KTB absorbs its subsidiary’s NPLs

 Krungthai said it would need a year to improve KTB Leasing’s credit and debt-collection processes.
The bank told KTB Leasing to stop lending money two months ago, with the subsidiary’s loan portfolio worth Bt50 billion. Half of its lending is for retail leasing, mainly for auto loans, and the rest is lending to commercial clients.
Krungthai resident Vorapak Tanyawong said that after transferring the total loans of KTB Leasing, Krungthai would use its auto-loan model for the credit analysis.
He said auto loans would be Krungthai’s primary focus after taking over KTB Leasing’s loan portfolio.
He said the bank would not service auto leases for commercial customers, in line with a Bank of Thailand regulation.
The auto-lease portfolio has been transferred to Krung Thai IBJ Leasing, a joint-venture company in which Krungthai holds a 49 per cent stake.
Vorapak said that leasing at Krungthai was not expected to take off in 2017, adding that its auto-loan model should be similar to its general-loan model -meaning the bank must have a price evaluation system, quick car repossession and quick liquidations.
He said Krungthai would use its 1,200 branches for the sales and marketing and the distribution of auto loans and would focus on existing customers because the bank had a record on them.
Prasit Wasupath, chairman of the board at KTB Leasing, said that KTB Leasing had NPLs at the same level as the industry average but the problem was it sales losses from car repossessions.
He said the situation for used cars was better, with the loss on sales 20 per cent the value of the hire purchases, against 40 per cent in the previous few years. The bank is interested in new auto loans and the car-title loan segments, he said.
Prasit said Krungthai and KTB Leasing each had branches, resulting in high operating costs. Therefore, if the lending approval could be done at Krungthai branches and loan approvals considered based on the bank’s customer base, credit management would be more efficient.