project, with previous promotions well received by developers.

Krungsri is targeting new home loans of Bt60 billion this year. In the first four months it reported new mortgages of Bt25 billion, up 156 per cent on the Bt9.8 billion in the same period last year.

Krungsri has benefited from the government’s incentives for the housing market but now that they have ended the challenge will be greater over the remainder of the year, the bank said.

“With the high base in the second quarter to fourth quarter last year and the government’s incentive ending, we are optimistic the situation for housing loans will turn to normal again in June because property developers will introduce new lots of products to the market,” Nathapol said.