KLeasing expects rebound in outstanding loans
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Kasikorn Leasing hopes its outstanding loans this year will start growing again after its auto-loan portfolio registered flat growth for two years in a row.
KLeasing’s auto-loan portfolio peaked at Bt90 billion in 2013 before flat growth in 2014 and declining to Bt88.67 billion last year because the economic slowdown had an impact on new-car sales, said executive chairman Thawee Teerasoontornworn.
Sales of passenger vehicles in the first half of this year dropped by 11 per cent to 154,746 units, but sales of pickup trucks grew by 14 per cent to 192,546. The firm sees that as an indication the economy is getting back on track, because pickups are used by the business sector.
In the first six months, KLeasing had outstanding loans of Bt89.35 billion, up by 0.50 per cent year on year, while non-performing loans were 1.54 per cent of the total, better than targeted by 0.36 percentage point.
New loans amounted to Bt41.15 billion, up by 35.31 per cent year on year. That total consisted of new hire-purchase at Bt18.07 billion, up by 18.31 per cent, and floor-plan loans (financing to auto dealers) at Bt23.08 billion, up 52.45 per cent.
Thawee said the company expected Bt75 billion worth of new loans to be booked this year, of which Bt20 billion will be new hire-purchase and the rest floor-plan loans. During the rest of the year, KLeasing will focus more on new instalment loans to individuals.
New lending to dealers is higher than to end users, but dealers pay off their loans faster, so total outstanding loans might not increase as much as new lending, he explained.
He said the auto-lending business had bottomed out in mid-2015, and was likely to recover with modest growth of 0.5-2 per cent over the rest of 2016. The market will be driven by an increase in auto sales in the second half and fewer car repossessions together with a low-interest-rate environment.
Lending for used cars is expected to see an improvement this year, with ongoing momentum from the second half of 2015 due mainly to rising used-car prices following a price slump during 2013-14.
KLeasing is also focusing on lending to buyers of former lease vehicles put on the market by corporates after the contracts expire.
Used-car dealers are another focus of KLeasing, as the company can use those channels to acquire customers, Thawee said.
However, the firm is only in the first stage of entering the used-car market, so the results of this focus will not be seen clearly until next year, he added.
