PERSONAL LOANS
HSBC targets low-income market
HSBC has leapt into the low-income market by offering personal loans to those earning a minimum of Bt7,000 a month, as it bids to become one of the top three players.
The bank yesterday relaunched its personal loan scheme, originally targeted at the middle-level customer base with monthly incomes starting at Bt12,000. It lowered the minimum salary requirement to Bt7,000. Previously, those earning less than Bt10,000 could seek personal loans only at non-bank institutions. HSBC has decided to widen its customer base by establishing business links with the lower-income group, given the large numbers in this segment, said Wichit Phayuhanaveechai, the bank's head of personal financial services. He said there were 3 million Thais with a minimum monthly salary of Bt15,000, and more than 16 million with a minimum income of Bt7,000. The bank offers an attractive promotion of zero interest for the first two months, with annual interest of between 21 and 27 per cent throughout the term. A 21-per cent interest rate will be applied to loans of Bt300,000 and above. The bank is offering repayment terms from 12 to 60 months and credit lines of up to four times an applicant's monthly salary. "We are targeting 40,000 new customers for this loan product this year. And the bank aims to be among top three in the country's personal loan market in terms of new lending per year over the next few years," Wichit said. The bank soft-launched its personal loan service early in the year, and currently gets about 600-700 applications per day. However, its loan approval rate is quite low at around 25-30 per cent of total applications. Wichit predicted the personal loan market this year would grow by at least 20 per cent and that market growth over the next few years would remain robust at about an annual 20 to 30 per cent. "With the higher cost of living right now, and with such a trend expected to continue, demand for personal loans will remain at a high level," he said. The country's outstanding personal loans are currently Bt180 billion, with HSBC's portfolio worth Bt1 billion. Meanwhile, Krungthai Card (KTC) president and chief executive officer Niwatt Chittalarn said that if banks wanted to increase their personal loan business, they would inevitably have to take into account low earners, given that there are many more of them than in other income segments. KTC offers personal loans to borrowers who have a minimum salary of Bt7,500. Somruedi Banchongduang The Nation
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