NPL-wary AEON Thana Sinsap expects lower loan growth

Nuntawat Chotvijit, director of AEONTS, said loan was likely to grow by only 1-2 per cent this year, the weakest performance in many years.
The drought situation and uncertainties in agricultural prices have hurt the incomes of AEONTS customers, while factory workers have experienced a decline in overtime income.
Accounts receivable this year might be around Bt60 billion, he said.
AEONTS reported that in the first quarter of its 2016 fiscal year, which ended on May 30, gross accounts receivable increased by 2 per cent to Bt64.74 billion from Bt63.30 billion in the same period of fiscal 2015.
Nuntawat said the company would not chase lending as aggressively as it did in the past and would be more selective of its customers.
More than 50 per cent of the lender’s portfolio are customers who have monthly incomes of Bt8,000-Bt15,000.
“Even though this segment poses the [risk of] rising NPLs, AEONT is one of the few players that provide lending to this segment … If the company abandons this segment, they won’t have lending sources and might turn to the [underground] system,” he said.
AEONTS prefers customers with monthly incomes of around Bt10,000, as it believes their wages stand a decent chance of rising in the future.
The company uses credit scoring to check whether potential customers’ incomes are compatible with their expenses.
Earlier, AEONTS attempted to expand its customer base to government employees as they have stable incomes, but acquiring these customers has been slow.
In its first quarter, bad debt and doubtful accounts amounted to Bt1.24 billion, a 7-per-cent increase from the same period last fiscal year.
Nuntawat said the company had transferred its debt-collection process to its subsidiary, ACS Servicing, last year, which was proving to be a positive move.
According to the company’s first-quarter report, the allowance for doubtful accounts improved to Bt2.357 billion from Bt2.412 billion in the same quarter of fiscal 2015. The proportion of accounts receivable three months overdue or non-performing was 2.99 per cent, a decrease from 3.30 per cent a year earlier.
As of the first quarter ended May 30, AEONTS had 7.61 million cards in circulation, comprising 2.33 million credit cards and 5.28 million member cards, up by 63,000 from the previous quarter ended February 29, 2016.
Credit-card receivables were Bt26.32 billion, up by 4 per cent, and loan payments receivable were Bt36.55 billion, up by 1 per cent.
The lending segment, which accounted for 43 per cent of total turnover, (23 per cent from personal loans and 20 per cent from purposed loans for mobile phones, IT products, and electrical appliances at department stores and more than 17,100 dealers nationwide) reported revenue of Bt2.26 billion, up by 7 per cent year on year.
The company’s board of directors recently approved the issuance of two lots of debentures to refinance debt and for reserves for working capital.